(yeah, I too would probably rather be writing about the stunning decision to give Obama the Nobel Peace Prize -- but this is important too, so bear with me!)
One of the subsidiary issues in the health care debate involves funding it, and one of the plans causing controversy right now -- especially now that Douglas Elmendorf of the Congressional Budget Office has fallen in love with its presence in the Baucus plan -- is the plan to tax "Cadillac" health care plans that cost above a certain set amount.
Labor doesn't like this because for years it has followed the rules and bargained for (non-taxable) health care plan as part of its compensation package rather than (taxable) cash payments. Many of those people with "Cadillac" plans are middle- and working-class, not wealthy. Taxing their plans hurts them -- and we're going to hear a lot about it from unions. They simply won't be able to compensate for the lost income by trying to make it up in new negotiations -- not in times like these.
But surely some such plans are ripe targets for taxation. How can we resolve the issue?
Simple: Obama just has to keep one of his campaign promises.
Obama's promise, as you may remember from a year ago, is that he would not raise taxes on those earning less than $250,000 per year. That includes the vast majority of union members -- and the ones it doesn't include can probably muddle through on their own even if their health plans get taxed.
So, here's what Obama has to say, out loud, and soon:
"I'm keeping my promise."
In other words, we can tax "Cadillac plans" -- but only for people and families making at least $250,000 per year or more. (As usual, there would have to be a phase-in near that figure, so that someone making $249,999 wasn't better off than someone making $250,000.)
I suggest calling this proposal the "Cadillac hybrid" -- which, coincidentally, is apparently the model of limousine in which Obama travels.
A "Cadillac hybrid" tax on health care won't raise nearly as much money as a simple "Cadillac" tax -- but it will not punish Labor for having played by the rules all these years. Specifically, it won't harm the middle- and working-class union members for whom these strong health care plans are the best aspect of their compensation.
Yes, it means we need to look for additional funding mechanisms -- and that's OK. I know that we want deficit reduction, but we don't need to balance the budget on the backs of already beleaguered union members, no matter how happy it makes Douglas Elmendorf.
There's a principle at stake here: Obama made a promise, and he should make sure that he keeps it.