WASHINGTON – Key House Democrats decided Friday to raise taxes on the wealthy to help pay for health care legislation, capping an up-and-down week for President Barack Obama's top domestic priority. At the same time, Democratic leaders tried to quell concerns among moderate and conservative lawmakers about other elements of the bill.
"We're closer to that significant reform than at any time in recent history. That doesn't make it easy. It's hard," Obama said while traveling overseas.
Democrats on the tax-writing Ways and Means Committee agreed to a new surtax that would start with households making $350,000 a year and begin in 2011, said the committee's chairman, Rep. Charles Rangel, D-N.Y.
It would raise some $540 billion over 10 years, about half the cost of Obama's ambitious plan to reshape the nation's health care system and provide care to the 50 million uninsured. However, lawmakers could not provide an exact price tag of the overall bill.
The proposal faces an uncertain reception in the Senate and from moderate and conservative Democrats in the House, who rebelled Thursday over various aspects — including costs — of the plan.
Democratic leaders spent hours Friday trying to soothe those concerns without reaching resolution, even as Rangel's panel met to come up with the payment proposal.
Obama acknowledged obstacles to the legislative timetable but said failure to meet a self-imposed August deadline for moving bills through the House and Senate didn't doom the endeavor.
"I never believe anything is do-or-die," the president said at a news conference in Italy. "But I really want to get it done by the August recess."
Rangel said the new surtax would be graduated, starting with households at $350,000 and then rising at $500,000 and again at $1 million. Cuts to Medicare and Medicaid would raise about $500 billion, according to the Congressional Budget Office. Fees paid by companies who don't provide insurance to their employees would push the amount of the bill even higher.
"Instead of putting pieces of different revenue raisers together the best we can do is a graduated surtax," Rangel said.
Rangel didn't describe details, but one official said the surtax would apply to individuals with adjusted gross incomes over $280,000 a year, and couples over $350,000. A senior House aide said the surtax would be 1 percent for the first group of high earners, those households making $350,000 or more. The levels for the other two groups, those above $500,000 and $1 million in annual income are still being determined, said the aide.
Both officials spoke on condition of anonymity to discuss private deliberations.
House Democrats had hoped to release a final bill Friday, but that was before a group of moderates and conservatives, known as Blue Dog Democrats, voiced their objections. House leaders are now promising a bill Monday with committee votes later in the week.
The Blue Dogs want a greater focus on cost containment within the health care system, such as reducing overpayments. They are also concerned about impact on small businesses and disparities in care in rural areas.
Blue Dog members said Friday that House Democratic leaders were beginning to hear their concerns but that more attention was needed.
"Addressed? Obviously we'll wait and see," Rep. Heath Shuler, D-N.C., said after meeting with House leaders.
Several Blue Dog members voiced concerns about new taxes, and it's unclear whether the Senate would go along with the House on a tax on high earners. Republican senators have said revenues for health overhaul should be related to health care in some way. A health insurance benefits tax that got shot down in the Senate this week was related to health care, since many economists say it would help hold down costs by forcing people to switch to more frugal coverage.
Asked Thursday if the Senate could support a "millionaire's tax" to pay for health care, Budget Committee Chairman Kent Conrad, D-N.D., answered: "I don't know."
Whatever the final plan, Obama's political machine is stepping up efforts to gin up support. Organizing for America is asking supporters to join door-to-door canvasses on upcoming weekends to ask their neighbors to support the president on health care.
Ways and Means members said that an earlier proposal to tax soda was unlikely, but a new coalition of beverage and food producers and marketers, joined by some conservative groups, was taking no chances.
The group will begin running ads in Washington area newspapers this Sunday opposing proposals to tax sugary drinks. The ad shows a smiling couple sitting outside a lakeside tent with the headline, "In: Budget Vacations. Out: Beverage Taxes."