Top House Democrat says permanent middle-class tax cuts too costly
WASHINGTON — A top House Democrat said yesterday that tax increases will eventually be necessary to address the nation’s mounting debt, raising a difficult election-year issue as Democrats fight to retain control of Congress.
In the near term, Steny Hoyer, House majority leader, raised the possibility that Congress will only temporarily extend middle-class tax cuts set to expire at the end of the year. He pointedly suggested that making them permanent would be too costly.
Tax cuts enacted under President George W. Bush are scheduled to expire at the end of the year, affecting taxpayers at every income level. President Obama proposes to extend them permanently for individuals making less than $200,000 a year and families making less than $250,000 — at a cost of about $2.5 trillion over the next decade.
“As the House and Senate debate what to do with the expiring Bush tax cuts in the coming weeks, we need to have a serious discussion about their implications for our fiscal outlook, including whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction,’’ Hoyer, a Maryland Democrat, said at a forum on deficit reduction.
In the short term, deficit spending has been necessary to stimulate the economy, Hoyer said.
“I don’t think this is the time to increase taxes,’’ Hoyer told reporters after the forum.
But in the longer term — after the economy has improved — Congress will have to rein in spending and raise taxes to tackle the debt, Hoyer added.
“Raising revenue is part of the deficit solution, too,’’ Hoyer said.
Obama has appointed a bipartisan commission to come up with ideas to reduce the budget deficit and has said that all options must be on the table, including spending cuts and tax increases. The commission is scheduled to release its recommendations Dec. 1.
Republicans, however, have refused to embrace any talk of tax increases.
“It’s now official,’’ Mitch McConnell, the Senate Republican leader, said yesterday. “Top Democrats on Capitol Hill are starting to signal their intention to raise taxes on the middle class.’’
“We’re not going back,’’ he said.
Obama also sparred with the insurance industry — but this time he sounded a conciliatory note, praising insurers for meeting some requirements of the law ahead of schedule. The legislation “is not meant to punish insurance companies,’’ he said, but will bring them millions of new customers. Still, Obama left no doubt his administration would aggressively confront what he called unreasonable premium hikes.
“There are genuine cost drivers that are not caused by insurance companies,’’ Obama said. “But what is also true is we’ve got to make sure that this new law is not being used as an excuse to simply drive up costs.’’
Marking the first 90 days since the bill was signed, the White House rolled out new regulations that explain how several provisions of the law will be carried out, including a ban on insurers denying coverage to children in poor health. The White House called it a “patients’ bill of rights,’’ but Republicans dismissed yesterday’s announcement as a public relations effort.
“This shouldn’t be called a health care bill of rights, but a bill of goods that the American people aren’t buying,’’ said Senator Orrin G. Hatch, Republican of Utah. “There isn’t enough slick advertising, politically crafted events, or artful sales pitches that will change that.’’
Many Republicans, however, agree with at least some of the consumer protections, which were among the least controversial elements of Obama’s $1 trillion, 10-year overhaul legislation. The law’s major benefit — expansion of coverage to some 32 million uninsured — doesn’t come until 2014. So Obama is doing his best to showcase its modest early benefits.
The safeguards announced yesterday apply to most health plans renewing on or after Sept. 23. They include:
■Guaranteed coverage for children with preexisting health problems. The administration estimates that about 540,000 children with health problems are uninsured, and some 51,000 are likely to gain coverage. It’s still unclear whether families will be able to afford the premiums. The law does not limit what insurers can charge.
■A ban on lifetime coverage limits. More than 100 million people are enrolled in plans that impose such limits, the White House said.
■Phasing out annual coverage limits. Starting this year, plans can set annual limits no lower than $750,000. Such limits rise to $2 million in 2012 and will be completely prohibited in 2014.
■Prohibiting insurers from canceling the policies of people who get sick. Unintentional mistakes on application forms cannot be used to revoke a policy. Most health insurance companies have already complied voluntarily.
■Guaranteed choice of primary care doctors and pediatricians from a plan’s network. No referral needed for women to see an obstetrician-gynecologist. No prior approval needed to seek emergency care out of network.
The new rules apply to most health plans, except in cases where they are “grandfathered’’ under the law.