Senate Dems: No tax hikes for healthcare

Senate Democrats have identified a healthcare reform talking point they believe is a winner: No tax increases.

After a two-hour meeting Wednesday, Democrats made a special point to emphasize they will not raise taxes on any individuals, unlike House Democrats.

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“There’s been a lot of talk about the House plan; it has tax increases as pay-fors. We really don’t,” said Sen. Kent Conrad (D-N.D.).

Senate Finance Committee Chairman Max Baucus (D-Mont.) went so far as to describe health insurance subsidies for low-income individuals as tax cuts.

With President Barack Obama and the White House going into campaign mode for healthcare and opponents intensifying their efforts to discredit the Democrats’ plans, August will be a pivotal time for lawmakers to do their part.

To prepare, Senate Democrats are staging gatherings all week. On Tuesday, Obama hosted the entire caucus at the White House for lunch. David Axelrod, Obama’s communications guru, will talk messaging with Senate Democrats Thursday.

Also on Thursday, the six senators trying to devise a bipartisan bill in the Finance Committee – Baucus, Conrad, committee ranking member Chuck Grassley (R-Iowa), Democratic Sen. Jeff Bingaman (N.M.) and Republican Sens. Mike Enzi (Wyo.) and Olympia Snowe (Maine) -- will visit the White House to meet with Obama.

Democrats met for two hours Wednesday to hear a presentations on healthcare from Majority Leader Harry Reid (D-Nev.), Baucus, Sen. Chris Dodd (D-Conn.), who presided over the Health, Education, Labor and Pensions (HELP) Committee’s passage of its portion of the healthcare reform bill, and White House Office of Health Reform Director Nancy-Ann DeParle.

Although the final Senate bill will include new taxes– worth as much as hundreds of billions of dollars – those taxes will not target individuals.

“What we’re working on the in Finance Committee, we don’t have tax increases,” said Conrad, one of the bipartisan negotiators.

“We’re not going to be talking about any broad tax increase,” Dodd said. Dodd also said the Senate has completely abandoned a proposal to cap the currently unlimited tax exclusion on workplace health benefits, which Obama and labor unions strongly opposed. “What’s not going to happen is a tax increase on benefits,” he said.

The House bill as it currently stands would levy a “surtax” on people earning more than $350,000 a year and raise about $540 billion over 10 years.

Senate Democrats highlighting the lack of individual income tax hikes in their bill will come as a relief to nervous House Democrats who pressured their leadership to at least scale back the new tax in their bill to only affect people earning more than $1 million a year.

But by making an unfavorable comparison of the House bill to theirs, Senate Democrats also are taking aim at the House leaders and liberals who support taxing the wealthy to pay for healthcare.

Instead, the six Finance Committee members negotiating in search of a bipartisan deal are looking at deeper spending cuts and a smaller tax increase – and refusing to look outside the healthcare system to find ways to pay for their bill.

Though no agreement has been reached, the bipartisan working group is eyeing a tax on insurance companies that sell health plans worth more than $25,000 a year. Many economists believe such “Cadillac” plans with rich benefits encourage people to consume unnecessary and costly medical services, driving up national healthcare spending in the process.

That tax would raise about $90 billion over 10 years but Conrad said health insurers would not be hit with the cost. Conrad said the tax’s purpose is to discourage insurers from selling the plans in the first place.