SYNOPSIS: The Gephardt healthcare plan is is not realistic but right in spirit and would take the U.S. in a far more equitable direction than it is headed now
Congressman Richard Gephardt's new proposal to scrap the 2001 tax cut and use the reclaimed revenue to provide health benefits to the uninsured has been widely dismissed as unrealistic. And in political terms that's probably true. After all, these days it's considered "moderate" to support an irresponsible tax cut that is merely large, as opposed to gigantic.
But today I'd like to take a holiday from political realism, and ask a naοve question: Why shouldn't the American people favor a proposal like Mr. Gephardt's? Never mind the details; why shouldn't the typical citizen, faced with a choice between Bush-style tax cuts and a plan to provide health insurance to most of the uninsured, choose the latter?
Of course, originally tax cuts weren't supposed to require sacrificing something else. In the 2000 campaign, and up through the passage of the 2001 tax cut, George Bush insisted that there was plenty of money for everything. But there wasn't and now, having returned to an era of deficits, we are told that social programs must be shrunk even as taxes are cut further. Why not choose a different road?
Most Americans were never going to get much of a tax cut, anyway. If all the Bush tax cuts those actually passed in 2001, and those the administration is now pushing were fully in effect, they would reduce annual taxes collected per family by about $2,500. But averages can be deeply misleading. When Bill Gates enters a bar, the average net worth of the patrons soars, but that doesn't make everyone in the bar a billionaire.
So it is with the tax cuts, which bestow most of their benefits on the very, very affluent. Most families, as best I can estimate, will see their taxes fall by less than $800 many cases, much less. Meanwhile, a handful of people will benefit hugely: the top 1 percent of families, with incomes averaging more than $1 million, will get tax breaks to the tune of $80,000 each.
On the other hand, ordinary families would benefit greatly from a plan that provided health insurance to those now uninsured.
It's true that at any given moment most middle-income families have insurance. But people lose their jobs, companies go bankrupt, benefits get suddenly slashed. Over any given two-year period, roughly a third of Americans spend some time without health insurance; over longer periods, the risk of losing health insurance is very significant for most families.
Would ending that risk be worth several hundred dollars a year to the typical family? (It doesn't have to be worth $800: Mr. Gephardt's plan, which would provide increased tax credits to employers, would also lead to higher wages, offsetting some of the tax-cut reversal.) Yes, without question.
When a family without health insurance suffers illness, the results are often catastrophic either serious conditions go untreated or the family faces financial ruin. Our inadequate insurance system is one important reason why America, the richest country in the world, has lower life expectancy and higher child mortality than most other advanced nations.
So why should tax cuts take priority over health care? I know the party line: tax cuts for high earners are the key to economic growth, and a rising tide lifts all boats. But there's not a shred of evidence supporting that claim. More than two decades after the supply-siders launched their tax-cut crusade, ordinary workers have yet to see a rising tide. The median real wage is only 7 percent higher now than it was in 1979, with all of that increase achieved after Bill Clinton raised taxes on the top bracket.
If American families knew what was good for them, then most of them all but a small, affluent minority would cheerfully give up their tax cuts in return for a guarantee that health care would be there when needed. And even the affluent might prefer to live in a society where no sick child was left behind.
O.K., back to political reality. Nothing like Mr. Gephardt's plan is going to become law anytime soon. On the contrary, the right is likely to ram through even more tax cuts, while using deficits as an excuse for not helping the uninsured. But we have the right to ask why. And claiming that those who don't support tax cuts are somehow unpatriotic is not an answer.
Originally published in The New York Times, 4.25.03