An Unhealthy Flip | NBC New York

An Unhealthy Flip

Obama considers taxing health benefits

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    If Obama is seen as flipping on the specifics of a central domestic issue open which he ran, he risks seeing some of his popularity start to erode beneath his feet.

    Politics can be a cruel business. And there is nothing crueler than when a politician is forced into more than just going back on his word -- but to actually adopt the policy of an opponent that he vanquished in the previous election.

    But -- even as he launched a full-court PR offensive this week with a speech before the American Medical Association -- that seems to be the direction that President Obama is heading on health-care reform. Vice President Joe Biden began letting the cat out of the bag in his "Meet The Press" appearance Sunday: he refused to rule out taxing health-care benefits

    Monday's Washington Post suggested that -- given increasing public disquietude over spending -- the administration might not have a choice if it wants to keep its vow on overhauling health care:

    But many Democrats [say] they prefer a tax that has some hope of winning Republican support. In legislation that could be unveiled as early as this week, Senate Finance Committee Chairman Max Baucus (D-Mont.) is expected to propose a new tax on the health benefits that millions of Americans currently receive tax-free through employers.

    Economists say taxing employer-sponsored benefits would help trim runaway health costs and force society to broadly share the burdens of reform. The idea also has bipartisan appeal. Former president George W. Bush and Sen. John McCain (Ariz.), the 2008 GOP presidential candidate, championed a form of the tax; so did Obama advisers Jason Furman and Ezekiel Emanuel before they joined the administration.

    "The Democrats are trying to figure out whether they can do health-care reform by themselves without Republicans, or whether they need to adopt some Republican ideas to get a health-care plan," said Chris Edwards, director of tax policy at the libertarian Cato Institute. Taxing health benefits "could be the center of a bipartisan agreement," he said. 

    This is a rather bad idea for Obama to agree to for a couple of reasons:  For one, it places a rather large broad-based tax on the middle-class, more than wiping out the much-ballyhooed "middle-class tax cut" that was passed in the stimulus package.  Even with Republicans signing on, this certainly revives the old GOP mantra of Democrats as the party of "tax and spend" (don't think that that won't be part of the July 4 weekend "Tea Party" protests). 

    Secondly, candidate Obama vociferously attacked opponent John McCain for seemingly suggesting this very thing last fall:

    "On health care, John McCain promises a tax credit," an announcer says in one of Obama's new ads, over images of families examining their bills. "But here's what he won't tell you: McCain would make you pay taxes on your health benefits, taxing your health care for the first time ever, raising costs for employers who offer health care so your coverage could be reduced or dropped completely. You won't find one word about it on his website." 

    And so, in order to keep a policy promise, President Obama appears ready to look like both a promise-breaker on the substance of taxes and something of a hypocrite on the specifics of taxing health-care benefits. And, again, all this is necessary because the billions in spending over the first six months of the Obama presidency seems to have hit the public limit.  Fifty-one percent of the American people don't think the president is doing enough to control the deficit.  

    The most powerful weapon a president has in his arsenal is his credibility. Even if the public doesn't agree on a specific issue, if he is seen as saying and believing the same things on an ongoing basis, he can get things done. If Obama is seen as flipping on the specifics of a central domestic issue open which he ran, he risks seeing some of his popularity start to erode beneath his feet. 

    Robert A. George is a New York writer. He blogs at Ragged Thots.