Sticking it to people who work for a living

So, as Kevin Drum writes, the big healthcare proposal for the State of the Union is Bush's plan to tax people who already have insurance to pay for some of those who don't. Grand.

WASHINGTON, Jan. 20 — President Bush intends to use his State of the Union address Tuesday to tackle the rising cost of health care with a one-two punch: tax breaks to help low-income people buy health insurance and tax increases for some workers whose health plans cost significantly more than the national average.

White House officials say Mr. Bush has decided to forgo the traditional formula for the State of the Union — a laundry list of ideas, many of them dead on arrival — in favor of a more thematic speech that will concentrate on a few issues, like health care, immigration and energy, on which he hopes to make gains with the new Democrat-controlled Congress.

The basic concept is that employer-provided health insurance, now treated as a fringe benefit exempt from taxation, would no longer be entirely tax-free. Workers could be taxed if their coverage exceeded limits set by the government. But the government would also offer a new tax deduction for people buying health insurance on their own.

It's amazing how an administration so hostile to taxing the richest investors in the country is so quick to tax those who, you know, work for a living. And in this age of HMOs, taxing people for having to deal with them should go over well with the voters.

“It’s a bad policy,” Representative Charles B. Rangel, the New York Democrat who is chairman of the House committee that writes tax legislation, said in an interview Friday night. “We are trying to bring tax relief to the middle class. The president is trying to increase their tax liability. This proposal is inconsistent with what the majority is seeking in the House and the Senate.”

It's especially galling in light of this.

Mr. Rangel said he had also been talking about the possibility of action on Social Security with the ranking Republican on his committee, Representative Jim McCrery of Louisiana. And in the Senate, Mr. Gregg and Senator Kent Conrad of North Dakota, the chairman of the Budget Committee, have proposed a bipartisan working group to explore broad entitlement and fiscal issues.

But the old fault lines have quickly re-emerged. Vice President Dick Cheney, in an interview with Fox News last week, said Mr. Paulson’s openness to all ideas did not indicate that the administration was open to any increase in the payroll tax that supports Social Security. Raising the cap on income subject to payroll taxes — now at $97,500 — is one of the most commonly cited ways to shore up Social Security. “I think this president has been very, very clear on his position on taxes, and nothing’s changed,” Mr. Cheney said.

Mr. Conrad said that after those comments, his effort to move forward with his working group “is on life support.” He added, “People have interpreted that to mean that the administration is not willing to alter their position one iota, and it’s their way or the highway. Well, that’s not going to work.”

Democrats already mistrustful of negotiating with the administration were buttressed in their views, Mr. Conrad added. “They say, look, they’re playing us for suckers.”

Yes, they are.