If democrats tax health benefits they will exempt unions

Yes, you read that right. When democrats floated the idea of taxing employer sponsored health care benefits the unions howled, as they have better health care benefits than just about anyone but politicians. Kimberly Strassel calls it a union payoff. That sounds about right.

Mr. Baucus, the Finance Committee chairman who is helping lead the Obama health effort, is still deciding what to include in the bill. But his far bigger headache remains how to pay for this blowout. He and other Democrats have been inching toward the taboo benefits-tax, putting them on a collision course with liberal special interests like unions. Mr. Baucus’s newest solution? A union payoff.

The cost estimates for the Democrats’ health-care reform have by now hit $1.5 trillion over a decade. Goodness knows the architects of this beast — which they hope will include a new “public option” health entitlement — have been creative in dreaming up ways to pay for it. In recent months, the administration and Congress have floated ideas to limit tax deductions, penalize soda-pop drinking, tax alcohol, tax salty foods, further raise the price of cigarettes, tax specific companies, charge for carbon, cut Medicare payments, or even implement a national sales tax.

In each case, Democrats have confronted the bitter reality that the proposed tax is too puny (Dr. Pepper tariffs), too doomed (cap-and-trade revenue), or too politically ugly (a sales tax). Contrast this with the tantalizing reality that requiring Americans to pay taxes on some part of the company health-care benefits they now receive for free could easily raise a half-trillion dollars over a decade. In a choice between a dozen niggling tax fights that could yield uncertain revenue, or a bigger fight over benefits taxes that could yield oodles, Mr. Baucus will take the oodles.

The sting of having my health benefits taxed would have been lessened a bit knowing the people who spent millions to elect Obama were given the shaft. But no, we can’t even have that small consolation.

The attack against Mr. Wyden was an early shot across the Baucus-Obama bow, and it resonated. Mr. Baucus officially floated his plans for a tax this week, only with a surprising twist: His levy will not apply to union plans, at least for the duration of existing contracts. In other words, Mr. Baucus intends to tax the health-care benefits only of those who didn’t spend a fortune electing Democrats to office. Sen. Ted Kennedy, who is circulating his own health-care reform, has also included provisions that will exempt unions from certain provisions.

The union carve-out is designed to allay the fears of many Democrats who remain outright hostile to a tax on health-care benefits, whether out of principle, political fear or union solidarity. Much will depend on the union reaction, which might remain ugly. Manufacturing unions in particular view their health-care benefits as sacrosanct, and even a delayed tax is still a tax.

Of course the king of double-speak says he loathes the idea of taxing health benefits while his minions tell us he’s open to the idea. You know, kind of like the way he says he doesn’t want to do away with private insurance.