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The Dishonest Selling Of The Excise Tax

Bob Herbert:

If even the planís proponents do not expect policyholders to pay the tax, how will it raise $150 billion in a decade? Great question. [. . .] According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by workers who have been given pay raises by employers who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans.

Can you believe it? [. . .] A survey of business executives by Mercer, a human resources consulting firm, found that only 16 percent of respondents said they would convert the savings from a reduction in health benefits into higher wages for employees. Yet proponents of the tax are holding steadfast to the belief that nearly all would do so.

The tax on health benefits is being sold to the public dishonestly as something that will affect only the rich, and it makes a mockery of President Obamaís repeated pledge that if you like the health coverage you have now, you can keep it. Those who believe this is a good idea should at least have the courage to be straight about it with the American people.

(Emphasis supplied.) Herbert is right. See also Glenn Greenwald and Atrios ("None of the benefit reductions are going to be converted to wages.") FTR, I think Atrios overstates the case. Some portion will be converted to wages imo.

Speaking for me only

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    Ok, now I finally understand why this won't work (5.00 / 1) (#1)
    by andgarden on Tue Dec 29, 2009 at 08:15:55 AM EST
    Thanks BH.

    Define "work?" (5.00 / 2) (#4)
    by Big Tent Democrat on Tue Dec 29, 2009 at 08:26:00 AM EST
    I think it will work just as designed - reduce health insurance benefits for workers.

    The lie is that the savings will be transferred back to workers in the form of income (subject to tax of course.)

    This is ivory tower economist BS - the relative bargaining power and built in expectations make it almost certain that, at best, only a portion of the reduction in health insurance costs will be converted to wages.

    Anyone who tells you otherwise is blowing smoke up your A**.  

    Parent

    It's not even "ivory tower" (5.00 / 2) (#35)
    by gyrfalcon on Tue Dec 29, 2009 at 10:33:55 AM EST
    Even "ivory tower" economists aren't so stupid.  This sounds more like college sophomore intern stuff.

    I wish Herbert had named specific names of people making this argument.  It's completely insane.  Never in the history of the universe have businesses behaved this way.

    Parent

    It is really bad isn't it? (5.00 / 1) (#39)
    by Militarytracy on Tue Dec 29, 2009 at 10:37:16 AM EST
    But everybody hated economics in college except a few of us who seemed to be sort of strange, and it was made clear that there was something wrong with us so I was always very quiet about that passion :)

    Parent
    I didn't hate economics in college (5.00 / 2) (#79)
    by Cream City on Tue Dec 29, 2009 at 11:22:37 AM EST
    because I didn't take it.  I soon realized, in the work world as a manager, how much I had missed and went back and took it on my own.  Then I appreciated it.  It should be required -- if taught well -- as necessary for reading a newspaper, at the least.  I started reading business news daily, not only in my local paper but also the WSJ and other media.  That's all it has taken for decades now to know when to buy a house, when to sell a house, when to spend, when to save (more, as I learned to always save something), and especially when to know that the government is selling nonsense -- and to know to not buy a bit of it.

    Parent
    Of those of us required to take it (none / 0) (#84)
    by Militarytracy on Tue Dec 29, 2009 at 11:32:04 AM EST
    If an MBA was your goal you only had to survive the classes.  Once you got beyond four years you could put those text books in storage, and once you got your MBA you could burn them.  And gee, look where we are now :)

    Parent
    What I should have said (none / 0) (#40)
    by andgarden on Tue Dec 29, 2009 at 10:38:35 AM EST
    is that I didn't understand how the excise tax would be god for individuals. If the argument all along was that it would make wages go up--yeah, that does seem absurd.

    Parent
    Sounds like the excise tax will (none / 0) (#43)
    by oculus on Tue Dec 29, 2009 at 10:42:15 AM EST
    help employers who now must offer competitive health care coverage to recruit good employees.  These employers will be off the hook under excise tax HCR.  

    Parent
    In this current economic climate (5.00 / 1) (#49)
    by Militarytracy on Tue Dec 29, 2009 at 10:48:16 AM EST
    that is going to flounder for years, our employers are going to be looking for ways to cut a cost any way they can.  If you aren't Goldman Sachs or Wall Street, you most likely aren't showing quarterly earnings that aren't setting your hair on fire right now.

    Parent
    I mean, "pay for" the overhaul. (none / 0) (#7)
    by andgarden on Tue Dec 29, 2009 at 08:37:40 AM EST
    And your second sentence is the condensed version.

    Parent
    Since Herbert writes better than I do (5.00 / 5) (#2)
    by MO Blue on Tue Dec 29, 2009 at 08:19:56 AM EST
    Within six years, according to Congress's Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.
    ...
    Proponents say this is a terrific way to hold down health care costs. If policyholders have to pay more out of their own pockets, they will be more careful -- that is to say, more reluctant -- to access health services. On the other hand, people with very serious illnesses will be saddled with much higher out-of-pocket costs. And a reluctance to seek treatment for something that might seem relatively minor at first could well have terrible (and terribly expensive) consequences in the long run.


    Yep (5.00 / 3) (#14)
    by hookfan on Tue Dec 29, 2009 at 09:01:06 AM EST
    The way selected to solve the healthcare crises is to reduce access to health care! Yay!!!!!

    Parent
    AGAIN (5.00 / 3) (#29)
    by Militarytracy on Tue Dec 29, 2009 at 10:06:20 AM EST
    Because it isn't as if that "solution" hasn't been applied to the people to the point that we all look like roadrash.

    Parent
    Takes the breath away, doesn't it? (5.00 / 2) (#38)
    by gyrfalcon on Tue Dec 29, 2009 at 10:36:54 AM EST
    It's interesting this idea of "too much health care" seems to have been dreamed up by people who go stay in the hospital for a few days at the first sign of a bad cold.

    What a theory, health care as Doritos.  Just raise the price and "consumers" will use less of it.

    Parent

    I can't find the link now (5.00 / 1) (#44)
    by andgarden on Tue Dec 29, 2009 at 10:42:17 AM EST
    (sitting on the beach) but Kruhman explained pretty clearly why it's impossible to treat healthcare like bread.

    Parent
    I've read it a few times now (5.00 / 2) (#60)
    by Militarytracy on Tue Dec 29, 2009 at 10:55:22 AM EST
    Here it is. Always seemingly a good read no matter who is debating what on what healthcare outrage day :)

    Parent
    Ha. Sand in the laptop. (none / 0) (#57)
    by oculus on Tue Dec 29, 2009 at 10:53:05 AM EST
    Suntan lotion on the iPhone (none / 0) (#61)
    by andgarden on Tue Dec 29, 2009 at 10:55:39 AM EST
    stole my "g" key!

    Parent
    It's funny how this does not apply to them though (5.00 / 1) (#115)
    by suzieg on Tue Dec 29, 2009 at 05:09:06 PM EST
    with their little inserted exclusion in the bill.

    Parent
    Ambulance to Presidential vacation (none / 0) (#45)
    by oculus on Tue Dec 29, 2009 at 10:43:46 AM EST
    home in Hawaii.  Why?  Child needs stitches.  But child didn't.  Who calls an ambulance instead of hightailing it to urgent care or ER?

    Parent
    The secret service? (5.00 / 1) (#51)
    by Militarytracy on Tue Dec 29, 2009 at 10:48:51 AM EST
    You are probably correct, smart a**! (5.00 / 1) (#59)
    by oculus on Tue Dec 29, 2009 at 10:53:58 AM EST
    I'm like BTD (5.00 / 1) (#62)
    by Militarytracy on Tue Dec 29, 2009 at 10:56:34 AM EST
    I try to stay above .500 smarta$$ verses dumba$$ :)

    Parent
    Glad to see this myth being exploded (5.00 / 1) (#5)
    by ruffian on Tue Dec 29, 2009 at 08:31:35 AM EST
    For all most of us know, the insurance premiums our employers pay could have been going down for the last 10 years. We have no way of knowing what our employers pay, and they have no obligation or incentive to pass along any savings.  The idea that they will do it on their own is just pure fantasy.

    Especially considering... (5.00 / 4) (#8)
    by kdog on Tue Dec 29, 2009 at 08:40:49 AM EST
    the unemployment rate...with unemployment around 10% wages ain't going nowhere but down...even if the health care bill somehow magically reduced healthcare costs...not that I buy that.

    And with the way (5.00 / 5) (#22)
    by TeresaInSnow2 on Tue Dec 29, 2009 at 09:18:44 AM EST
    the government is ignoring the jobs situation, I'm pretty certain the 10% unemployment rate is considered a "feature" rather than a "bug".  Keep unemployment high long enough and people will form a new mindset that they should have no rights, just be freaking glad they have a job at all...and that's just how the corporate world likes it....destruction of worker rights under a Democrat...my, tastes sweet, doesn't it?

    Parent
    One CT that I agree with (none / 0) (#25)
    by Salo on Tue Dec 29, 2009 at 09:31:09 AM EST
    O was send to drive the final nail into the coffin of the workers.

    Parent
    What they should have done (5.00 / 1) (#26)
    by Salo on Tue Dec 29, 2009 at 09:35:27 AM EST
    Is at least offer unions a chance to buy into a PO. That way we would have exactly who supported it and who opposed it. And then we'd know who's who in the party.

    God forbid... (5.00 / 3) (#27)
    by Jackson Hunter on Tue Dec 29, 2009 at 09:43:37 AM EST
    that we utilize the Inheritance Tax to fund a part of healthcare, no let's target instead the overburdened Middle Class, after all, I'm sure they have a few bucks to spare.  They can take the money from their closing bank or mortgage their house that they're 50,000 in the hole on already.

    And of course, Corporations have a long and illustrious history of giving potential profit to their employees.  That's like, really common and everything if you study industrial history.  It was the Corporations that insisted on ending child labor and pushed the 40 hour work week down the throats of the unions, who were nothing but obstructionist commie DFH's who got in the way of the true arbiter of fairness and light, the mighty corporation.

    But hey, the personality cult must be granted it's victory because if non-progressive bills like this fail, we might not get progressive Bills.  Nevermind that LBJ got actual Klan members to vote for the Civil Rights Act, Obama was just Rapunzel locked in her tower unable to affect a thing.  In fact, he's downright heroic and I am pleased that I love him.  Instead of pushing for my ideas I'll just put up pictures of the precious and w*nk to them.  That'll cut unemployment.

    And no, John Cole, you who looked at the landscape in 2004 and still voted for Bush as I guess you enjoyed the needless death of both our soldiers and Iraqis, I will not take lessons about how to be a good Democrat from YOU or the other sundry former republican Bloggers who have embraced Obama.  Maybe that's not a coincidence like what I first thought?  Maybe that's the feature and not the bug.  (To be fair, at least Markos has taken off the blinders a bit and fighting for his beliefs, but he has a long road back to respectability as for a while, and some members are trying to make it there, an Obama 527 as Lambert so rightfully nailed it.  John Avairosis also got burned, and now is nothing but a PUMA.  As is Kos I guess.  LMAO!)

    Jackson

    The plan (5.00 / 2) (#34)
    by mmc9431 on Tue Dec 29, 2009 at 10:33:32 AM EST
    Rather than raising the bar of health care in this country, this bill will drag everyone to the bottom.

    Maybe the Democrats plan is to destroy any semblance of quality health care for everyone so that the public will finally insist on a national health care plan!

    One question: Is the health care plan that Congress has a "Cadillac" policy? And will this plan be stripped like the rest to avoid the excise tax?

    Congressional Health Care (none / 0) (#69)
    by Zorba on Tue Dec 29, 2009 at 11:07:12 AM EST
    Doesn't seem to be, if I understand the current plans for the excise tax.  The "cadillac plans" are those costing over $23,000 per family or $8,500 per individual.  Of the fee-for-service plans available to Congress (and all federal employees), the most costly plan for 2010 is GEHA High Family- total cost is $1217.88/month, or $14,614.56/year (see chart).  GEHA High Individual is $535.49/month.  (There are regional HMO's also available- most are cheaper, some are not.)  So, no, it wouldn't be considered a "cadillac plan."  Of course, Congresspeople also have available to them the use of the Office of Attending Physician, which is a Naval medical clinic in the U. S. Capitol, plus six satellite offices.  Members of Congress can use the clinic for all kinds of care, for a flat yearly fee of $503- that's it, no co-pays, nothing submitted to their insurance companies.  The additional cost of their care in this clinic is subsidized by our taxes.

    Parent
    Layers of this stuff (5.00 / 5) (#37)
    by Stellaaa on Tue Dec 29, 2009 at 10:36:28 AM EST
    This bill has layers and layers of this kind of stuff in it.  All of it, not good.  No one has really looked at any of the resulting consequences.  This is total hodge podge of bad, bad public policy.  It will be a nightmare.  

    And he is playing golf.  WTF.  

    Heh! (5.00 / 2) (#66)
    by Militarytracy on Tue Dec 29, 2009 at 11:00:15 AM EST
    Some presidents golf while battlefields melt and others golf while economies melt :)

    Parent
    And some golf whilst underpants melt. (5.00 / 3) (#78)
    by oculus on Tue Dec 29, 2009 at 11:20:05 AM EST
    They just called him the (5.00 / 1) (#82)
    by Militarytracy on Tue Dec 29, 2009 at 11:26:31 AM EST
    Christmas Eve Bomber on the news, and I know that we need an investigation but do we need to moniker him with that?  It makes him sound dangerous.  I don't mean to make light of him, and I don't want a repeat of his successful failure again.......but sheeesh, seriously!  This guy is the Christmas Eve Bomber but the guys we took out in Yemen who had no media image yet were harmless innocents?  Ima gonna go beat my head against the wall now.

    Parent
    Per LAT, latest terrorist suspect (5.00 / 1) (#86)
    by oculus on Tue Dec 29, 2009 at 11:35:34 AM EST
    had a U.S. visa but no passport.  WTF?  LAT

    Parent
    Golf? (none / 0) (#94)
    by Militarytracy on Tue Dec 29, 2009 at 11:41:54 AM EST
    Stateside intel agencies are having turf wars because the big man is always golfing?  It is very troubling.  That and the fact the Ben Masel can't even smuggle a joint in his shorts because of how well he's flagged :)

    Parent
    Delta/NW and/or (5.00 / 1) (#101)
    by oculus on Tue Dec 29, 2009 at 12:07:09 PM EST
    Amsterdam Airport Schiphol personnel should never have let him on the plane in Amsterdam.  

    Parent
    Some submissions re the naming of the bomber: OT (5.00 / 1) (#88)
    by DFLer on Tue Dec 29, 2009 at 11:37:59 AM EST
    the Tighty-Whitey Terrorist
    the Boxer Bomber
    the Jockeyshorts Jihadist
    the Jimmy Hat Jihadist

    (a plethora of pardons proffered)

    Parent

    Much better!!!!!! (none / 0) (#92)
    by Militarytracy on Tue Dec 29, 2009 at 11:38:30 AM EST
    Check out Greenwald today (none / 0) (#85)
    by oculus on Tue Dec 29, 2009 at 11:34:10 AM EST
    on our five-front war on terror.

    Parent
    I don't want to :) but I will (none / 0) (#89)
    by Militarytracy on Tue Dec 29, 2009 at 11:38:02 AM EST
    cuz I can't bear being stupid.  I'm supposing it does go something like Iraq, Afghanistan, Yemen, Somalia, Sudan, starving Americans bleeding in the streets.....I'M R NEOLIBERAL PIG?

    Parent
    Pigs are fascinating animals (5.00 / 1) (#99)
    by hookfan on Tue Dec 29, 2009 at 11:59:53 AM EST
     I helped raise pigs as a teen. They're smart and would always find creative ways to break out of pens, get into things they weren't supposed to, and left to their own devices would attempt to eat you out of house and home. reminds me alot of our financial sector pigs today, who with their legal pens removed seem to have done the same thing .
       Although you're smart, sorry, you don't qualify as a pig. You're not near greedy enough. =)

    Parent
    Premise is if U.S. would just stop (none / 0) (#102)
    by oculus on Tue Dec 29, 2009 at 12:09:20 PM EST
    threatening to eradicate extremist Muslims whereever they may be, and trying to do so, there would be very few extremist Muslims and, hence, we would be safer.

    Parent
    You hit exactly on it (none / 0) (#105)
    by Militarytracy on Tue Dec 29, 2009 at 12:38:10 PM EST
    as I did.  I think that someone always needs to ask those questions too but his arguments really don't line up.  What spawned our own nation's  religious explosion of late and the rolling back of settled science?  And if Christianity fostered jihadists we'd have them.  We would still perhaps have them if we all had not lived within the framework of laws that we have for the length of our lives.  If only it were as Glenn says, then we could control everything....the whole world.  It just isn't so and the explosion of Muslim Extremism is much more multifaceted than that Glenn, and finding affective solutions...he didn't even touch that.  He just stuck with it is all our fault.  And that's easy to stick with because then that makes it possible for us to simply fix it all by changing our behaviors and actions.  It just isn't true and everybody knows that the only working relationship is one of mutual respect.  Mutual respect is not something that Muslim Extremists teach to anybody.

    Parent
    You forgot about the murder of (5.00 / 1) (#107)
    by oculus on Tue Dec 29, 2009 at 12:43:25 PM EST
    Dr. Tiller.  We do have Christianity-induced radicals, unfortunately.

    Parent
    I did think of him though did not (none / 0) (#108)
    by Militarytracy on Tue Dec 29, 2009 at 12:47:40 PM EST
    bring him up.  He was certainly assassinated for the Crazy Christian cause.  If our laws provided protections to Christian actions like this as the Muslim world often does, I can only imagine that we would have an explosion of explosions and who knows where they would stop in what they would attack with bloodshed and violence?  They certainly have the fervor.

    Parent
    No the starving Americans (none / 0) (#103)
    by cawaltz on Tue Dec 29, 2009 at 12:09:26 PM EST
    bleeding in the streets is what happens when we don't fight them over there so that we don't have to fight them over here. Thus the bleeding

    Since one in 6 people are expected to need food stamps at some point in their life I don't think starving Americans is not entirely unapt. I mean if the money is going to defense it surely ain't going to be utilized for social programs or health care. The money has to come from somewhere.

    Parent

    Oh, believe me (none / 0) (#106)
    by Militarytracy on Tue Dec 29, 2009 at 12:41:58 PM EST
    I'm extremely disappointed...No, I'm extremely pi$$ed that this administration addresses one threat to the people but is willing to allow you all to go to the dogs in another different way that they are fine with.  It makes the efforts that this family puts forth to seemingly provide actual protection for corporate muscle and not Americans at all.  But if we don't address Muslim Extremists they aren't going away either.  I can only do so much and argue and vote for the rest.

    Parent
    Makes him sound dangerous?? (none / 0) (#112)
    by jimakaPPJ on Tue Dec 29, 2009 at 01:45:47 PM EST
    Good grief, MT. He tried to blow up a commercial jet and failed only because he screwed up the trigger/fuse.

    Parent
    Haw! (none / 0) (#91)
    by gyrfalcon on Tue Dec 29, 2009 at 11:38:30 AM EST
    Comment of the day, even though it's barely past noon.

    Parent
    not a penny will go to workers (5.00 / 3) (#93)
    by Dadler on Tue Dec 29, 2009 at 11:40:21 AM EST
    sorry, but the entire POINT of capitalism is to hire as few people as you can, pay them as little as you can, and make as much profit as YOU can.

    that is how capitalism works, that is how it is supposed to work. the only money that will go to workers for wage increases is money from employers who are unusually generous, which would amount to maybe, at most, 5 in a 100 employers, if that.

    money matters more than people in this country. that is our reality.

    My husband, a papermill (none / 0) (#113)
    by oldpro on Tue Dec 29, 2009 at 02:11:58 PM EST
    union president and negotiator, always said that "if they could make a profit by making paper out of me, they would."

    He wasn't kidding.

    Parent

    TL and Other Principled Progressives (none / 0) (#3)
    by azhealer on Tue Dec 29, 2009 at 08:22:20 AM EST
    Time to join together and create the "START OVER COALITION".

    We can find some common cause with those we have disagreements on--- let there be an honest and open debate... and our ideas will win.

    Enough of this corporatist takeover of our lives ---

    The Mercer study (none / 0) (#6)
    by Steve M on Tue Dec 29, 2009 at 08:37:28 AM EST
    has been characterized differently elsewhere (as a study of what companies that have already reduced benefits plan to do) so someone is describing it inaccurately.

    At least the Mercer study, if it says what Herbert claims, is a real piece of evidence.  The other attacks on the excise tax, by BTD and others, have been pure know-nothingism, I'm sorry to say.  "Virtually every policy expert in this area concludes that wages will go up... but I just know they won't!"

    Know nothingism? (5.00 / 2) (#11)
    by Big Tent Democrat on Tue Dec 29, 2009 at 08:46:13 AM EST
    My gawd. Let me ask you this question, Mr. Expert, what has been the correlation between GDP growth and median income levels?

    Hint - it ain't 1:1.

    BTW, name ONE actual policy expert in the field of LABOR economics who says "wages will go up 1:1." Jon Gruber is a health economics expert, in case you do not know that.

    Indeed, link to those "experts" now please so that we can get past your platitudinous nonsense.

    Your approach is absolutely an embrace of a different sort of "know nothingism," that which embraces the "expert" who says what you believe.

    To be honest, I have not consulted experts on this because I have lived in this country for the past 40 years, including experiences negotiating for management new collective bargaining agreements.

    Now, it is absolutely true that unions bring more negotiating power than your run of the mill employee who has no clue and no chance in negotiations - they take the offer or they don't. But  even unions suffer from a lack of bargaining power now. This is not the era of unions with real power. They can fight at the edges, and mostly in the political arena - on bills such as this one.

    I am not one to get into name calling with you (of course I am willing to with others) but your blind adherence to a set of talking points on the excise tax is truly know nothingism.  

    Parent

    On your side, (none / 0) (#13)
    by andgarden on Tue Dec 29, 2009 at 08:48:52 AM EST
    Except (5.00 / 3) (#17)
    by TeresaInSnow2 on Tue Dec 29, 2009 at 09:09:54 AM EST
    Atrios agrees with Herbert that the EXCISE TAX is the worst part of the plan?  

    No.

    The worst part of the plan is mandates without real cost controls.

    Parent

    The tax IS a cost control (5.00 / 4) (#24)
    by Dan the Man on Tue Dec 29, 2009 at 09:28:25 AM EST
    When they talk about cost control, you thought they meant lower premiums due to lower profits for the health insurance companies.  But what they really meant was insurances will pay out less because you'll be getting junkier insurance.  The insurance companies are controlling the cost by making us get less.

    Parent
    But (5.00 / 4) (#110)
    by TeresaInSnow2 on Tue Dec 29, 2009 at 01:11:54 PM EST
    junky insurance doesn't mean they'll charge lower premiums.

    And maybe the provision that insurance companies have to pay out 85% to healthcare costs will occur to you as a cost control to prevent over-inflating premiums?  No.  All insurance companies have to do is increase payouts to doctors, then raise premiums because of "increasing medical costs" and voila!  increased profits.

    And what this will in turn do is increase the difference between what insurance companies pay providers and what Medicare and Medicaid pays, thus, likely even further decreasing the number of providers who accept Medicare and Medicaid.

    Parent

    Politically speaking, yes (none / 0) (#21)
    by Big Tent Democrat on Tue Dec 29, 2009 at 09:16:01 AM EST
    In terms of policy, the excise tax is worse than the mandate.

    Parent
    Well you're right (none / 0) (#32)
    by Steve M on Tue Dec 29, 2009 at 10:27:46 AM EST
    it doesn't take an expert to know wages will not go up 1:1.  Certainly not in the short term, at any rate.  But I didn't realize that was the debate we were having.

    Indeed, if we are to credit Herbert's interpretation of the Mercer study, only 16% of employers will raise wages AT ALL.  The other 84% will just unilaterally slash their health care coverage and offer nothing in return.

    If you want to reject Herbert's silly claim and simply go with "most workers will get increased wages, but it won't be 1:1" then that's a reasonable position.  But if we're in a situation where the compensation being paid to workers far outstrips what they could achieve through their actual bargaining power, and the only way we can maintain that situation is by bribing employers with massive tax subsidies to incentivize the provision of Cadillac plans that serve to drive up health care costs across the board, that's a status quo I doubt we can maintain in any event.

    Parent

    It sems quite likely to me (5.00 / 3) (#36)
    by andgarden on Tue Dec 29, 2009 at 10:35:12 AM EST
    thatin many if not most cases, wages will not be increased at all. What would be the incentive, except maybe in a union negotiaton, to do so? Clearly it would never happen in an economy like this one.

    Parent
    No idea dude (none / 0) (#41)
    by Steve M on Tue Dec 29, 2009 at 10:41:18 AM EST
    Why aren't employers unilaterally cutting compensation, since workers have no leverage?  Why does any non-union worker ever get a raise?

    Parent
    I'm not buying (5.00 / 3) (#48)
    by andgarden on Tue Dec 29, 2009 at 10:47:28 AM EST
    when you "distort" the health insurance market across the board in this way, everyone has the same excuse at the same time. I think the wage picture for most Americans over the last 30 years undrcuts your point.

    Parent
    Expectations and inertia (5.00 / 2) (#53)
    by Big Tent Democrat on Tue Dec 29, 2009 at 10:49:47 AM EST
    You really like to play the Know Nothing on this.

    Have you read anything on wage stagnation of late?

    Parent

    Seriously? (5.00 / 3) (#70)
    by sj on Tue Dec 29, 2009 at 11:07:17 AM EST
    I live in the IT world and my wages have been completely stagnant for 4 years.  Adjusted for inflation, they have gone down.  And I've been able to maintain my income only by going the contract route rather than permanent hire.  And the trend is to layoff the more highly paid, experienced staff and either hire foreign contractors at a low rate or offshore projects completely.

    Of course, one gets what one pays for, but the stockholders make out very well.  Customers may suffer from a shoddy product, but stockholders do well.

    Oh sorry, I forgot.  The consumers may suffer.

    Parent

    Not sure how you have been effected (5.00 / 5) (#104)
    by MO Blue on Tue Dec 29, 2009 at 12:25:34 PM EST
    over the last ten years.  But I do know how the average (non-executive, non-union) worker has fared over the last ten years here in MO. We have seen our compensation reduced each and every year. Employers have increased the amount the employee must pay of  their insurance premium and reduced coverage. Higher premiums, higher co-pays and higher deductible each ad every year. Employees realized negative annual income as their higher premiums far exceeded their meager salary increases.    

    Parent
    By the way (none / 0) (#46)
    by Steve M on Tue Dec 29, 2009 at 10:45:43 AM EST
    this is exactly what I mean by "know-nothingism."  Never mind what the economists say, never mind the empirical evidence that justifies the CBO and JCT analysis - none of that matters because people "feel" that wages won't go up at all.

    In thread after thread I see commenter after commenter declare that you'd have to be an idiot to think wages will ever go up.  Based on nothing, of course.  I'd like to see just one person who has done the research and grappled with the evidence and can explain why they disagree, as opposed to this folk wisdom that just gets recirculated around the echo chamber day after day after day.

    Parent

    What empirical evidence? (5.00 / 2) (#52)
    by Big Tent Democrat on Tue Dec 29, 2009 at 10:49:02 AM EST
    please point to it. what we have is "assume a can opener" evidence.

    I will not claim to have SPECIFIC evidence to support my view as there has never been a tax on an employer based worker benefit to my knowledge.

    I DO point to the fact that wages have been stagnant despite GDP growth, which points to unequal bargaining power between capital and labor.

    Parent

    How much (none / 0) (#63)
    by Steve M on Tue Dec 29, 2009 at 10:58:40 AM EST
    of the anemic growth rate in real wages has been attributable to the fact that we provide employers with a massive tax benefit if they provide additional compensation in the form of health insurance rather than wages?

    Parent
    I do not know (5.00 / 1) (#67)
    by Big Tent Democrat on Tue Dec 29, 2009 at 11:00:45 AM EST
    In my view, very little. the tax preference for employer based health insurance is not of recent vintage.

    Parent
    That's a crock (5.00 / 2) (#90)
    by cawaltz on Tue Dec 29, 2009 at 11:38:17 AM EST
    since the majority of the companies providing those benefits(that they are getting the tax break for) are increasingly passing on the cost of the health insurance on to their employees or switching to high deductible plans that cost the employee more out of pocket before they can access them.

    "Large employers aren't stopping coverage," says Jim Branscome, survey statistician for the Agency for Healthcare Research and Quality, which conducts the annual survey. "But what they're doing is passing on more of the cost of insurance to their workers."

    http://online.wsj.com/article/SB115646182399145004.html?mod=economy_secondary_stories_hs

    Parent

    Got a chart of real wages handy? (5.00 / 2) (#54)
    by andgarden on Tue Dec 29, 2009 at 10:50:18 AM EST
    What? (none / 0) (#42)
    by gyrfalcon on Tue Dec 29, 2009 at 10:42:14 AM EST
    Can you try this again?  I literally have no idea what you're getting at.  From what I understand of your position, I don't think I agree with it, but I can't tell for sure because I can't follow your argument in this paragraph.

    "if we're in a situation where the compensation being paid to workers far outstrips what they could achieve through their actual bargaining power, and the only way we can maintain that situation is by bribing employers with massive tax subsidies to incentivize the provision of Cadillac plans that serve to drive up health care costs across the board, that's a status quo I doubt we can maintain in any event."

    Parent

    Let's try it this way (none / 0) (#50)
    by Steve M on Tue Dec 29, 2009 at 10:48:30 AM EST
    If employers have the power to unilaterally cut benefits with no negative repercussions, why are they sitting around waiting for the excise tax to get passed?  Why don't they cut those benefits right now and generate higher profits?

    What percentage of the average worker's wages and benefits are being paid to him not because of negotiations or competitive pressure, but simply out of the generosity of his employer's heart?  And how do you know?

    Parent

    If I were an employer, I would kill for (5.00 / 1) (#58)
    by andgarden on Tue Dec 29, 2009 at 10:53:18 AM EST
    "the taxman made me do it" as an excuse.

    Parent
    Who needs an excuse? (none / 0) (#68)
    by Steve M on Tue Dec 29, 2009 at 11:05:29 AM EST
    I thought the employees had no bargaining power.  Who cares if there's a good excuse?

    This scenario of a nation of employers paying their employees more compensation than the market requires them to, year after year after year, waiting patiently in hopes that the government will give them an excuse to finally slash their employees' compensation, is more than I can handle.

    Parent

    False bifurcation (none / 0) (#71)
    by andgarden on Tue Dec 29, 2009 at 11:08:08 AM EST
    It's not the case that employees have no power, it's that they don't have much.

    Parent
    Just barely enough power (none / 0) (#73)
    by Steve M on Tue Dec 29, 2009 at 11:12:05 AM EST
    to sustain this massive amount of compensation employers are handing out in excess of what the market requires them to, year after year after year, and infinitely onward into the future UNLESS the government provides employers with a fig leaf of an excuse.  Sorry, ridiculous.

    Parent
    Ridiculous is the idea (5.00 / 3) (#75)
    by Big Tent Democrat on Tue Dec 29, 2009 at 11:15:21 AM EST
    The wage CUTS are not perceived differently than wage increases.

    Ridiculous is the idea that expectation do not effect behavior.

    Ridiculous is the idea that you are floating.

    Indeed, let's understand the argument you are making - the minimum wage is pointless as workers could bargain for AT LEAST that.

    The Cato Institute happily awaits your subscription.

    Parent

    I don't follow (none / 0) (#81)
    by Steve M on Tue Dec 29, 2009 at 11:23:33 AM EST
    Presumably, the minimum wage exists because some people, if left to the mercies of the market, would be paid an amount less than the minimum wage otherwise.  I don't really follow your criticism.

    Parent
    the mercies of the market (none / 0) (#97)
    by Big Tent Democrat on Tue Dec 29, 2009 at 11:49:36 AM EST
    You argue, will transform 1:1 employee health care benefits for wages.

    If the natural level of wages are always the result of the labor market forces then why do we need a minimum wage? Won't workers get at least that anyway?

    Or is it your theory that it is only in THAT part of the market that workers are at a bargaining disadvantage? Heck, by the theory of transference of health care benefits into wages, it is amazing that the minimum wage impacts anyone - seeing as how most minimum wage workers do not get health care benefits.

    Parent

    Pffft (5.00 / 1) (#76)
    by andgarden on Tue Dec 29, 2009 at 11:16:51 AM EST
    In the real world, employers will send out emails in unison, explaining that because of healthcare reform, as of some date, your PPO will be swapped out for an HMO. What's new is that this will happen everywhere at the same time.

    Surely you must realize this.

    Parent

    I do realize (none / 0) (#80)
    by Steve M on Tue Dec 29, 2009 at 11:22:41 AM EST
    quite a bit about the behavior of employers in the real world... possibly even more than you, my friend, although I wouldn't be so bold as to presume.

    Parent
    So we're at an impasse (none / 0) (#83)
    by andgarden on Tue Dec 29, 2009 at 11:29:36 AM EST
    I can't prove that this will happen, but it seems quite obvious to me. Tell you what, how likely do you think Congress is to require employers to cut their employees a check for the difference if they switch to a cheaper plan because of the excise tax?

    Parent
    They actually have been (5.00 / 2) (#95)
    by cawaltz on Tue Dec 29, 2009 at 11:42:28 AM EST
    thus more high deductible coverage that more opt out of paying for or more costs passed on to their employees or in the case of small business (which makes up about 80% of business) opting out of providing coverage entirely. Did you expect it to be an all or nothing type of transition?

    Parent
    Exactly. Wait 'til Steve sees (5.00 / 2) (#98)
    by Cream City on Tue Dec 29, 2009 at 11:52:05 AM EST
    his children enter the work world.  I am astonished at how few employers today provide benefits to the 20-somethings.  And a lot of them, like mine, have health conditions and need medications that mean they need health insurance.  The result is that they can't go for some jobs they would love or they do so and have to pay a lot for insurance on their own.  It also drives a lot of them out of school by 25 -- the age extension in the bill will help a bit -- because these often are the students who, owing to their health conditions, incur many delays in college and need more time to get to graduation.

    It is a different work world now from what it was when many of us entered it.  

    Parent

    Why do you think they aren't doing so (5.00 / 4) (#96)
    by Cream City on Tue Dec 29, 2009 at 11:46:49 AM EST
    and haven't been doing so already?  Actually, it is you who have been doing so to us.  You are my employer.  All of you are my employers, as I am a government employee -- the largest group of employees in this country.  And you all have been leading the way for the rest of the employers.

    So we haven't had a raise in years, and even those did not keep up with inflation -- and we lost even more in real wages with the soaring cost of health insurance.  And we got pay cuts this year and next year ("furloughs"), and we're not going to get a raise for years, while we are informed of even more rising costs of health insurance.

    Get real.

    Parent

    In many states (5.00 / 4) (#109)
    by TeresaInSnow2 on Tue Dec 29, 2009 at 12:55:44 PM EST
    Employers cannot give different health benefits to executives than they give to peons.  That's probably why benefits haven't been cut.  Once the 40% tax is implemented, it will likely make more sense to increase executive compensation, and then decrease benefits for everyone.

    Wages HAVE been cut for peons.  Why?  Because the market is allowing it, with the help of do-nothing government.

    Parent

    My current belief on this (none / 0) (#55)
    by Militarytracy on Tue Dec 29, 2009 at 10:51:39 AM EST
    has been the rate of actual economic shock everyone is going through month after month.  Nobody has even moved into a lot of "stabilizing problem solving" because nothing is stable at the moment.  They will though

    Parent
    Yet again (none / 0) (#65)
    by Big Tent Democrat on Tue Dec 29, 2009 at 10:59:53 AM EST
    You are better than this.

    Behavior economics is not new to you I hope.

    Parent

    Whew. Thanks. (none / 0) (#87)
    by gyrfalcon on Tue Dec 29, 2009 at 11:36:24 AM EST
    Now I know I really disagree with you.

    Parent
    Losing a dollar of health care benefit (none / 0) (#47)
    by Big Tent Democrat on Tue Dec 29, 2009 at 10:46:20 AM EST
    for 30 cents of wage increase is a burden - the excise tax will do this to middle class workers.

    Proponents of the excise tax have been dishonest about this. You know this Steve. two folks in particular have been dishonest about this claiming basically a 1:1 relationship -- Jon Gruber, an "expert," and Ezra Klein, a Village blogger.

    I've never claimed there would be zero wage increase as a result (Atrios did though, and he is an economist, if "expertise" is what you are interested in). On the other hand, proponents of the excise tax have very much claimed a 1:1. I wrote about this, as you say, when Klein first made the ludicrous claim (based, stunningly, on evidence that increases in health insurance costs depress wages - as if that proved the inverse.)

    Parent

    Well (none / 0) (#56)
    by Steve M on Tue Dec 29, 2009 at 10:52:25 AM EST
    Atrios is well-credentialed but I sure wish he'd show his work to the same extent as Gruber.

    I'm still waiting for any dissenter to make either a theoretical or an empirical case at all.  All I ever read is "anyone who thinks wages will ever go up is an idiot."  After a while one develops a negative reaction to arguments of that sort.

    Parent

    Have you seen Gruber's work? (none / 0) (#64)
    by Big Tent Democrat on Tue Dec 29, 2009 at 10:58:48 AM EST
    I haven't. I saw the "conclusion" spit out but none of the work. Even the "conclusion" is lacking in specifics. For example, he projects a 230 BILLION dollar increase ($600 per annum per person) for persons who have employer based health insurance as a result of the excise tax. I assume that squares with the assumptions made by CBO and JCT.

    Whether that is correct or not, it does not tell us what Gruber (and CBO and JCT) expect to happen to the value of employer provided health insurance benefits. will it go down by more than $230 billion? I assume, given that he did NOT disclose THAT amount, that it is indeed higher, and perhaps significantly so, according to Gruber's assumptions.

    I use the words ASSUMPTIONS here purposefully. Gruber has no effing clue how much will be turned into wages. Neither do I. But EXPERIENCE tells me that it will fall FAR short of 1:1.

    Gruber tries to rationalize this result by saying that the EXISTING tax code is unfair because it favors employer based plans. Fine. this is also true for home ownership and anything else that gets favorable tax treatment (capital gains?)

    But let's not pretend that the excise tax does not impose a cost on middle class workers. It does. It is dishonest to pretend otherwise.

    the better thing to do is what the House does - tax the rich to provide health insurance to the poor.

    Parent

    That is a better solution (none / 0) (#72)
    by Steve M on Tue Dec 29, 2009 at 11:08:10 AM EST
    from a funding perspective, but not from a cost control perspective.  I believe the popularity of these super-expensive health care plans is a huge factor in our health care cost spiral and we can't afford to keep on propping it up.

    Parent
    Cost control (5.00 / 4) (#74)
    by Big Tent Democrat on Tue Dec 29, 2009 at 11:13:09 AM EST
    The tradeoff is not worth it on policy grounds or political grounds.

    Indeed, if health is the point of all this, this is BAD policy, as we will be providing LESS health care to a lot of people as a result of this policy.

    and of course, if cost control was the main impetus of this bill, the Medicaid expansion would be bigger and Medicare for 55-64 would have been included.

    the BEST cost controls were deliberately sabotaged in this bill and no small part was played by those championing the excise tax.

    The hypocrisy and dishonesty reeks.

    Parent

    Please describe the attributes (none / 0) (#77)
    by oculus on Tue Dec 29, 2009 at 11:19:01 AM EST
    of such a plan.  

    Parent
    Perhaps this tax is the cost control Krugman talks (none / 0) (#9)
    by Dan the Man on Tue Dec 29, 2009 at 08:41:07 AM EST
    about over and over again.

    Makes him seem sort of silly (5.00 / 1) (#10)
    by andgarden on Tue Dec 29, 2009 at 08:45:56 AM EST
    My favorite quote from Krugman: (5.00 / 1) (#19)
    by TeresaInSnow2 on Tue Dec 29, 2009 at 09:12:32 AM EST
    What were they thinking? Mostly, they probably weren't thinking at all.

    LOL, Krugman needs to watch out, throwing stones like that.

    Parent

    One can only guess (none / 0) (#12)
    by Big Tent Democrat on Tue Dec 29, 2009 at 08:47:10 AM EST
    as Krugman has chosen to not actually explain what in the hell he is talking about in terms of "cost control."

    Parent
    Some of us have been saying that (none / 0) (#15)
    by jimakaPPJ on Tue Dec 29, 2009 at 09:04:39 AM EST
    taxes for the MC will go up under Obama's PlanS for a long, long, long time.

    I am glad to see some others coming around.

    I've been against the Senate financing scheme (none / 0) (#16)
    by Big Tent Democrat on Tue Dec 29, 2009 at 09:05:54 AM EST
    since its announcement.

    Are you in favor then of the House bill's financing mechanisms?

    Parent

    I am in favor of chunking both bills (5.00 / 0) (#18)
    by jimakaPPJ on Tue Dec 29, 2009 at 09:12:10 AM EST
    and starting over with a single payer plan based on the Medicare model financed through a national sales tax adjusted to reduce the impact on lower income people.

    Parent
    Fair enough (none / 0) (#20)
    by Big Tent Democrat on Tue Dec 29, 2009 at 09:15:03 AM EST
    I can't argue with that. Unfortunately, single payer is a political impossibility right now.

    Parent
    Then let us first do no (more) harm. (5.00 / 1) (#23)
    by jimakaPPJ on Tue Dec 29, 2009 at 09:21:42 AM EST
    A Hippocratic-like Oath... (5.00 / 1) (#31)
    by kdog on Tue Dec 29, 2009 at 10:26:54 AM EST
    for congress-critters?  Excellent idea.

    Parent
    Jane Hamsher birthed it (5.00 / 1) (#33)
    by Militarytracy on Tue Dec 29, 2009 at 10:31:43 AM EST
    on Fox News :) Of course you can appreciate this as I can because I'll take my truth where ever I can find it right now.....and it gets hard to find right now :)

    Parent
    I googled it (none / 0) (#111)
    by jimakaPPJ on Tue Dec 29, 2009 at 01:36:06 PM EST
    Exactly. Jane and I have the same goals for health care reform. We just differ on whether to scrap this bill and start over, or pass it and push for more later. But she ought not to have sunk this low. Is she really this desperate for a platform?

    Link

    The whole article shows how much the writer has his jockey's in a wad.

    The question I ask is this.

    How can anyone believe there will be another after the public figures out how badly they have been screwed by Congress?? More likely you will see this bill rescinded.

    Parent

    I have NO IDEA what they are (5.00 / 1) (#114)
    by Militarytracy on Tue Dec 29, 2009 at 04:16:11 PM EST
    going to do with this bill, where it could go to die or where it could go to live.  I really don't.  All I know is it is a POS!

    Parent
    It'll continue to be an impossibility (5.00 / 1) (#28)
    by cawaltz on Tue Dec 29, 2009 at 10:01:36 AM EST
    as long as we continue to call it an impossiblity. Perception is reality. You don't hear the Republicans calling their initiatives impossibilities no matter how improbable they are of passing.

    Parent
    If I called it possible (5.00 / 2) (#30)
    by Big Tent Democrat on Tue Dec 29, 2009 at 10:13:56 AM EST
    There still would not be 5 votes in the Senate for it.

    There is a limit to the expanding of the possible in the short term.

    Reconciliation could have gotten you a public option, but never single payer.

    Parent

    You have to fight for what you want (5.00 / 4) (#100)
    by cawaltz on Tue Dec 29, 2009 at 12:00:16 PM EST
    BTD. There is no "easy" solution. Did you not learn that the hard way by voting for the "media darling?"

    At least the single payer movement doesn't toss their hands up in the air and go "woe is me, it's impossible." They are looking for the 5 votes or figuring out ways to turn the 5 votes or even figuring out ways that might lead to what they want via states. If you start out with the belief something is impossible(whichg the proressive side did), it's amazing how quickly that becomes conventional wisdom.

    Parent