Proposed Tax Cut Could Bump Health Care Spending

Proposals to enact managed care reform, extend prescription drug coverage to seniors and give health coverage to the uninsured "must compete" for funds with President Bush's $1.6 trillion tax cut plan, the Pittsburgh Post-Gazette reports. Democratic pollster Mark Mellman called health care "one of the questions that goes back to the Bush tax cut. Which is more important? A tax cut to the wealthy or providing health insurance to the uninsured?" The Post-Gazette reports that the "clash between money and political priorities" will be most visible on the issue of the uninsured, as a large-scale expansion of health coverage would be costly. The issue of prescription drugs for seniors, while "politically appealing," is also "highly contentious" and requires "a significant federal investment." The Post-Gazette reports that action is more likely on the "politically popular" issue of patients' rights, which has been endorsed by the president and also "carries the advantage of requiring little federal money" (Smolkin, Pittsburgh Post-Gazette, 2/11).

The New York Times reports that Democrats may try to weave the tax issue into an "overarching debate about policy choices," as polls have shown that issues such as health care and prescription drugs are "still more popular" than tax cuts. Many lawmakers are calling for a "slow and thorough debate" on tax cuts, saying that Congress should examine other budgetary needs before making a decision on tax reduction. Sen. Max Baucus (D-Mont.), senior Democrat on the Senate Finance Committee, said, "We don't have a budget yet. It makes no sense to pass tax cuts or lock in tax cuts without knowing what we are providing for other needs in America" (New York Times, 2/11). Despite their concern over how Bush's tax cut plan would affect other spending areas, Democratic lawmakers have "essentially ... conceded that a big tax cut plan will pass this year," the Los Angeles Times reports. Rep. David Obey (D-Wis.) said, "I do not believe there is a prayer of stopping this" (Hook, Los Angeles Times, 2/12).

Several states are now "grappling with budgetary problems" as a result of "large" tax cuts, leading some state governments to "warn" federal lawmakers that President Bush's large tax reductions could cause similar shortfalls on the federal level. Many state governments are facing deficits brought on by "higher-than-expected" Medicaid costs, according to a survey by the National Conference of State Legislatures. For example, Medicaid costs "essentially wiped out" Texas' $300 million surplus, leading state lawmakers to "question the wisdom" of then-Gov. Bush's 1999 $2 billion tax cut. Congress members have also cited state shortfalls as signs that a large tax reduction might be harmful. Rep. Ken Bentsen (D-Texas) said that a "chief danger" of Bush's tax cut plan is that the projections of a $5.6 trillion surplus over 10 years "make the unrealistic assumption that spending will stay at current levels," even while Bush has proposed spending increases for health care, education and other areas (Root, Ft. Worth Star-Telegram, 2/12).