As Jonathan Chait notes this morning (and as Oregonians proved Tuesday), taxing
rich people is a popular way to fund social services. Indeed, every poll on
health-care reform has shown that taxing rich people is a lot more popular than
taxing health-care benefits.
I think taxing health-care benefits is better policy (as it has potential to also control costs), so I've supported it. But if Democrats have to pare the bill back, they should scrap the excise tax.
This is a point that I was trying to make throughout the healthcare debate when Ezra and Yglesias seemed to be so profoundly confused by labor's vociferous opposition to the excise tax.
Labor is an interest group, of course they opposed a tax targetted at their constituents. Just as importantly though they so forcefully opposed the excise tax because for much of the debate the excise tax was the only funding mechanism that seemed to have legs. The House funded their bill through a tax on the rich, such a tax was never in play in the Senate. You can't expect unions to sit idly by while their members are asked to carry the burden of healthcare reform. Spread the pain around a little, I advised, and you're likely to see labor's opposition lessen.
It still amazes me that The White House, Congressional Dems and a host of other observers completely misread how terrible the politics of the excise tax were. When they finally did realize what a mess they had created The White House, Reid and Pelosi proceeded to give labor a deal which contributed to the collapsing public support of the process and the bill.
Here we are scrambling to find a way to put Humpty Dumpty back together again and it looks like now there is finally some understanding developing among the technocrats that dumping on the middle-class is a stupid way to try and get support for your legislation.