Little Guy Left in the Lurch

The Washington Post

The Great American Debate about how to use the largest budget surplus in history has come to a choice between the giant $1.2 trillion tax cut recently passed by the Senate and the gargantuan $1.6 trillion cut passed by the House. This week House-Senate conferees begin picking a figure between these two. If future historians ever want to illustrate both the pathetic paucity of political debate at the start of the 21st century and the near-bankruptcy of the Democratic Party, they could do no better than to use this example.

A few years ago Democrats championed such things as universal health care. Now that there's money to pay for it, they're rooting for the smaller of the two huge tax cuts instead. The Democrats' own budget alternative put aside just $80 billion for expanded health coverage. By the time Senate Democrats finished compromising on the tax cut, health care was whittled to $28 billion.

The dirtiest little secret about the Roaring Nineties is that average working families gained almost no income, adjusted for inflation, while their health care costs soared. By the end of the 1990s, 44 million Americans lacked health insurance; at the start of the Clinton administration, 37 million lacked it. And by the end, even those families that were insured paid substantially more, through higher co-payments, deductibles and premiums.

Now that the bloom is off the boom, working families could get clobbered. If just one earner loses a job, family income plummets. Even if the family is fortunate enough to have health insurance now, job loss may mean that its health insurance disappears.

Meanwhile, from 1992 through 1998 (the latest year for which detailed IRS data are available), the average income of the richest 1 percent of Americans skyrocketed from about $400,000 to just less than $600,000, and from 12.2 percent of the national net income to 15.7 percent.

Given the needs of working families for affordable health care, using the surplus for a tax cut anywhere near $1.2 trillion is bad policy. Given what's happened to the incomes of working families relative to the incomes of the people at the top, a cut that mostly benefits the people who enjoyed most of the gains of the past decade is morally repugnant. So how can Democrats support a $1.2 trillion tax cut, with almost no room for expanded health care? Why aren't they putting universal health care on the table instead?

Perhaps they still believe that Hillary Clinton's ill-fated plan of 1994 was responsible for the Republican takeover of Congress later the same year. If so, their memories need jogging. Hillarycare sank of its own complex weight -- which also made it a perfect foil for right-wing demagoguery. But it didn't go down without a fight and not without substantial public support at the start. In fact, in late 1993 and early 1994, a majority of Americans listed "universal health care" as the most important unmet public need and their highest priority for government action.

Americans still feel this way. In an ABC survey of 1,021 adults, conducted earlier this month, a majority said they preferred that the budget surplus be used "to provide health care for uninsured people," compared with 42 percent who said "cut my taxes" instead.

Some Democrats have adopted the old-time Republican religion of fiscal austerity, a faith that wouldn't allow spending of the magnitude required for universal health care in any event. Their litany, pushed by the "centrist" Democratic Leadership Council, is that most of the surplus should be used for tax cuts and debt reduction.

These Democrats would spend a bit more on Medicaid for the very poor and expanded health insurance for children not quite poor enough to qualify. But this still would leave a huge health gap. The children's health insurance program reaches only about one-third of the 9 million children eligible for it -- an administrative problem that won't be corrected merely by putting more money in the program. Anything less than universal access leaves out too many families.

To be sure, lowering the debt reduces federal borrowing costs, but so what? As John Maynard Keynes pointed out 60 years ago, public indebtedness per se isn't a problem. The underlying question is what that debt is used for. If the benefits to the public exceed the costs of borrowing from the public, it would be silly not to borrow. And with health care costs soaring and coverage declining, the benefits of universal health care are high indeed.

Bill Clinton proposed his plan for universal health care when the nation was deeper in debt than it is now and faced annual deficits of almost $300 billion. Now we have a surplus even Alan Greenspan thinks is too big, and working families need affordable health care more than ever.

Universal health care isn't only good policy; it's also good politics. Democrats can't fight Bush's tax cut successfully by saying it's just too big. They have to put something else on the table that working families desperately need, and that's more attractive than the Bush tax cut. Nor can Democrats hope to take back Congress 19 months from now, and the presidency two years later, unless they begin to stand up -- loudly and clearly -- for the little guy.

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