Margaret A. Bengs
On April 21, California Rep. Henry Waxman, chairman of the House Energy and Commerce Committee, will interrogate the heads of Caterpillar, Verizon, AT&T, Deere and other corporations on their announcement that the removal of a tax subsidy on retiree drug-benefit plans in the new health care reform law will cost them hundreds of millions of dollars – AT&T alone taking a $1 billion hit.
AT&T, which employs more than 46,500 people in California, will consider changes to its “active and retiree health care benefits.” Waxman’s planned inquisition is reminiscent of the February hearings in Sacramento and Washington, D.C., where politicians vented outrage over Anthem Blue Cross’s 39 percent rate hike.
“Breathtaking,” Waxman pronounced it.
What is truly breathtaking is that members of Congress, including Waxman, who preside over federal debt expected to reach $15 trillion over the next 10 years, trillions more in unfunded liabilities for Medicare and Social Security, and a $1.3 trillion budget deficit in the current year before adding the new $1 trillion health care entitlement, dare to offer themselves up as judges of sound fiscal practices.
If we are going to cross-examine Big Business for rate hikes and cost increases, why shouldn’t we grill Congress about Big Government’s unsustainable spending binge and insolvent programs? Is the government morally pure while the private sector is evil? The money taken out of our pockets is the same, whether by a company or an IRS agent. And government’s take makes the corporate cost write-offs in question equivalent to a grain of sand on a San Diego beach.
Federal government revenue has tripled since 1965 (in inflation-adjusted dollars) to over $2 trillion today. While real gross domestic product decreased 2.4 percent in 2009 and corporate profits fell 3.8 percent, taxes on corporate income rose 7.7 percent, according to the Bureau of Economic Analysis.
Our state government is no better at keeping its appetite under control. California led the nation in tax hikes in 2009 with $11 billion in new taxes, according to the National Conference of State Legislatures. We have the sixth-highest state and local tax burden in the nation and among the worst business climates. Yet, we still face another $18.5 billion state budget deficit and a state pension system debt of half a trillion dollars, according to a Stanford University study.
During Waxman’s hearing, as we watch our representatives stare down their noses at corporations, we should recall Congress’ history handling money. When the federal income tax was launched in 1913, the top bracket was only 7 percent, according to the Pacific Research Institute. Five years later the government had jacked it up to 77 percent. That rate was eventually reduced again, but rates for joint filers today range up to 35 percent.
In 1965, congressional budgeters predicted that Medicare would cost $12 billion in 1990. Instead, it rose to $90 billion, according to a Wall Street Journal analysis. Medicaid now costs 37 times more than it did when it was launched.
The idea that taxing the “rich” will pay for the deficits and debt politicians have run up is another pipe dream. Just to pay for the current year’s federal deficit alone, top rates would have to reach 84.9 percent, the Tax Foundation reports, and average tax payments would have to rise by almost $10,000.
And, if you think you’re paying a lot of taxes this year, next year will be worse. President George W. Bush’s tax cuts will expire, so taxes on income, capital gains and dividends will rise – likely to depress investment just when we need it to create more jobs.
While the new health law offers tax credits to small businesses that provide health insurance, it also imposes Medicare tax hikes on those in higher-income brackets, including a new Medicare tax on investment income, as well as taxes on medical devices and other tax increases. White House economic adviser Paul Volcker also just floated the idea of a “value-added tax” – a form of national sales tax – on top of all the taxes we currently pay.
If we are going to hold Big Business accountable for accurate bookkeeping, we should hold Big Government accountable for its broken promises and fiscal recklessness.
In his letter to AT&T, Mr. Waxman proclaimed that the new health care law “is designed to expand coverage and bring down costs.” Five years from now, who will summon Waxman to see if that promise has come true?
As Ronald Reagan once said, “Government is like a baby – an alimentary canal with a big appetite at one end and no sense of responsibility at the other.”