Democrats’ Tax-Raising Medicare Plan Has Roots in ObamaCare
Rather Than Preserve and Protect Medicare Today, Democrats Have a Plan for Even More Tax Increases
President Obama was widely criticized for his plan to do nothing to preserve and protect Medicare in his FY 2012 budget:
THE LOS ANGELES TIMES: “President Obama’s Budget For Fiscal Year 2012 Landed With A Thud Monday, Laying Out Short- And Long-Term Tax And Spending Plans That Disappointed Lawmakers On Both Sides Of The Aisle. The proposal was a remarkably tame response to Washington’s fiscal problems, not the bold statement about belt-tightening that the White House had suggested was coming. Yet the biggest shortcoming is that it all but ignored the most important long-term financial challenge, which is the growing cost of entitlements such as Medicare and Medicaid.” (Editorial Board, “Obama’s Overly Tame Budget,” The Los Angeles Times, 2/15/2011)
THE WASHINGTON POST: “The president punted. Having been given the chance, the cover and the push by the fiscal commission he created to take bold steps to raise revenue and curb entitlement spending, President Obama, in his fiscal 2012 budget proposal, chose instead to duck.” (Editorial Board, “President Obama’s Budget Kicks the Hard Choices Further Down the Road,” The Washington Post, 2/15/2011)
THE DENVER POST: “Obama called the proposal one of ‘tough choices and sacrifices,’ yet it does not confront entitlements and continues to act as if government spending is the way to prosperity.” (Editorial Board, “Obama Budget Still Falls Short,” The Denver Post, 2/15/2011)
The Democrat proposal for doing nothing, however, does do something. Obama’s plan requires a 23 percent hike in taxes for future beneficiaries, according to recent reports from both the Obama-appointed trustees of Medicare and the American Academy of Actuaries. The American people deserve to hear the truth:
MEDICARE PART A BANKRUPT IN 2029: “The HI [Hospital Insurance Trust] fund still fails the test of short-range financial adequacy, as projected annual assets drop below projected annual expenditures…by 2012. The fund also continues to fail the long range test of close actuarial balance.” (Timothy F. Geithner, Hilda L. Solis, Kathleen Sebelius, and Michael J. Astrue, “A Summary of the 2010 Annual Social Security and Medicare Trust Fund Reports,” Social Security Online, Accessed 3/15/2011)
23 PERCENT PAYROLL TAX HIKE AND A 16 PERCENT CUTS TO BENEFITS: “Over 75 years, HI’s [the Hospital Insurance Trust Fund’s] estimated actuarial imbalance is 23 percent as large as payroll taxes, and 16 percent as large as program outlays.” (Timothy F. Geithner, Hilda L. Solis, Kathleen Sebelius, and Michael J. Astrue, “A Summary of the 2010 Annual Social Security and Medicare Trust Fund Reports,”Social Security Online, Accessed 3/15/2011)
AMERICAN ACADEMY OF ACTUARIES: “The projected HI deficit over the next 75 years is 0.66 percent of taxable payroll, down from last year’s estimate of 3.88 percent. Eliminating this deficit would require an immediate 23 percent increase in payroll taxes or an immediate 15 percent reduction in benefits—or some combination of the two. Delaying action would require more drastic tax increases or benefit reductions in the future.” (“Issue Brief: Medicare’s Financial Condition: Beyond Actuarial Balance,” American Academy of Actuaries, Nov. 2010)
LONG-TERM UNADDRESSED COST IMBALANCES: “It is projected that SMI will continue to put increasing pressure on the federal budget and beneficiaries in the years ahead… Over the next 75 years, SMI costs are expected to average 3.3 percent of GDP, which is 1.4 percentage points higher than the SMI share of GDP in 2009.” (Timothy F. Geithner, Hilda L. Solis, Kathleen Sebelius, and Michael J. Astrue, “A Summary of the 2010 Annual Social Security and Medicare Trust Fund Reports,” Social Security Online, Accessed 3/15/2011)
And the planned 23 percent spike in payroll taxes is a best case scenario. By the Democrats’ own admission, there will be far greater tax increases in the likely event that Medicare costs exceed their rosy projections:
WHITE HOUSE PLAN ASSUMPTIONS ARE SO UNTENABLE EVEN THEY ADMIT IT: “Much of the projected improvement in Medicare finances…is premised on the assumption that productivity growth in the health care sector can match that in the economy overall, rather than lag behind as has been the case in the past. This report notes that achieving this objective for long periods of time may prove difficult, and will probably require that payment and health care delivery systems be made more efficient than they are currently… If health care efficiency cannot be substantially improved through productivity gains or other measures, then over time the statutory Medicare payment rates would become inadequate. In that situation, the payment update reductions might be suspended, in which case actual long-range costs would be larger than those projected under current law.” (Timothy F. Geithner, Hilda L. Solis, Kathleen Sebelius, and Michael J. Astrue, “A Summary of the 2010 Annual Social Security and Medicare Trust Fund Reports,” Social Security Online, Accessed 3/15/2011)
The Democrat plan to raise Medicare payroll taxes is just the latest illustration of Democrats’ insatiable appetite for raising taxes. Last March, Democrats led the way in instituting billions of dollars in new taxes and fees under ObamaCare:
CBO: OBAMACARE INCREASES TAXES AND FEES BY AT LEAST $525 BILLION:“The two pieces of legislation [that make up the health care law] were estimated to increase mandatory outlays by $401 billion and raise revenues by $525 billion.” (“The Budget and Economic Outlook: An Update,” Congressional Budget Office, August 2010)
TAXES ON EVERYTHING FROM MEDICARE TO TANNING BEDS: “The tax increases range from hundreds of billions of dollars in new Medicare levies, including one that taxes investment income such as capital gains and dividends for the first time, to a 10 percent excise tax on indoor tanning services that will raise less than $3 billion over the next decade…
“Middle- and working-class Americans, Republicans say, also can expect to pay a big portion of the numerous fees that the health care bill will impose on the pharmaceutical industry ($27 billion from 2011 through 2019), on medical-device manufacturers ($20 billion from 2013 through 2019) and on health insurance providers ($60.1 billion from 2014 through 2019), and on indoor tanning services (a 10 percent excise tax).” (David Dickson, “Healthy Tax Increases, Not Only on Wealthy,”The Washington Times, 3/24/2010)
TAX INCREASES FOR THOSE MAKING UNDER $200,000: “Taxpayers earning less than $200,000 a year will pay roughly $3.9 billion more in taxes — in 2019 alone — due to healthcare reform, according to the Joint Committee on Taxation, Congress’s official scorekeeper.” (Jay Heflin, “JCT: Healthcare Law to Sock Middle Class with a $3.9 Billion Tax Increase in 2019,” The Hill, 4/12/2010)
TAX INCREASES FOR THOSE WITH CHRONIC DISEASES: “The new law raises $15.2 billion over 10 years by limiting the medical expense deduction, a provision widely used by taxpayers who either have a serious illness or are older.” (Jay Heflin, “JCT: Healthcare Law to Sock Middle Class with a $3.9 Billion Tax Increase in 2019,” The Hill, 4/12/2010)
The Democrats’ ObamaCare law even includes a payroll tax increase, just as their plan for Medicare does:
“It would cut an additional $60 billion from Medicare, bringing total cuts to the program to more than $500 billion over the next 10 years. And it would delay a tax on high-cost insurance polices until 2018, replacing the lost revenue byimposing the Medicare payroll tax on investment income for families earning more than $250,000 a year.” (Shailagh Murray and Lori Montgomery, “With Senate ‘Fixes’ Bill, GOP Sees Last Chance to Change Health-Care Reform,” The Washington Post, 3/24/2010)