For some reason I seem to be straying a bit from the narrow discrimination(s) path today. First it was Smithie sex (see two posts below), now money, in neither of which do I possess any claim on your attention. Still, I can’t resist commenting on Harold Meyerson’s OpEd in today’s Washington Post about Richard Gephardt’s health care proposal.
One of the most interesting, er, “features” of Gephardt’s proposal is that it includes large subsidies for corporations that are already providing health care benefits. “Currently,” Meyerson writes, “these companies can claim a 30 percent tax credit; Gephardt doubles that figure.”
According to Meyerson, Gephardt’s intent is
to offer something to those workers whose health coverage is relatively secure. By doubling the government’s subsidy, say, to General Motors, Gephardt enables GM to spend more on research and development and the UAW to bargain for more in wages.
What strikes me as interesting here is not so much the substance of this comment (if any) but its provenance. Harold Meyerson, as most of you know, is an editor of The American Prospect, a leading liberal journal. It is virtually impossible to pick up any issue of TAP without finding one, or more, disparaging digs at Republican tax cut proposals as subsidies to the rich. Here are some examples, chosen more or less at random:
Make [Republicans] choose between a payroll tax cut for more than 130 million American working families, worth about $5,000 to each family, or a tax cut for the richest 2 percent of American families, worth millions to each of their do-nothing kids….
The Bush estate tax cut, on the other hand, has virtually no stimulative effect on the economy. It gives more money to a handful of rich families that already spend as much as they want.
The recent surge in corporate welfare reflects, in part, the enormous new tax breaks adopted in the so-called stimulus bill.
One of the impressive feats of intellectual tenacity in recent times is the Republicans’ ability to sustain their faith in large tax cuts for the wealthy despite repeated battering from reality.
First, repeal the tax cut. That’s what is eating up most of the surplus. Most of it went to the very rich anyway. Then, give ordinary people more tax relief – and spend the rest.
So, tax cuts that allow individuals and corporations to keep more of what they’ve earned, thus making it somewhere between possible and likely that they’ll invest at least some of it and create jobs, is “corporate welfare,” etc., etc. But an outright federal subsidy to large corporations, some of which may trickle down to some workers in wage increases, is statesmanship of a high order.
It’s a good thing there is no plank in the liberal platform that promises consistency.
I think there’s less, much less, here than you do. The health care subsidy, whatever you think of it, is a reward for certain behavior we wish to encourage (corporate sponsorship of health care). The Bush tax cuts are generally aimed at personally wealthy individuals and even his own economists, operating under wildly optimistic assumptions, agree that job creation and stimulus effects are minimal compared to the expense. [Since Bush’s first tax cut, you know, the one that he mendaciously promised would still leave the surplus, the economy has gained about minus two million jobs, which suggests it was the Laetrile of job stimulus packages.]
Good blog on economics here.
Andrew – It may make sense to use the tax code, etc., to “reward for certain behavior we wish to encourage,” but Gephardt’s plan doubles the “reward” to large corporations that are already doing what we want, i.e., providing health benefits. The doubled reward is not going to result in any additional health care being provided, although it presumably will make it easier for the big unions to press for wage increases, since the companies will, thanks to the rest of us taxpayers, be better able to afford them. This part of his plan thus doesn’t buy more health care; it buys more union votes.