OBAMACARE = BIG STATE TAX HIKES

[Devil's Advocate]

OBAMACARE = BIG STATE TAX HIKES

By DICK MORRIS & EILEEN MCGANN

Published on DickMorris.com on November 20, 2009

Anxious to avoid raising taxes too much to pay for their health care
proposals,
the Obama Administration and its Congressional allies hit on a great new
idea:
Make the states raise their taxes to fund the program instead.

Both the House and the Senate bills require that states cover a larger
percentage of their people under Medicaid - a joint state and federally
funded
program. The idea was to force the state to raise their taxes to cover
a big
part of the health care bill for treating poor people. Since the Feds
can
simply charge any increase in spending to their already overdrawn bank
account,
but the states have to balance their budgets, the increased state
spending for
Medicaid will cause sharp increases in state taxes. And the Governors
will get
the blame, not Obama and not the Congress.

The House bill requires states to give Medicaid to those whose incomes
are less
than 150% of the poverty level while the Senate requires coverage up to
125%.
For most states, this is a hefty increase.

In some states, like New York, where Medicaid covers everyone making
150% of the
poverty level already, there will not be any extra required spending.

But not so in California, which only covers 100% of the poverty level.
Were the
House bill to pass, the already fiscally beleaguered state would have to
increase its Medicaid spending on poor people by 50%, at least an extra
$2
billion a year and perhaps more.

In many Southern states, the Medicaid program only covers a portion of
those
living below the poverty level. For these states, the requirement to
cover all
those in poverty and then 50% more will cause enormous increases in
taxes. In
Arkansas and Louisiana, where swing Senators Pryor, Lincoln, and
Landrieu come
from, the cost could exceed $1 billion for each state each year.

Unfunded mandates for state spending imposed from on high in Washington
have
always rankled governors. The Senators and Congressmen in Washington
get the
credit for spreading largesse but the Governors in the states get the
blame for
the taxes that are needed to pay for it.

Since Democrats currently control the vast majority of governorships,
this
process of making their own party members take the rap for raising taxes
is
politically self-destructive in the extreme. But Obama is so desperate
to pass
his health care legislation that he doesn't care what havoc in his party
he
reaps in the process.

The question now is whether the governors of the fifty states,
particularly the
Democrats, are going to sit idly by and let their budgets be destroyed
by the
health care bill.

When the Republicans in Congress insisted on tacking big cuts in aid to
legal
immigrant benefits for disability and other areas onto the welfare
reform bill,
it was the Republican governors who forced them to repeal the pernicious
cuts
the very next year. They did not want to have to raise taxes to make up
for the
withdrawal of federal funding.

Now the Democratic governors face the same situation. If Obamacare
passes with
its expansion of Medicaid benefits - but with no federal funding of the
extra
spending - it is these Democrats and their legislatures that will have
to bite
the bullet and pass new taxes to pay for it.

Since states are already facing mammoth financial problems as a result
of
dwindling revenues and swelling expenditures in the recession, these
additional
burdens could be politically fatal. Unless Democratic governors want to
avoid
the fate of one of their late brethren, former Governor Jon Corzine of
New
Jersey, whose political career was ended in a blaze of new taxes, they
might
want to call their buddies in Congress and ask them to lay off the
unfunded
mandates, particularly during this recession.

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