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“President Joe Biden on Tuesday proposed new taxes on the rich to help fund Medicare, saying the plan would help to extend the insurance program’s solvency by 25 years… Biden wants to increase the Medicare tax rate from 3.8% to 5% on income exceeding $400,000 per year, including salaries and capital gains… Besides the taxes, Biden wants to expand Medicare’s ability to negotiate drug costs, which began with the Inflation Reduction Act.” AP News
Biden also published an op-ed in the New York Times outlining his plan. New York Times
The right criticizes the proposal, arguing that taxing the rich will not stabilize Medicare.
“Mr. Biden is proposing a top federal tax rate of roughly 42%, and higher if he succeeds in his aim to raise the top rate on wages to 39.6% from 37%. Add state taxes in Democratic enclaves and earners could pay well above 50% of what they earn to Uncle Joe. The plan is also a tacit admission that Medicare for All is a fiscal fantasy, since even current Medicare needs a giant tax increase. Imagine the rates required if Medicare covers those under age 65…
“The White House proposal doesn’t address any of Medicare’s fundamental cost drivers, and even pretends it can rescue the program while charging seniors less. The fact sheet says the Administration will ‘lower out-of-pocket costs for drugs subject to negotiation,’ limit some prescription out-of-pocket costs to $2, and lower costs for mental-health visits. More subsidies mean more costs, which mean more taxes and price controls. The only good news is that this plan is a political document with no chance of passing this Congress.”
Editorial Board, Wall Street Journal
“[Biden] claimed that the limited ‘negotiations’ in last year’s massive spending bonanza will ‘reduce the deficit by $159 billion.’ But even when Biden’s analysts originally claimed savings twice that large from price ‘negotiations,’ the Congressional Budget Office wrote: ‘That decrease [projected, but not yet realized] was almost entirely offset by increases in projected outlays for other programs.’…
“But now, Biden wants us to believe that even more government price negotiations — he wants to adopt these even before the limited test project for negotiations has had a chance to prove itself — will save yet another $200 billion… Biden is promising changes that amount to hocus pocus to achieve savings for both government and seniors that history shows will probably never materialize.”
Quin Hillyer, Washington Examiner
“The president’s implication that full benefits can be paid without raising taxes for 98 percent of families has no basis in mathematical reality. Imagine that Congress let the Trump tax cuts expire, applied Social Security taxes to all wages, doubled the top two tax brackets to 70 and 74 percent, increased investment taxes, imposed Senator Bernie Sanders’s 8 percent wealth tax on assets over $10 billion and 77 percent estate tax on estates valued at more than $1 billion, and raised the corporate tax rate back to 35 percent…
“Combined federal income, state and payroll marginal tax rates would approach 100 percent for wealthy taxpayers, and America would face among the highest wealth, estate and corporate tax rates in the developed world. Yet total new tax revenue — 4 percent of G.D.P. — would still fall short of Social Security and Medicare shortfalls that will grow to 6 percent of G.D.P. over the next three decades. Not even halving the defense budget would close the remaining gap.”
Brian Riedl, New York Times
The left generally supports the proposal, arguing that tax increases are necessary to stabilize Medicare.
The left generally supports the proposal, arguing that tax increases are necessary to stabilize Medicare.
“Biden scored a big win during the State of the Union when he appeared to get Republicans to agree not to cut funding for Medicare or Social Security. Republicans have since tried to make it seem as if they never intended to gut the entitlements programs, despite widespread evidence to the contrary… [His] new budget proposal will force Republicans to make their stance on Medicare funding clear for all to see.”
Tori Otten, New Republic
“Biden folded this proposal into claims that Democrats have already vitally improved Medicare’s solvency via the cost-containment measures in the Affordable Care Act and the power to negotiate drug prices for Medicare that was featured in the Inflation Reduction Act of 2022. By proposing to strengthen ‘Medicare’s newly established negotiation power,’ Biden is now exposing and exploiting the GOP’s extremely unpopular stance of solidarity with Big Pharma…
“At the same time, he’s countering Republicans’ bad intent toward Medicare benefits with populist rhetoric about making the rich pay ‘just a little bit more of their fair share’… When Medicare was passed, the wealthiest one percent of Americans didn’t have more than five times the wealth of the bottom 50 percent combined, as is now the case, so it only makes sense that some adjustments be made to reflect that reality.”
Ed Kilgore, New York Magazine
“Some mix of benefit reductions and tax increases is necessary. Think about raising the Medicare eligibility age to 67 to match the existing Social Security retirement age for those born in 1960 or later. Perhaps raise premiums for Medicare beneficiaries with higher incomes. And maybe reduce Social Security benefits for those with higher incomes. Many of the Trump tax cuts expire in 2025. This could be leverage to negotiate tweaks to the payroll tax.”
Editorial Board, Washington Post
“What Republicans mostly talk about is raising the age cutoff for Social Security and Medicare. But while it’s certainly true that people live longer than they used to, and remain in better health, the frame of reference for advocates of this idea is the professional class, to which most Americans don’t belong… Less than 20 percent of all people aged 65 or older still work or seek work. Employers don’t particularly want them…
“A better way to save Social Security? It’s simple: Eliminate the regressive $160,200 cap on payroll taxes… The Lakers pay LeBron James, the highest-paid NBA player in history, $44.5 million. Why do we exempt $44.3 million of that from the FICA tax? Were LeBron to protest that a 15 percent surtax on 100 percent of his income would be unreasonable, we could politely explain to him that that injustice is already visited on 94 percent of his fellow Americans… [Eliminating the cap] would more than cover the Social Security and Medicare shortfall.”
Timothy Noah, New Republic
