All politicians are deficit hawks sometimes. When a proposed program isn’t to their liking, they sound the alarm: “We cannot burden our children with these massive debts. Other massive debts, sure, of course, but not these!”
So you can’t judge elected officials by whether they demand a dedicated funding stream for everything they support. You can only judge them by what they think is important enough to pass, whether it has a dedicated funding stream or not.
According to the Republican Party, health care for 9 million poor kids and 400,000 pregnant women must be paid for with spending cuts elsewhere. Huge tax cuts for the kids inheriting from the very rich do not require such a “payfor,” even though they would add $239 billion to the deficit over 10 years.
It’s about priorities, people!
On Sept. 30, federal funding for the Children’s Health Insurance Program (CHIP) expired after 20 years of bipartisan support. The program insures children and pregnant women who are not quite poor enough to qualify for Medicaid. That includes 700,000 recipients in New York and 70,000 on Long Island.
Now states are running out of money to operate the program, which costs the federal government about $14 billion a year. State officials say New York might run out of money for CHIP in March.
In Washington, both parties claim to support the program, but Republicans are demanding it be funded with cuts elsewhere. They want to pay for it by slashing the Prevention and Public Health Fund, which helps fight the opioid epidemic. That GOP plan also would scrape up cash by shortening the grace period before people are kicked off Obamacare plans for nonpayment of premiums, and would add a surtax on wealthy Medicare recipients.
Right now, that version can’t pass in the Senate, where it would need at least eight Democratic votes. And it’s worth noting that both the original CHIP bill in 1997 and an expansion in 2009 were passed with tobacco tax increases that took the per-pack levy from 24 cents to $1.01 to fund CHIP. Those increases raise $11 billion a year.
The federal government hasn’t stopped charging that tax. Republicans have simply stopped acknowledging the fact that this revenue funds most of the program’s costs, as they demand cuts elsewhere.
But no such cuts are being required by those same Republicans as they fight in the House to end the estate tax on the very wealthy. In fact, the GOP has dropped the usual trade-off meant to pay for much of the cost of estate-tax repeal that has accompanied every serious effort to erase it in recent memory: Ending the step-up basis.
Under current law, when we die, rich or poor, our heirs never owe capital-gains tax on the total value of what they inherit from us as of the day we died, even if it’s mostly profit. If you bought $100,000 worth of Amazon stock in 1997 and it’s worth $30 million when you die, your heirs will owe capital gains only on the value accrued above that $30 million when they sell. Responsible plans to end the estate tax have always included a provision to impose a capital-gains tax on those huge profits by ending the step-up basis and taxing all heirs, rich or not, on the full profit realized when such assets are sold.
Even President Donald Trump’s campaign plan included levying a capital-gains tax on these profits. But the plans he’s pushing now don’t. Nor do they provide some other source to pay for the $239 billion in lost revenue over 10 years from ending the estate tax.
Some things are so sacred that you don’t quibble over cost. To the Republicans, the inheritances of rich kids are one of those things. And health insurance for poor ones just isn’t.
Lane Filler is a member of Newsday’s editorial board.