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Working In These Times

Monday, Jan 11, 2010, 2:51 pm

Trumka Slams Health Plan, Warns Dems—But Is Compromise Brewing?

BY Art Levine

Richard Trumka speaks on labor issues in Washington, D.C., on January 11, 2010.   (Photo by SAUL LOEB/AFP/Getty Images)

A few hours before he and other labor leaders were scheduled to meet with President Obama over the dubious excise tax on so-called "Cadillac" plans, AFL-CIO President Richard Trumka delivered a toughly-worded attack on the Senate health plan and warned Democrats not to take union members for granted.

As pointed out by the center-right Politico and other news outlets, Trumka offered a clear warning to Democrats to improve healthcare reform legislation and promote a pro-worker agenda -- or risk a 1994-style electoral bloodbath, in part because of potential disaffection among union members.

Comparing the run-up to that election to 2010, Trumka declared:

We swallowed our disappointment and worked to preserve a Democratic majority in 1994 because we knew what the alternative was. But there was no way to persuade enough working Americans to go to the polls when they couldn’t tell the difference between the two parties. Politicians who think that working people have it too good – too much health care, too much Social Security and Medicare, too much power on the job – are inviting a repeat of 1994.

At the same time, some reports indicate that unions may be working for a compromise on the 40% excise tax on high-cost plans that could exempt or limit the impact on those in dangerous professions and older workers, and raise the amount at which the excise tax could begin. As NPR's health blog, Shots, reports today:

But despite the red hot rhetoric that the tax would be a sucker punch to middle income folks, many of whom have given up wage increases to get better health care coverage, union leaders indicate a compromise is what they're after. And that's what they're likely to get in the end.

"This is a policy designed to benefit elites--in this case, insurers, hospitals, pharmaceutical companies and irresponsible employers, at the expense of the broader public," said AFL-CIO's Richard Trumka, forshadowing the classist criticism to come, in a speech at the National Press Club today:

He added that Democrats are "inviting a repeat" of 1994 by pursuing this strategy, conjuring up images of massive Congressional seat loss and likely sending Senate Democratic leaders into fits of anger and Republicans into fits of joy.

But the reality is, compromise is already on the table. This isn't a divorce between labor and Democrats -- far from it. A labor official already told The Hill that the groups are unlikely to knock out a Cadillac tax, but instead hope to cut it back so that fewer labor households would get hit.

"I can assure you the labor movement is fighting with everything we've got to win health care reform that is worthy of the support of working men and women," Trumka said today.

The administration and Senate Democrats say the tax on high-cost plans is the only thing that can begin to slow the high growth of health care costs. The theory is that expensive plans waste resources, so a tax will curb employers from offering such plans to begin with.

But there is a problem with the proposal, some point out, namely that sometimes plans cost a lot because the people in them are sicker or older, or live in areas where health costs are high, like cities.

But the problems with the high-cost tax won't be fixed just by adjustments on who is covered -- the tax itself, new reports indicate, can't raise anywhere near the $150 billion in revenue promised for it. That's because it's based on the "voodoo" economic theory that employers will suddenly lavish their workers with wages when the bosses cut back on health benefits, but as few as 9% of employers  plan to do so.

 So Trumka's critique of the Senate health plan was well-aimed, and, even as possible compromises may emerge, the union movement is going to fight for the strongest possible legislation. As Trumka declared today:

Something different is happening with health care.    On the one hand we have the House bill, which asks the small part of our country that has prospered in the last decade—the richest of the rich—to pay a little bit more in taxes so that most Americans can have health insurance.  And the House bill reins in the power of health insurers and employers by having an employer mandate and a strong public option.     

But thanks to the Senate rules, the appalling irresponsibility of the Senate Republicans and the power of the wealthy among some Democrats, the Senate bill instead drives a wedge between the middle class and the poor.  The bill rightly seeks to ensure that most Americans have health insurance.  But instead of taxing the rich, the Senate bill taxes the middle class by taxing workers' health plans—not just union members' health care; most of the 31 million insured employees who would be hit by the excise tax are not union members. 

The tax on benefits in the Senate bill pits working Americans who need health care for their families against working Americans struggling to keep health care for their families.  This is a policy designed to benefit elites—in this case, insurers, hospitals, pharmaceutical companies and irresponsible employers, at the expense of the broader public.  It's the same tragic pattern that got us where we are today, and I can assure you the labor movement is fighting with everything we've got to win health care reform that is worthy of the support of working men and women.          

Yet Trumka also highlighted the pressing need for Congress and the Democrats to do more to create jobs, and that crisis -- even more so than health care -- is likely to determine the fate of the Democrats in 2010 and beyond. As Trumka noted, decrying the lack of political courage in Washington:

Today, on every coast and in between, working women and men are fighting to join the middle class and to protect and rebuild it.  We crave political leadership ready to fight for the kind of America we want to leave to our children and against the forces of greed that brought us to this moment.  But instead we hear a resurgence of complacency and political paralysis.  Too many people in Washington seem to think that now that we have bailed out the banks, everything will be okay...

We want an entirely different kind of economy. Let's talk about what we need to do.   

We must directly and immediately take on what is wrong— by creating millions of good jobs now, rebuilding our economic foundations and giving working people the freedom to form a union again and make all our jobs good jobs...  

Our political leaders have a choice.  They can work with us for a future where the middle class is secure and growing, where inequality is on the decline and where jobs provide ladders out of poverty.  Or they can work for a future where the profits of insurance companies, speculators and outsourcers are secure.  There is no middle ground.  Working America is waiting for an answer.  We are in a "show me" kind of mood, and time is running out.

Hear and watch for yourself Trumka talking about the labor movement's vision for America:

UPDATE: After the private conference between Obama and the unions, The New York Times reported, the President signalled some willingness to compromise, but it may not be enough for some unions or the primay Congressional advocate for blocking the tax, Rep. Joe Courtney (D-Conn.):

Privately, Mr. Obama and the union officials used Monday’s session to search for a sort of compromise, said a union leader who was briefed on the discussion. This official, who said the tone of the meeting was friendly, said it was clear that there would be some sort of excise tax in the final bill, but that the president “threw out some new concepts” in how it might be designed...

Until now, Mr. Obama has taken a relatively hands-off approach to the specifics of the health care bill, instead leaving them to Congress. But last week, in a meeting with House leaders, he made clear his support for the excise tax, which many economists regard as an important way to bring down health care costs [Note: The Times omits references to prominent economists, such as Princeton's Uwe Reinhardt, who denounce that unproven notion as "nonsense."] The senior administration official, who insisted on anonymity to describe a private conversation, said Mr. Obama made that point at Monday’s session.

“It was a frank conversation about the excise tax,” the official said, adding, “The president was very clear that he thinks this is a critical part of bringing down costs in the long term and bending the curve.”

But in delving into the nitty-gritty of health care negotiations for the first time, Mr. Obama risks alienating members of the labor movement, who worked hard to elect him.

The machinists’ union announced Monday that its executive council had unanimously voted to oppose any health bill that was financed by taxing the value of workers’ existing health plans, and the general president of the International Association of Fire Fighters, Harold A. Schaitberger, accused Mr. Obama of abandoning his campaign promise not to tax the middle class.

“We held President Bush accountable when he made decisions that had a negative impact on our members’ jobs and lives,” Mr. Schaitberger, who did not attend the White House session, said in a statement. “We will do the same with President Obama.”

Mr. Trumka and other union leaders said before Monday’s meeting that they intended to tell Mr. Obama that the tax would be economically and politically unwise. The union officials support a tax approved by the House: a surcharge on couples earning more than $1 million a year...

“Instead of taxing the rich, the Senate bill taxes the middle class by taxing workers’ health plans — not just union members’ health care,” Mr. Trumka said. “Most of the 31 million insured employees who would be hit by the excise tax are not union members.”

On Capitol Hill, some House Democrats agreed. Representative Joe Courtney, Democrat of Connecticut, who has been leading opposition to the tax on high-cost health plans, said he did not see any path to imminent compromise.

“Proponents of the tax minimize the scope of its impact,” Mr. Courtney said. “This is a larger issue than unions. This proposal has a much wider reach than the proponents ever acknowledge.”

At a recent town-hall-style meeting in East Lyme, Conn., Mr. Courtney said, “there was not a union person in the audience,” but people were fired up with concern over the issue.

Art Levine, a contributing editor of The Washington Monthly, has written for Mother Jones, The American Prospect, The New Republic, The Atlantic, Slate.com, Salon.com and numerous other publications.

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