Sen. Max Baucus Proposes Taxing Health Benefits of Middle Class

Cross-posted in Francis L. Holland's Diary.

Some Congressional Democrats simply don't seem to know how to make candy out of the sugar they have been given. Now in control of the House and the Senate, and with Obama in the White House, they want to tax employees' health benefits, even for the middle class, thereby infuriating the very constituencies that put them in office. 

The Washington Post reports today:

The White House is caught in a battle within its own party over how to finance a comprehensive overhaul of America's health-care system, as key Democrats advocate a tax plan that could require President Obama to break his campaign pledge not to raise taxes on the middle class.   WaPost 

Taxing the health care benefits of the middle class would effectively decrease already stagnant wages and negate any benefits that might have come from the middle class stimulus plan.  It would effectively increase instead of decrease the cost of health insurance for most Americans. So, it's a boneheaded idea that would predictably result in Republicans winning back the House and Senate in 2010. 

What ever happened to  Obama's promise to raise taxes on the top 1% of income, while providing new benefits for the working class?  Why would raising taxes on the middle class suddenly seem more logical than raising taxes on the rich?

The smarter idea is that which Obama ran on: increase only the taxes of the rich. This could include people whose health care packages are worth $25,000 or more and who earn more than $250,000 per year. And then increase income taxes on wealthy back to where they were when Ronald Reagan was president. These steps would raise money without slapping the faces of those who voted for Obama and who will decide who stays and who leaves in the next Congress.

If this ill-begotten idea is enacted, the Republicans are certainly going to run on tax increases in 2010. Why give them a new and potent cudgel for their television commercials?

Obama should draw a line in the sand, promising to veto any health care plan that taxes the health care benefits of the middle and working classes.  If he does so, he will strengthen his image as an advocate for the working class, while preventing the Democratic Congress from committing electoral suicide.