For readers who want a fuller—and clearer—explanation of the excise tax on the Cadillac plans, Campaign Desk recommends Saturday’s story in The New York Times. The piece was a good blend of explanation and politics. The explanation part gave the rationale for the tax—the Senate probably would not go along with the House’s plan for funding subsidies, an income tax surcharge on rich people. An aide to Senate Finance Chairman Max Baucus said the tax would also incentivize employers to find the best possible cheaper plans. She didn’t mention what benefits would look like under a less expensive plan; that would have been a good point for the Times to make.
The paper did let the unions push back on other arguments made by economists, including one by the ubiquitous Jonathan Gruber from MIT, who predicted that the excise tax might just raise workers’ wages from 2010 to 2019. Balderdash, countered the president of the United Steelworkers, Leo Gerard.
The people who are promoting this tax say companies will make up for this with higher wages. These people who say that have never been at the bargaining table. It doesn’t work that way.
It does kind of call into question Mr. Gruber’s experience with the nitty-gritty of collective bargaining.
The political part examined what might happen to Democrats in the fall elections if they support a tax that affects workers and the middle class. Ron Gay, an AT&T repairman in Ohio who urged co-workers to vote for the president, told the Times: “If this passes in its current form, a lot of working people are going to feel let down and betrayed by our legislators and president.”
The story lede did mention another important political point: When John McCain talked about taxing health insurance benefits during the campaign, and many union workers were thinking about voting for him, the labor unions steered them back to Barack Obama, repeatedly saying McCain wanted to tax their health benefits. Later in the piece, the Baucus aide said there was a difference between what McCain wanted to do and what Obama supports. McCain wanted to eliminate all tax breaks for employer-provided plans, and the president just wants to tax policies that fall above a certain threshold. Some experts view Obama’s approach as a way to ultimately end the tax breaks. The finer points of all this are the subject of another post. Still: Is that the reason Christina Romer had so much trouble finding the right words to say?