Paying for Health Care Reform

Republicans in Congress are complaining about the anticipated cost of health care. It is a political smokescreen. All they want is to make President Obama look bad. It will be easy to pay for health care reform if Democrats have the guts to impose necessary taxes on the rich and cut wasteful programs.

Last week Goldman Sachs, the financial firm that had to be bailed-out to survive, announced that it would be rewarding hundreds of its employees with multi-million dollar bonuses. Other banks and financial companies are paying-back bailout money so they can do the same. What can the government do? The answer is, give them a swift kick in their assets and tax them to pay for health care.

The House Ways and Means Committee has released a plan to introduce a surcharge with graduated rates from 1-3 percent on household incomes over $350,000 to help finance health care reform (I would make the surcharge higher). According to a report just released by Citizens for Tax Justice, it would raise approximately $540-550 billion over 10 years. There will also be a surcharge on companies that do not provide health care for their employees. That will provide tens of billions of dollars more to pay for health care reform. There is also a proposal to tax health insurance benefits for people earning over $1 million a year. Add all that to the premiums that will be paid by people getting governmental insurance, and you should be able to more than cover the cost of healthcare.

But if the surcharges, taxes, and premiums do not cover everything, where is the money going to come from? Well, a panel of 45 of the nation’s leading economists predicted for the National Association for Business Economics Outlook that the recession will be over by 2010. Tax revenue will rise dramatically. In addition, the Bush tax cuts for the wealthy will expire in late 2010. According to the Brookings Institution, those tax cuts cost the government over $400 billion per year.

There are other ways the government can save money. Let’s start with one of the major boondoggles of out time, farm subsidies. The government pays about $16 billion a year to subsidize agriculture. The majority of these subsidies flow only to corporate farms. Farm income reached new highs in 2007 and 2008 with the USDA estimating an average farm household’s income in 2008 at almost $90,000. The government should simply abolish all farm subsidies.

As Iraq war winds down there will be large savings in military spending. In addition, the conservative Cato Institute has called for Congress to terminate or reduce procurement of a number of unneeded weapon systems, including the Air Force’s F-22 fighter (now voted-down by the Senate), the Navy’s F/A-18E/F aircraft, the Navy’s Virginia-class submarine, the Marine Corps’ V-22 transport aircraft, and the Army’s Comanche helicopter. Cato says that elimination or reduction of these items could save the government over $340 billion in the next ten years. Defense Secretary Gates also wants Congress to eliminate the presidential helicopter, the Air Force's C-17 cargo jet, the F-18 Super Hornet fighter jets, and an alternative F-35 engine (also voted-down by the Senate), saving more billions of dollars. There are many other military programs that can be eliminated.

There is no need for another trip to the moon which could cost $40 billion. And we do not need to subsidize the oil industry, which has reported gigantic profits the past few years, to the tune of $15 billion dollars a year. We should be taxing the windfall profits of the oil companies, not subsidizing them!

Through taxing policy and cuts in wasteful programs, we could not only pay for health care, but have large surpluses by the end of President Obama’s presidency.