I had the opportunity to study modality — the branch of philosophy dealing with possibility and counterfactuals — with Professor Richard Heck in college. It was only one unit in a single course, so I couldn’t say that I have a very sophisticated understanding of all the issues. But one thing I got loud and clear is that the truths of basic arithmetic are necessary truths, it’s not possible that 2 plus 2 could equal 4. Thus we get Marc Ambinder’s attempted fact check of Barack Obama’s criticisms of John McCain’s health care plan:
The truth is that it… well, it might not– although McCain would require Americans to begin to pay taxes on the health benefits their employers provide to them, some analysts think that they’d get more than that money back in the form of the refundable tax credit that McCain is proposing to offset the tax hike. (We’re talking about a tax on the benefit, not the benefit itself, and McCain would not apply the levy to the payroll tax.)
Of course, if employers drop coverage, the money McCain would give employees might not cover the cost of the premiums which average more than $12,000 per family.
As Brad DeLong observes, the fact that McCain’s tax credit maxes out at $5,000 seems relevant here. There’s no “might not” about it — $5,000 is less than $12,000.
The other missing piece here, which we at CAP and CAPAF have been trying to drive home, is that the value of the existing insurance tax break rising in line with the growth in the cost of health care. McCain’s tax credit would, instead, rise in line with the CPI. But since health care costs rise faster than the CPI, the purchasing power of McCain’s credit would erode over time. McCain has structured his plan so that if his critics say “McCain will raise taxes on health benefits enjoyed by millions of middle class families,” gullible media fact-checkers will say “wait a minute, he’d really…,” but this offset will vanish in a couple of years so there’s nothing really very complicated about it.