STATEMENT BY ROBERT GREENSTEIN, EXECUTIVE DIRECTOR,
ON THE BUDGET AND HEALTH CARE TAX ISSUES IN THE STATE OF THE UNION
On Budget Policy
In committing his Administration to a balanced
budget by 2012, the President has acknowledged that deficits matter. This is
progress. But there are reasons to doubt the strength of the President’s
newfound interest in fiscal discipline.
- First, his budget is likely to achieve balance
in 2012 only on paper — by leaving out key costs such as the cost of
continuing relief from the Alternative Minimum Tax beyond the next year and by assuming
unrealistically deep and unspecified cuts in domestic discretionary programs
in years after 2008.
- Second, and more important, the true test of
the President’s commitment to fiscal responsibility is whether he is willing
to put all parts of the budget on the table — including both popular programs
and taxes — to meet the nation’s serious long-term budget challenges. Yet the
President continues to call for Congress to permanently extend all of his tax
cuts, which will cost about $300 billion a year and provide an average tax
break of more than $150,000 a year to people with incomes of over $1 million.
- Moreover, the claims the President has
recently made implying that his tax cuts are paying for themselves and fueling
robust economic growth are belied by the government’s own figures. While the
President did not repeat such claims in his State of the Union address, he
continues to make them in other forums. Such claims are more likely to mislead
the country than to help prepare Americans for the tough budget choices that
lie ahead.
Regarding Health Care Tax Policy
On the subject of health insurance, by contrast,
the President has shown leadership in placing the tax treatment of
employer-based coverage on the table as part of health care reform, and by
implicitly acknowledging that more revenues will be needed over time to help
address the problem of the uninsured. But the President has undermined his
initiative by tying it to an ill-designed proposal that would erode incentives
for employer-based coverage — the primary means of pooling healthier and sicker
Americans together to keep insurance affordable — without providing an
alternative way of effectively pooling risk.
The President’s plan would drive more Americans
into the deeply flawed individual health insurance market, where people with
health conditions are often refused coverage or can get it only at exorbitant
cost.
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The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants. |