Message to Unions: Don’t Bargain for a Temporary “Fix” - Push to Eliminate the Excise Tax

Before Scott Brown's win in Massachusetts, Democrats were still foolishly trying to pass health care reform while adhering to the insane 60-vote myth in the Senate. Under this scenario, while I'm disappointed that union leaders could only secure some small improvements to the excise tax and a special carve out for their members, I can understand the necessity of their action. But with the push for a reconciliation sidecar, the political landscape has completely changed. With any deal now only needing a simple majority in the Senate, labor unions should push for a complete elimination of the excise tax, or at least a much more better fix.

The Senate bill’s so-called “Cadillac” tax on employer-provided insurance is both terrible politics and bad policy. Let’s leave aside the extremely faulty, free market economagic claims that the excise tax will magically control health care costs, and focus on its terrible design. It is not even properly designed to do its stated function of taxing generous insurance packages; instead, it just blindly taxes expensive insurance.

The excise tax is, most importantly, a political nightmare for Democrats. It is incredibly unpopular. It is also a direct violation of Obama's campaign pledges not to tax people's health care and let people keep the insurance they have now. Voting for it could be very politically damaging to House Democrats.

Realizing the new political math involved in using reconciliation, labor unions should not try to resurrect some outdated deal they made earlier. Their negotiation position and power has changed dramatically vis-a-vis the Senate.

The reconciliation sidecar strategy already faces an uphill battle. It should only be used to make reform more popular, not less. A deal on the excise tax that exempts negotiated contracts can easily be painted by Republicans as another secret deal to benefit a special interest. It is these special deals and giveaways that have so damaged the health care reform brand. It tarnishes both Democrats and labor unions. That is not what labor or House Dems should want.

If labor unions and House Democrats are unable to completely eliminate the excise tax, they should be able to at least find a much better fix. They can redesign the excise tax to protect union workers, but in a more broad-based manner. For example, having the tax only hit people making over, say, half-a-million a year is one solution. This will provide union members with the same or greater level of protection from the excise tax without Republicans being able to attack it as a deal just for “special interests.”

This change would also have the benefit of making the general idea of the excise tax much more popular for House members. Additionally, it could make labor unions more popular (or at least not cause them to take a big hit in popularity) by allowing organized labor to say that they, in an act of solidarity, fought to make sure every working class American got the same protections from the tax that the unions did.

When something does not work--and this current, corrupt, Rahm Emanuel-driven, insider game, health care strategy hasn't--the right thing to do is a course correction. Don't plow full steam ahead with the exact same strategy. Reconciliation sidecar should not be used to make only the minimum changes to the Senate bill thought necessary to get a “deal.” This shows a tone-deafness to the vox populi, if not a penchant for political suicide. Reconciliation should be seen as a great opportunity to make the bill more popular, and show the American people that Democrats have listened to their complaints.

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