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Health Plan Means Bigger Deficits and Higher Taxes
The president has called on critics to stop talking about the messy legislative process and to focus on the specifics of the bill. Okay.


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Michael Barone

As this is written, the lobbying of House Democrats on the health-care bill is going on apace, and every hour brings news of another no vote converted to yes, or a yes vote switching to no.

Speaker Nancy Pelosi and the House Democratic leadership are expressing confidence that the jerry-built bill they’ve put together will pass — which is evidence either that they have the 216-vote majority pretty well in hand or that, like any party’s House leadership, they’re professing confidence to prevent a stampede against them. Republicans are saying the Democrats haven’t gotten to 216 yet but admit they’re getting close.

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At a rally Friday, Barack Obama called on critics to stop talking about public-opinion polls or the messy legislative process and to focus on the specifics of the bill. Okay.

The first thing to be said is that it would vastly increase government spending. Democrats have been focusing on the Congressional Budget Office’s (preliminary) finding that it would reduce the federal deficit. But that’s misleading because the CBO is required to assume that Congress won’t increase the Medicare reimbursement rate for doctors (the doc fix), as it has done every year for a decade — and as the Democratic leaders may be planning to do permanently later this year.

Over the last 40 years, federal-government spending has hovered around 21 percent of the gross domestic product. The Obama budgets have pushed that up to 25 percent. The health-care bill threatens to keep it in that vicinity indefinitely. And that, as the CBO has said, means deficits around 5 percent of GDP as far as the eye can see — or higher taxes. Pelosi and other Democrats have been eyeing a value-added tax, i.e., a national sales tax.

The bill begins the march to higher taxes. High earners will pay 3.8 percent more in Medicare tax, on top of a promised increase, from 35 percent to 39.6 percent, in their income-tax rate. Economists of every ideological stripe agree that raising taxes in a recession will slow or prevent recovery. The bill also creates a 3.8 percent tax on interest and dividend income above certain levels beginning in 2013. That’s another growth-killer.



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