If Rep. Richard Gephardt (Mo.) is the Democratic presidential nominee next year against President Bush, voters will face the starkest possible choice on domestic policy — which may explain why Gephardt came up with his bold new proposal on taxes and health care. [IMGCAP(1)]
Gephardt is calling for cancellation of nearly all of Bush’s enacted and contemplated tax cuts — more than $2 trillion worth — and for using the money to pay for a universal health insurance plan that he says will also stimulate economic growth.
The plan makes Gephardt easily the most liberal candidate in the Democratic field when it comes to domestic policy, with not a dollar in his plan devoted to reducing budget deficits or preserving Social Security.
Gephardt needed a big idea to set himself apart from the eight other Democrats running for president. He was in danger of being written off as “yesterday’s man.”
He can’t be ignored any more — and he won’t be, either by other Democrats or by Republicans, whose spokesmen already are jibing that “the first thing he would do in office is raise taxes by over $2 trillion.”
Having supported Bush on the Iraq war and risked alienating Democratic loyalists who detest the president, Gephardt stands as a total repudiation of Bush’s ideology, signature domestic policy and growth engine.
Bush, said Gephardt in unveiling his plan, “has no plan, no vision, no answer beyond simplistic, knee-jerk tax cuts for the wealthiest among us.”
Indeed, tax cuts are Bush’s vision, based on the supply-side theory that they will cause the economy to boom, create jobs and ultimately pay for improvements in health care.
Gephardt’s vision, by comparison, is based on vintage Democratic demand-side theory — that growth can be achieved by pumping money into the economy.
Once upon a time, Democrats favored stimulating growth by massive expenditures on public works. Gephardt, however, wants to pump the money into all kinds of U.S. corporations by doubling the government’s tax subsidy for health insurance.
The government currently gives employers a tax deduction equal to 30 percent of their health insurance outlays. Gephardt would substitute a 60 percent tax credit that would be available even to companies that don’t make a profit.
For the moment, the proposal definitely moves Gephardt to the front of the Democratic pack in the so-called “ideas primary.”
It also edges aside former Vermont Gov. Howard Dean, who had been coming on strong among anti-Iraq war Democrats but needs his opposition to Bush’s tax cuts and his advocacy of a national health insurance plan to keep him relevant.
Dean was the first Democratic candidate to attack Gephardt’s plan, calling it “pie in the sky” and not capable of passing Congress.
Dean told me he’s planning to formally unveil his own health plan June 4 in a commencement speech at the Albert Einstein College of Medicine at Yeshiva University in New York and that it would cost “half of Bush’s $1.7 trillion” tax cuts already enacted.
Dean said he hasn’t decided how much of Bush’s cuts he wants repealed in total, but that he’d devote some of the money saved to reducing the federal deficit and funding special education programs for the states.
His health plan would achieve coverage of all Americans by expanding existing government programs — Medicaid for low-income people, Medicare for seniors — and add government subsidies to help small businesses and individuals who can’t afford health insurance.
Sen. Bob Graham (D-Fla.), who’ll announce his candidacy next week, also blasted Gephardt’s plan by comparing it to the failed 1994 proposal drafted by then-first lady (now-Sen.) Hillary Rodham Clinton (D-N.Y.).
Gephardt’s plan may be comparable in trying to guarantee coverage to all Americans, but it’s certainly less complex and government-dominated, relying instead on the existing employer-based health insurance system.
Other candidates haven’t taken on Gephardt yet, but they will. Sen. John Kerry (D-Mass.) is scheduled to come out with his health plan before the end of this month.
Kerry aides said Gephardt’s plan “is a giant tax cut for big corporations without any requirement that they provide more coverage for their workers” and “a total windfall for the biggest employers in the country.”
Indeed, Gephardt views the health subsidy as money that corporations can use to invest in plans and equipment as well as health care — that is, as a means to create jobs.
But rival campaigns all anticipate that the biggest benefits would flow to unions representing workers at major corporations, who would use the firms’ new bounty to bargain for higher wages and benefits.
Gephardt long has been close to organized labor but had not been able to nail down its broad endorsement. This, rival candidates note, couldn’t hurt.
It’s certain that other candidates also will attack the plan for failing to provide as generous a benefit to the unemployed as to employed workers, for failing to include a prescription drug benefit for senior citizens and for failing to encourage cost containment in the health system.
“This will increase health costs,” said a Kerry aide. “If you flood the system with $3 trillion — which is what we think Gephardt’s plan will really cost — providers and insurance companies are just naturally going to go after that money.”
Another complaint sure to emerge is that Gephardt’s plan does nothing to improve health quality. Medical errors have been estimated to cost 90,000 lives a year.
One thing Gephardt’s plan does, however, is put health care squarely on the presidential campaign agenda for 2004. Compared to Gephardt’s $2 trillion or $3 trillion package, Bush is recommending only $89 billion over 10 years to help the low-income uninsured.
After Democrats and Republicans get done fighting next year, maybe something will actually get done for the 45 million Americans who lack insurance.