Dave Lindorff: Obama Shows His True Colors, Sticking It to the Working Stiffs

If you want to see the unvarnished, true nature of our latest president, you need look no farther than two issues: whether to tax health plans that are deemed "too generous" and whether or how to tax the banks that brought about the financial crisis.

In the case of the health insurance tax, President Obama, after opposing the idea as a candidate when it was proposed by Republican candidate John McCain, is endorsing the Senate bill's approach, which would levy a 40% tax on all insurance plans that cost more than $8,500 for an individual or $23,000 for a family. According to the union movement, such a tax would hit one in four union members, who over years of struggle have negotiated decent medical benefits, often foregoing pay increases in order to provide members with health coverage. It would also hit employers with older workforces, smaller employers, who have to pay more for insurance, and also employers in parts of the country where the overall pay scales and cost of living are higher, such as the Northeast and the West Coast.

Obama says he thinks taxing such plans (which are hardly "Cadillac" in today's health marketplace), would help restrain health inflation. More important, he and the Senate backers of the measure, like that it is estimated by the Congressional Budget Office to bring in $149 billion in revenue over 10 years. (Note that we're talking about just $14.9 billion per year -- a rather minor sum compared to the total U.S. healthcare bill of $2.5 trillion a year, or the taxpayer share of that bill -- $1.2 trillion.)

The claim that taxing health plans that provide better coverage to people will reduce health care costs overall is spurious and based upon the work of ideological free-market economists who take it on faith that healthcare is a good that "consumers" use based upon price. This notion is far from proven and in fact many studies show it to be flat-out wrong. Most people have no idea what the price or cost of any treatment is. Whether they are in a preferred provider plan (PPO) or an HMO, most people don't know what a visit to the doctor actually costs, don't know what their medicine actually costs, and don't know the cost of a stay in the hospital. They only know what their co-pay amount is. Furthermore, when people are sick, they generally go to doctors that they believe will cure them, not to the cheapest doctor. The only thing that taxing better health insurance plans will do is lead employers to cut back on the benefits offered by those plans -- most likely dropping things such as mental health coverage, dental coverage, payment for medical tests, etc., and raising the co-pays. Aside from the basic unfairness of penalizing workers who have fought hard at the bargaining table to win better benefits, this tax plan simply lowers the bar for all people in terms of what quality of health insurance they receive from their employer. When union plans get whacked, you can bet that non-union plans will also get whacked, since the main reason non-union employers even offer health insurance is to help keep unions at bay.

This tax is a body blow to the union movement, plain and simple. (And to anyone who believes that employers who cut back on health plans will offer the savings to workers as higher wages, I have a bridge in New York to sell you, cheap.)

Meanwhile, an alternative proposal to raise the same money to fund government health care programs -- a supplemental tax on all families earning more than $1 million a year -- something that is long overdue in a nation where the income divide between rich and poor has been widening to a chasm over the past decade -- is going nowhere. Obama opposes taxing the rich. So do Senate Democrats.

If it's a choice between taxing unionized workers and taxing the rich, the workers get the shaft from President Obama.

Now let's turn to the banksters. Here, the challenge facing the president is that the American public -- left, right, and middle -- is incensed over the huge amount of money -- trillions of taxpayer dollars -- that has been shoveled out to the banks, with very little increase in lending to show for it, and at the billions of dollars in bonuses that the banks are paying to their top executives and employees -- the very people who made the bad bets and risky investments that produced the current recession/depression. So, this being an election year, Obama and the Democrats in Congress are looking for a way to at least appear to be taking the banks to task and making them repay as much as $120 billion that has already been lost.

Obama's proposal is a tax on the big banks -- either on their profits, or based upon the riskiness of their investments and loans.

That would be fine as far as it goes, but for the fact that bank accountants can easily make profits vanish through accounting sleight of hands, and to the fact that there is no easy way to define what is risky. The chances are good that such a tax would be largely ceremonial.

Meanwhile, rejected from consideration is a proposal that would generate large amounts of revenue while hitting only those who speculate in markets -- primarily the wealthy -- a small tax on stock and bond trades. A tax of 0.5% on securities transactions could raise anywhere from $50-100 billion a year, experts say, and because it would only be levied on short-term trades, it would not impact long-term investors such as people investing in retirement funds at all. It would also have the likely effect of reducing market volatility -- not a bad idea.

Although the U.S. already has a very minor transaction tax of 0.0033%, meaning it long ago crossed that Rubicon, the Obama Administration will not hear of the idea of significantly raising that tax, though it would fall almost entirely on hedge funds and the wealthy, and on the brokerage arms of the big banks, who would stand to see their business -- trading securities for clients -- shrivel. It's not as though this is a particularly radical idea -- there are such taxes in place in the UK (.03%), as well as Australia, India, Austria, Finland, Germany, Singapore, Hong Kong, Korea, Taiwan, and Japan.

Here are two cases where the Obama Administration is clearly showing its true colors: no pain for the wealth and the powerful, and stick it to the working stiff.

This isn't "change we can believe in." It's the same old crap we've been being dished for years.

DAVE LINDORFF is a Philadelphia-area journalist. His latest book is "The Case for Impeachment" (St. Martin's Press, 2006). His work is available at www.thiscantbehappening.net.