Rep. Dick Gephardt is trying to shake the Democratic Party out of its doldrums from 2002 is proposing rescinding the Bush tax cut and replacing it with a universal health care system. Not only would Gephardt rescind future tax cuts, but also would remove existing tax cuts retroactively.
While a bold plan, it’s also boldly idiotic. Said one DNC operative:
"There isn’t going to be a single candidate who disagrees with the goal that Gephardt has laid out," said an operative from a competing campaign. "However, by taking money out of the economy, which is what his plan would do, he will be criticized not only by the right, but by some Democrats, and by any economist worth his salt. The debate prior to this point has been about rolling back the unenacted portions of the tax cut, in large part because it is commonly understood by experts that taking money out of the economy in the midst of a downturn would only exacerbate that downturn."
Gephardt’s plan would optimistically cost $214 billion a year, but that estimate would probably balloon as the population ages and medical treatments expand. Gephardt counters that it would create more jobs and increase both wages and benefits. However, the costs to the economy of taking a large chunk of money from a productive area of the economy into government would likely negate any benefit.
While Gephardt is right that the Democrats suffer from a lack of vision, this plan is a non-starter on many aspects. He’s treating the problems facing many American workers symptomatically rather than strengthening the economy as a whole. The waste and fraud under the current Medicare/Medicaid system, as well as their regulatory costs already burden the economy. Adding to these programs will invariably add to that cost.
On the other hand, Gephardt is generally approaching the idea from the right perspective. Unlike the disastrous Clinton plan of 1994, Gephardt’s plan does not attach nearly as many strings to the healthcare system. His plan involves using corporate tax cuts to achieve more insured workers, an idea that has much merit to it. However, at the same time it will be viewed with suspicion by many on the far left who see corporate tax cuts as a defacto wrong.
Unfortunately for Gephardt, his plan will likely recieve fire from both the Republicans and many Democratic partisans. While it was a bold strategy, it may turn to a political liability for the already struggling Gephardt campaign. However, the idea of corporate tax incentives for increased healthcare coverage, if coupled with regulatory streamlining and more accountability for fraud and waste, may be an idea that will last longer than Gephardt’s campaign likely will.
Whatever short-term economic gain may come from the current tax cut in place (and they are exceedingly few), their long-term economic consequences will be devastating. The best approach I would suggest would be to roll back the vast majority of the current tax cut and use it to finance debt reduction, thereby reducing the interest cross we’re already carrying on our backs, and are about to force future generations to carry with even more weight. Once we undo two decades of Republican debt, then we can press forward with health care reform. Of course, Bush and the GOP’s strategy is exactly the opposite….prolong deficit-spending through tax cuts for their own constituencies so that government is incapable of financing any of the social spending we’ve already committed to, let alone creating a national health care plan.
Gephardt’s plan sounds worth looking at, as our HMO-socialized-medicine health care approach is quickly turning into one of the worst, if not the worst, health care system in the world. Much of our current recession can be traced to out-of-sight growth rates in health care costs, and doling out budget-busting tax cuts is doing nothing to slow that trend or to stimulate the economy. In that sense, Gephardt’s priorities are in the right place short-term and long-term compared to Bush and GOP Congressional leaders.
Ultimately though, we’re not gonna be able to finance anything effectively until we turn around the cycle of Republican debt choking the country’s finances, and that will only come with elected leaders recognizing that policy needs to quit being proactive for a few years. Spending needs to be slowed and tax cuts need to be halted entirely before we’re able to land on two feet and finance any ambitious plans for a productive future. Gephardt may have a good plan to institute five or ten years down the road, but it’s not a good plan for 2003 until we get Republican deficits under control.