Senate proposes to overturn Obamacare insurance mandate

  • 17 November 2017
  • NormanL
Senate proposes to overturn Obamacare insurance mandate

The Senate has put foward its version of a tax cut plan, but with one big addition: the Senate would also do away with the Obamacare individual mandate, and shift those resources to help "pay" for its suggested cuts. What does this mean? From the Wall Street Journal:

The insurance mandate is a centerpiece of the 2010 Affordable Care Act, also known as Obamacare. Repealing it is a long-sought goal of Republicans, who see it as onerous. Moreover, eliminating the mandate could free up federal tax revenue because it would mean fewer households buying insurance and thus fewer applying for federal health-care subsidies or for Medicaid.

Republicans plan to use the money freed up by repealing the mandate to direct tax cuts to middle-income households. They want to increase their proposed $1,650 child tax credit to $2,000 per child and lower the tax rates in three brackets, dropping the proposed 22.5%, 25% and 32.5% rates to 22%, 24% and 32%, respectively, according to the proposal, released Tuesday night by the Senate Finance Committee.

Those alterations, which the committee will debate Wednesday, will help Republicans show more tangible benefits to families, and the bigger child credit was a priority for some GOP senators.

Under the changes announced late Tuesday, all of the individual tax cuts and the tax cuts for pass-through businesses would expire at the end of 2025.

That last bit of informaton is critical for the entire tax debate. Only a few of the proposed tax cuts would be made permanent, while others would expire after a decade unless Congress votes to extend them (recall that the tax cuts enacted during the Bush years were temporary...and were mostly allowed to expire under the Obama administration).

What to make of this? From National Review:

Faced with the same budget constraints as the House bill, the Senate bill is moving away from making the tax changes permanent. In 2025, we will see the sunset of the changes to — but not limited to — the standard deduction, the estate tax, the child tax credit, SALT, the pass-through deduction, and individual tax rates.

Sunsetting tax provisions is bad policy, but if you could only make one of these policy changes permanent, the Senate chose the right one: It reduces the corporate tax rate from 35 to 20 percent and makes the change permanent. That’s good for economic growth, that’s good for wages, and that’s good for competitiveness.

There is also the problem that very few in either the House or Senate will openly discuss: how all of these proposed cuts match-up with Congress' decision to increase federal spending, further fueling the national debt. 

...if Republicans and conservatives aren’t ready to fight for serious reductions in government spending, they are taking a serious risk with these individual tax cuts. You can’t perpetually get a European-size government and still pay U.S.-type taxes.

This is exactly right. We're all for tax cuts. After all, it's your money, not the government's. But a government that cuts taxes cannot also continue to spend at its current rate (nevermind the even faster rate it has adopted) and expect anything but a fiscal disaster down the road.

 

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