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Compromising with Medicare and the Top Tax Rate

Yesterday Ezra Klein, at the Washington Post, wrote a piece that’s gotten a lot of attention. (emphasis added throughout post)

The fiscal cliff deal comes clearer: a 37% top tax rate and a higher Medicare eligibility age

Right now, the fiscal cliff negotiations are proceeding on two tracks.

One track includes the press releases, public statements and legislative tactics the two parties are deploying to prove the purity of their faith and their commitment to beating the other side to a bloody pulp. …

The other track includes the offers, counteroffers and red lines proposed by Boehner and President Obama. If you look at these closely, a deal is taking shape. …

Talk to smart folks in Washington, and here’s what they think will happen: The final tax deal will raise rates a bit, giving Democrats a win, but not all the way back to 39.6 percent, giving Republicans a win. That won’t raise enough revenue on its own, so it will be combined with some policy to cap tax deductions … .

… There will be a variety of nips and tucks to Medicare, including more cost-sharing and decreases in provider payments, and the headline Democratic concession is likely to be that the Medicare eligibility age rises from 65 to 67.

Just yesterday, some indication about the accuracy of some of this: Biden: Tax Rates for Top Earners Have to Rise, But There’s Room to Deal.

Paul Krugman responds at the NY Times:

I Hope This Isn’t True

Ezra Klein says that the shape of a fiscal cliff deal is clear: only a 37 percent rate on top incomes, and a rise in the Medicare eligibility age.

I’m going to cross my fingers and hope that this is just a case of creeping Broderism, that it’s a VSP fantasy about how we’re going to resolve this in a bipartisan way. Because if Obama really does make this deal, there will be hell to pay. …

And if it does happen, the disillusionment on the Democratic side would be huge. All that effort to reelect Obama, and the first thing he does is give away two years of Medicare? How’s that going to play in future attempts to get out the vote?

Good question. Based on past experience, I think there’s a fairly good chance that while some would take such a move very seriously, and let that be known, more would probably say the other side is worse, and we’re remain in lesser evildom.

Some analysis from Richard Eskow, at Nation of Change:

A Higher Medicare Age Means a Lower Quality of Life

It’s almost impossible to believe: With the private-sector economy struggling and politicians worried about government spending, the biggest proposal on the table is raising the Medicare age to 67. That would take far more out of household budgets than it would save in government spending — and the savings would be short-lived.

What’s more, it would impose terrible hardships on lots of people. …

A Kaiser Foundation study showed that ‘raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree health-care costs.’

So it would save $5.7 billion from the Federal budget in the first year, but it would cost everyone else $8.2 billion. That means it would increase overall health care costs by $2.5 billion.

‘Among the estimated 5 million affected 65- and 66-year-olds,’ the Kaiser study reports, ‘about two in three would pay an average of $2,200 more for their health care in 2014 than they would have paid if covered under Medicare.’

And those costs would skyrocket in the following years.

“Shared sacrifice,” lesser evildome style, into the future.

It’s been a long time since I read Animal Farm. but I keep thinking of the line that morphed from “All animals are equal” to include “but some animals are more equal than others.”

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11 Responses to Compromising with Medicare and the Top Tax Rate

  1. Cujo359 December 8, 2012 at 5:06 pm #

    My real world self received an e-mail this morning from MoveOn, saying they’re going to protest the heck out of any idea of cutting Social Security, Medicare, and Medicaid. These folks, of course, are the ones who were writing breathlessly every day about the threat to Obama’s victory, etc., etc. I felt like writing back: “Too late, idiots.”

    Unfortunately, they’re idiots, and thus incapable of learning.

    If this hadn’t been a part of the Friday news dump, when our brave and bold ruling class inevitably releases the bad news they’d rather not have us paying lots of attention to, I’d at least be entertaining the idea that this was a way for the Obama Administration to drum up support for SS,M&M, etc. Unfortunately, that’s not the case. Whoever leaked this almost certainly wants it to be ignored, and I think you can take it for granted that at least some of the “smart folks” Klein is referring to are OA officials of senior rank.

    • Joyce Arnold December 8, 2012 at 5:28 pm #

      Yep, the “Friday news dump” is significant. I don’t know if Biden’s comments were a part of the Friday plan, or if they helped necessitate a “news dump.” Whatever, I saw the MoveOn email, and similar stuff. No doubt they will protest. But if the deal is made, I think it’s just as likely that at some point it will be another round of “Obama / Democrats had no choice because of the Republicans, and now we must move forward into 2014 / 2016.”

      • Cujo359 December 8, 2012 at 5:55 pm #

        “it will be another round of “Obama / Democrats had no choice because of the Republicans”

        Even the AEI recognizes that this isn’t true. Option number 4 from the quote in that article, AKA “coin seigniorage” is entirely within the purview of the Executive Branch, and option 2 is something Congress and the President could do together to make their different points of view known without tanking the economy.

        Unfortunately, neither side wants to do that. The rich want that SS and M&M money, and their politicians are going to give it to them.

  2. thoreau December 8, 2012 at 7:21 pm #

    if obama permits only a 1% increase for the top. how can he expect any future support after rallying around the country for clinton-era rates. not to mention, the hugh public support the policy always had?

    • TPAZ December 8, 2012 at 7:32 pm #

      “how can he expect any future support”

      Why would he believe he could ever lose his support?

  3. TPAZ December 8, 2012 at 7:30 pm #

    Who could have EVER seen this coming only 31 days after the November elections. You would have had to been a fucking retard to think this WH would sell you out.

    • Cujo359 December 8, 2012 at 8:15 pm #

      Nah! All you have to be is unfailingly negative, and unwilling to give Democrats credit where it’s due for some mysterious and no-doubt pathological reason.

      You know, like for instance they had other options and didn’t take them.

  4. TPAZ December 8, 2012 at 7:45 pm #

    The truly stunning point of this charade is that the WH began negotiations with a cap on the top tax rate increase at 39% and everyone on the left said nothing. Absolutely nothing.

    Were it me in the WH, I would have at least trotted out a trial balloon stating “the new top tax rate would fall somewhere between Reagan’s (50%) and Clinton’s (39%) top tax rate”.

    We are facing a financial situation neither of these Presidents faced yet this WH is asking for a lower top tax rate than either President settled for; disgusting.

    • Cujo359 December 8, 2012 at 8:27 pm #

      Not too long ago, I made the point that the average progressive was a nitwit when it comes to politics. You’ve provided yet another example why. There are lots of ways they could have made the case for far more than they’re willing to accept at this point. Making up for shortfalls in state and local government revenues since 2008 would be one example of something that really has to be done, but isn’t. Then tell them you need to raise the rate for anyone earning more than $500k to 75% to pay for it.

      Either that, or you can raise the debt ceiling, Congress.

      But no, that’s not Serious, apparently. Obama has the means to make this problem go away any time he wants. He won’t, which tells me that he, and possibly DC Democrats generally, want the problem more than they want a solution that honks off their big contributors.

      • Cujo359 December 9, 2012 at 6:47 am #

        “You’ve provided yet another example why.”

        Let me rephrase that – you’ve described another example why. Your comment isn’t foolish, but reading what I wrote, you might be led to believe that I think so.

  5. Uh-oh December 8, 2012 at 8:28 pm #

    Not that it helps, but I don’t think that history will be kind to Obama. He works really hard to snatch defeat from the jaws of victory.

    Obama is totally a Madison Avenue president, dependent on advertizing and branding for his position. As president, well he really isn’t that much. And the big hurt is going to be on us.

.... a writer is someone who takes the universal whore of language
and turns her into a virgin again.  ~ erica jong