Labor vs Ron Wyden

Comprehensive health care reform holds out the promise of saving money over the long-term, but it takes money up front. One natural way to get some of the necessary money would be by curtailing or eliminating the currently existing tax-subsidy for employer provided health care. But since many labor union members benefit from said subsidy, this is not a popular plan with labor leaders. Hence this:

A labor coalition is mounting an unusual assault on a Democratic Senator, Ron Wyden of Oregon, over his proposal to pay for health care in part by taxing health benefits — a proposal for which candidate Barack Obama attacked John McCain. [...]

“The last thing we need is to pay more,” says the ad. “But Senator Ron Wyden would tax the health care benefits we get at work – as if they were income. Taxing health benefits? That doesn’t make sense. Tell Senator Wyden that Oregon families want quality, affordable health care – not taxes on their health care benefits.”

To clarify something, Obama did attack McCain for proposing to eliminate the tax subsidy. But McCain wasn’t proposing to use the money to create a viable universal health care system. That’s a very important difference.

On the merits, I think it’s a little hard to see how Ron Wyden is public enemy number one at the present moment in time. That said, I sympathize with the view that this shouldn’t be our only option in terms of revenue-raising. The Obama administration’s initial proposal to curtail deductions for high-income taxpayers was, for example, a perfectly sound idea—it marks well both on equity, in terms of hitting folks in the high-end, and in terms of efficiency in terms of minimizing economic distortions. There are also ideas out there for higher taxes on public health hazards. Meanwhile, over the medium-term revenues are going to have to be higher than they are now so we’ll probably need some combination of all these revenue measures.