Left In Lowell

Budget Review

by Lynne at 12:30 pm.

Dday over at Hullabaloo gives her review of the (leaked) Obama budget.

President Obama’s budget has been leaked to major news organizations in time for the Sunday papers, and it seeks to close a yawning deficit over the long term through entirely unobjectionable means like ending unnecessary wars and ensuring that everyone pays their fair share for using the public commons. Also, importantly, he doesn’t try to close the budget gap entirely, and he’s offering an honest appraisal of the numbers instead of the stupid budget tricks that have defined the past decade.

She quotes a lot of the details, but suffice it to say, there’s some spending decreases (one of which is defunding Bush’s failed Iraq war as we draw down) and some tax increases (letting the failed Bush tax cuts expire, so that the top tax rate goes from its current 35% to 39% - to my mind, still pretty damn low). As well as keeping the estate tax in place on estates over $3.5M, and getting aggressive on tax dodging by rich people and corporate loopholes, and the hedge fund loophole. She also says,

They are talking about reducing Medicare eligibility to age 55, and also getting rid of the grossly inefficient Medicare Advantage, which is essentially a $35 billion dollar payoff to private insurance companies.

Nice. This is a good and popular way to start to extend the umbrella of health care to more folks, albeit the most expensive way (given that 55+ are the most expensive in the risk pool of health insurance). It will help people like my own folks, where my dad, who owns his own business and pays his own health care premiums 100%, is approaching 65 but my mom is younger and would otherwise require a private plan costing thousands a year.

If there were also a provision stating small business owners of any age could opt into the Medicare system if they pay an extra 1% or 3% in FICA, I bet you’d see a huge influx of younger workers into the Medicare pool to help stabilize the risk pool, while saving those independent business owners thousands a year in private insurance premiums.

Dday concludes:

This budget is a Democratic statement of priorities, which states pretty clearly that we need a more responsible and progressive tax system that makes sure corporations and the wealthy are paying their fair share. It strives for progress in health care and climate change and a winding down of commitments to foreign military adventures. And it ends blatant giveaways to industry.

There will be details that come out that I imagine I will not particularly like, and I’ll certainly fight any off the books chicanery designed to prop up elites as well as any assaults on the social safety net in this time of economic peril. But the budget is a major document. And this one is, so far, a very respectable manifestation of liberal principles.

Amen to that!

[Filed under Budget, Obama Administration] [link]

7 Responses to “Budget Review”

Tryin to Stay Anonymous Says:
February 23rd, 2009 at 3:04 pm
Interesting idea about small business owners opting into Medicare via more FICA contributions to offset the risk of older members. Never heard that before. Wonder if it could work? Seems logical if the numbers could be made to fit. I’ll bet the private insurance industry would lobby hard against that one though.
Lynne Says:
February 23rd, 2009 at 3:14 pm
You mean the SAME private insurance industry that refuses to give reasonable group-discounted prices for health insurance to small businesses? THAT private insurance industry??

*sigh*
waittilnextyr Says:
February 23rd, 2009 at 5:07 pm
One big problem with US industry is the cost of health care, pension, Social Security and Medicare taxes that are laid on those employers whose production is by US workers, so many corporations move the work outside of the US and use the US for sales predominantly.

If some of these costs were paid via a tax on sales, then companies like Walmart and many other companies who have off-shored their production would not have such an advantage over US-based production, notwithstanding the low cost of foreign labor.

Of course that would be a substantive change in tax policy, and may be difficult to implement, but it could go a long way in solving the health care revenue problem and make US-based companies more competitive with the importers.
kpem Says:
February 23rd, 2009 at 6:18 pm
Offering Medicare at 55 will free up a lot of jobs. My mom has been waiting to retire for 5 years and can not because she holds the insurance. My dad owned a business and is already on Medicare. My mom has a very desirable position that can be freed up and I would have reasonable (free) daycare! I am all for this.
Lynne Says:
February 24th, 2009 at 12:51 pm
LMAO, kpem!!
waittilnextyr Says:
February 26th, 2009 at 10:00 am
It appears that Obama’s approach will follow his campaign promises. He is proposing a Government Health Care Trust Fund with a 10-year funding profile adding up to $634B. This fund will likely be the source of payments for “catastrophic illnesses” which will be relieved from the typical health insurance policy thereby reducing the cost of the premiums significantly.

To “pay” for these expenses he will return the top marginal rate to 39.6% (from 35% under Bush), limit the percent tax reduction for itemized deductions to 28%, and close the sinful loophole that Hedge Fund managers have enjoyed by taxing their incomes at ordinary tax rates instead of the Capital Gains rate they have enjoyed in the last several years. (Note: In 2006 the top 25 Hedge Fund managers “earned” and average of $570M each. The additional income tax under the Obama plan from just these 25 men would have been $3.5B for 2006).
waittilnextyr Says:
February 26th, 2009 at 3:46 pm
Proposed budget for FY 2010:

http://www.whitehouse.gov/omb/

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February 23, 2009

Budget Review

7 Responses to “Budget Review”

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