The horizon is not so far as we can see, but as far as we can imagine

Shorter Sebelius: Welcome to a regressive tax which will rise faster than wages or inflation

As Heinlein once said, I laugh because otherwise I’d cry (and scream, and pound my head against the wall):

Health and Human Services Secretary Kathleen Sebelius said the White House would be open to co-ops instead of a government-run public option, a sign Democrats want a compromise so they can declare a victory on the must-win showdown.(TL)

Ok, so let’s say they ditch it and include an individual mandate, meaning you are forced to buy insurance from private insurers or co-ops (which won’t be able to contain costs).  What is that?

It is a regressive tax.  Given the likely pathetic subsidies it will hit the working and middle classes hardest as it will be a higher proportion of their income than for the rich.  Since health care costs will not be properly contained, they will rise faster than pay will (they have for decades now).  So every year you will be forced to spend more of your money than the year before and will have less money left over.

A regressive tax which rises faster than pay rises.

This is forced increased spending on domestic financial services, which is what insurance is. I guess that’s Obama’s economic plan as well as his health care plan.  And bonus, since there’ll be no denials and no recessions, you won’t be able to get out of it  in any fashion, except death.

Death and taxes, the first gets you out of the second.  And a health care mandate without effective cost controls is an ever growing tax till you die.


Off to Netroots Nation


Bloggers et al notice that Republicans can win in 2010 and 2012


  1. Howard Dean has pointed out that Obama’s healthcare reform is not a patchwork of options but rather a comprehensive plan, all elements of which are necessary to achieve the objective of controlling costs while providing near universal care at an affordable price. If this plan is reduced to a patchwork, as the trend seems to be heading, then it won’t work, and, as Ian observes, it will create a “rent” for industry and a “tax” on consumers. Since this tax will be extremely regressive, it will be unpopular with a whole lot of people. Moreover, since virtually everyone will be forced to pay this tax by buying health insurance or being penalized, it will be doubly unpopular, maybe even wildly unpopular. as the economic screws continue to tighten further except for a privileged few. Meanwhile, the punditry is mistaking kudzu for “green shoots,” and false expectations are building that are bound to disappoint.

    Somehow the Dems have blown a landslide victory and a mandate for change based on very specific campaign promises. This failure is just wrapping a gift for right wing populist GOP candidates to use to unseat Democrats. And given the economic time bomb that the administration is sitting on due to its asset reflation bet that has prevented necessary debt destruction by transferring toxic assets to the taxpayer, this does not bode well for either 2010 or 2012. Looking at the way things are unfolding, the US is headed for a jobless recovery and anemic aggregate demand, coupled with commodity speculation and another asset bubble due to excess liquidity. The US is still a long way from being out of the woods endogenously. And that’s without an exogenous shock hitting unexpectedly, with lots of wild cards out there.

    Add to this Obama’s punking his progressive base, and it’s not looking good for the Dems going forward. If Obama doesn’t get a grip, things could get a lot uglier. The progressive caucus needs to have a meeting with president and talk some truth to power. If Rahm will let them in, that is.

  2. gtash

    I am beyond screaming and/or laughing. I am simply not supporting Obama anymore. He’s been given slack and he has used it to tie a rope around the neck of my future and my son’s future. I have had enough of him. He has shown the Republicans that government involvement in healthcare is not going to be allowed and that will simply embolden them to try to take down Medicare and Medicaid. They stopped Clinton. They stopped Obama. You might even go back to Truman and say they stopped him too. Don’t flatter yourself into believing “nobody” would dare try to take-down Medicare. They are winning. Why stop here?

  3. Formerly T-Bear

    Disclaimer: I do not live in the homeland anymore and have not for some time. My views are from another perspective.

    It appears the whole “exercise” of “reforming healthcare” is a ruse to contrive a scheme that is assured of systemic failure before it is installed. There are no indications of any thought given towards actually addressing the nation’s healthcare crisis; nary a reference to the workings of multitudinous healthcare systems in place worldwide.

    The nations leaders are satisfied having 37 nations ahead of themselves for survival of the newborn; the induced ignorance upon the population precludes most from full appreciation of their condition. If there were a guaranteed process for unmaking a nation, the US government has definitely found it. From here on out, expect to see people fleeing the failure of politics that has become the national nightmare as it dawns upon the more observant that whatever glue holding the country together has become contaminated and no longer adheres the parts and pieces together.

    In order to develop a viable alternative to the economic collapse the nation finds itself, it is necessary to develop a new economic theory and narrative that is applicable to actual economic process. Some have started this development but the progress is insufficient to the need. The neocon-neoliberal had their Chicago School of Economic Phrenology in place to “intellectually” support the right wing travesty and pilfering of assets of the last 40 years since the Nixon administration and it served the ideology well until reality (and failed economic bubbles) revealed the utter bankruptcy of the Chicago School and the camp following Harvard Business Eugenics School leading the pack of lesser institutions in their economic charades and conceits. A new economic model will in effect require the discovery of an economic philosophy giant the equal of Adam Smith and Karl Marx themselves; a highly unlikely event given the intellectual conformity and shallowness of present academia.

    The present political administration will likely serve only one term, deservedly so, the abject frauds and hollow demagogues they have exposed themselves to be. What replaces them may as well be the quitter governor of Alaska, the sooner the collapse, the sooner the rebuilding can commence, the current edifice is beyond its ability to function, economically or politically, doG help the survivors find the leaders to reconstruct their world, there is little from the current edifice that will perform the needed repairs. Like a drunk, hitting bottom is necessary before resolving the problem can begin; the same is required on a country longtime drunk on power and wealth.

    Ian needs to do an essay on the effects of diminished utility of money and the nature of regressive taxes in his series of instructional presentations. Understanding these is required in seeing political frauds being perpetrated.

    Hope this comment does not kill the post.

  4. Evan

    Although I am a conservative and against the public option or single payer, I strongly prefer both of those to the Individual Mandate.

    There are a lot of people who would feel the same way I think. So if you want to make sure that the Individual Mandate doesn’t become law by itself, reach out to republicans that don’t know about it and make sure everyone on your side also knows about it.

    I’ve debated liberals who didn’t know about it and talked to a conservative who thought I was referring to a persons responsibility to buy THEIR OWN health insurance instead of the government buying it for them. Of course he, as a conservative, was in favor of the individuals having to buy insurance for themselves, he was NOT in favor of the government forcing people to buy health insurance.

    There are also republicans who will be for it, as well as democrats. Democrats who ignore the regressive taxes, and republicans who ignore the loss of economic freedom. Both ignoring that it would mean much higher rates.

    It is so far worse than nothing, it just makes me think that corruption is far higher than I ever dreamed.

    You won’t be able to get conservatives on board in favor of the public option or single payer, but I believe the Individual Mandate is a bipartison issue. Which means, of course, that most of our types of politicians will probably be for it for the campaign contributions, while almost everyone else who knows what it will do will be against it, and only the people can get the politicians to change their mind.

    Please don’t hate me! Just hate the individual mandate if it ends up being all that is left of the bill (which I personally think will happen in the Senate)

  5. >>I believe the Individual Mandate is a bipartison issue. Which means, of course, that most of our types of politicians will probably be for it

    Of course they will. It will bring tens of millions more policyholders to the insurance companies, who will show their gratitude with huge campaign contributions. It’s what the health care industrial complex has meant all along when they’ve talked about reform. Increasing their profits is what reform is all about.

    >>it just makes me think that corruption is far higher than I ever dreamed.

    Well, welcome to the club.

    Third party, anyone?

    Carolyn Kay

  6. tdp

    Ian, I remember reading one of your posts about the financial crisis awhile back. I think it was “How This Will Play Out” or something like that. In it you predicted a right wing populist movement coming to power in 2010 and 2012. Now it seems to be happening right before our eyes. This is just another example of why I am addicted to your posts. Don’t you hate most always being right? Lately anyway? *sigh*

  7. Valley Girl

    Hi Ian- sorry not to have found this before. Real Life was calling.

    You make a great point, which I’ve not seen before. A regressive tax.

    But, you say:

    “Ok, so let’s say they ditch it (public option) and include an individual mandate, meaning you are forced to buy insurance from private insurers or co-ops”

    So, let’s say I’m confused. That would be a good as a guess as any. And, my reliable source on the ins and outs of all details in the bills is taking a much needed vacation sans laptop.

    My impression was that “the mandate” was there in one or both of these: HR3200 and/or Senate HELP committee markup, aside from the co-op issue.

    Can you educate me?

    Apart from all my other objections, I find the idea of “mandatory health insurance” the most objectionable. If it meant that in the context of “Medicare for All”, that’s different. I’m not a teabagger. But, especially based on what I’ve read about the Massachusetts “reform” experience, it seems to hit people least able to pay really hard, and is likely to help create a whole new class of “lawbreakers” whose only offense, really, is that they are living in poverty.

    I hope you do expand what you said in this post, and give more examples- as to how this “regressive tax” may be even more onerous than other “regressive taxes”.

    Thanks as ever.

  8. Valley Girl

    btw, my point in saying “I am not a teabagger” was way too cryptic. I can’t even use the “acceptable” term “progressive” to describe myself anymore, because of how the uh “progressives” have folded. So, I’m a lefty. And, I think mandating people to buy health insurance given that that “health insurance” is provided by the usual suspects (the parasite insurance industry) is the most objectionable part of what is or might be on the table.

  9. Howard Dean should stop lying that “public option” is Medicare. It isn’t. Medicare is available to everyone over 65, case closed. Medicare isn’t means-tested, Medicare isn’t firewalled, and Medicare doesn’t exclude people who already have insurance — all of which the “public option”* does.

    I supported Howard Dean in 2004 and even gave him money, but he’s embarassing himself on this one and should stop.

    NOTE * If we equate the ill-defined and Rube Goldberg-esque contraption known as HR3200 withe public option. Of course, nobody can really define what public option is, not even it’s supporters. I mean, take HCAN’s principals — please! They say “public option” is supposed to be available on Day One — but they never specify Day One of what year. And I’ve seen commenters, completely straight-faced, say “Oh, of course that means January 1, 2013. Ludicrous beyond description, a complete clusterfuck.

  10. Ian Welsh

    tdp: Yeah, as I say to people “I do get things wrong, but my batting average is pretty good. I sure hope I’m wrong on (x), but you might not want to bet on it…”

    Mostly if I am wrong it tends to be the timing. I thought the financial crisis would happen a couple years before it did, for example. Once it became clear in the late 2007 that it was happening, the timing from there I managed to mostly get (for example, the stock market crash).

    But I have definitely gotten some key things wrong, especially on the political front (for example, I was pretty sure Kerry would win.)

    VG: It’s in the house bill, and the HR bill, not sure about the others but I believe it is. Individual mandates is why the insurance industry may be willing to get people to sign on. No better to make money than have the government force people to buy your products.

  11. Just a nitpickulation: your “Sebelius” tag is misspelled for anything that is not a classical Finnish composer.

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