By Steven Pearlstein
Wednesday, January 24, 2007; D01
When it comes to domestic economic policy, Bush the Wounded President is much to be preferred over Bush the Decider.
After six years of stubborn inflexibility, President Bush signaled last night in his State of the Union address that he is ready to come to the negotiating table on a range of domestic issues, holding some new and credible ideas that are consistent with his conservative philosophy but open to ideas that aren't.
Yes, it is possible it could be a bluff, a desperate and hollow attempt by an unpopular president to demonstrate that he's still relevant to the policy process. But whether it is or not, the right response for Democrats is to call that bluff, treating it as the jumping-off point for a much-delayed dialogue on domestic policy and seeing how his proposals can be transformed into something better.
Think about it. Here's an oil-man president who, having denied the existence of global warming for almost a decade and embraced increased drilling as the favored energy policy, is now willing to lead the charge for alternative fuels, raise automobile mileage standards and begin a conversation on what to do about global warming.
No, he's not yet come around to a modest carbon tax and cap-and-trade system for CO2 emissions, but now that corporate types have begun to accept the idea, is there any doubt where this all is headed?
This is also an administration that started out arguing that federal budget deficits don't matter and that even the teensiest, tiniest tax increase will destroy the economy. Now he's eager to be seen as a budget-balancer who is open to higher taxes as part of a financial rescue for Social Security and knows he'll have to sacrifice some of his tax cuts to save others.
And here is a president willing to take on members of his own party to celebrate the accomplishment of hard-working Hispanic immigrants, normally the kind of people Democrats like to champion, and give them a path to citizenship.
But the most surprising and encouraging development is that a president who for six years has only nibbled around the edges of health-care issues has weighed in with some bold ideas to expand coverage, rein in costs and bring some fairness to the tax code. And get this: It actually involves raising taxes on the rich and lavishly insured and giving the money to the working poor and the uninsured.
Given that, you'd think Democrats would have welcomed a politically courageous proposal to put a cap on one of the biggest and most regressive features of the individual income-tax code. But instead, they've shifted reflexively into partisan attack mode, mischaracterizing the impacts of the proposal and shamelessly parroting the propaganda from the labor dinosaurs at the AFL-CIO.
"Dead on arrival," declared Rep. Pete Stark (D-Calif.), chairman of a key health subcommittee in the House, hinting at a dark conspiracy to kill off employer-sponsored health insurance.
"A dangerous policy that ultimately shifts cost and risk from employers to employees," said Charlie Rangel, chairman of the House Ways and Means Committee.
Sen. Harry Reid, the majority leader, called it nothing less than an "attack" on American workers.
Worst of all was the five-page memo distributed by Sen. Edward Kennedy to Democratic colleagues that ought to embarrass a man who considers himself the Senate's leading health-care expert -- a compendium of half-truths, unsupported assumptions and outright lies. Kennedy reverted to the hackneyed rhetoric of class warfare, asserting that the president's proposals will do nothing for working families, give new tax breaks to the rich, increase the number of uninsured and encourage everyone to buy less insurance coverage than they should have.
In fact, all of these are almost precisely the opposite of the truth.
The president's health plan would, in fact, put a cap on a $200 billion-a-year tax break that now goes disproportionately to those with the most generous and costly employer-provided health insurance plans. It would redirect a small portion of that break to those who have less generous coverage or those who have to buy their own insurance because their employer does not offer it. For a few million of the roughly 47 million Americans with no insurance, it may also make the difference between being able to afford basic insurance or not.
The fact that some of those who have these rich policies happen to be members of auto or postal unions doesn't change that the president's proposal would make the tax code more progressive, not less. They are the aristocrats of the working class who, like lawyers, investment bankers and journalists, earn more in tax-free benefits each year than uninsured janitors earn in taxable wages. And whatever modest tax increase they might face from the cap on tax-free health benefits, it is certainly less than the tax cuts they got from Bush that Democrats are so eager to rescind.
Almost every health economist agrees that the tax subsidy for employer-paid health insurance is not only unfair but that it also encourages people to buy too much insurance, consume too much health care and pay too much for both. Bush deserves praise for having the political courage to confront the issue.
Now is this the magic bullet that will solve the health-care crisis? Of course not.
Would any real solution also require finding billions of dollars more to subsidize the purchase of health insurance by low-income workers and getting states to reform dysfunctional markets for individual and small group insurance? No doubt about it.
But anyone seriously interested in health reform would welcome the president's proposal as a basis for negotiations, raising public expectations and increasing pressure on the president to embrace more comprehensive reform. Unfortunately, that is not the approach of Messrs. Stark, Rangel, Reid and Kennedy, who apparently prefer demonizing the president and grandstanding on the issue until the next election.
Haven't we had enough of this?