By Jonathan Weisman and Michael A. Fletcher
Washington Post Staff Writers
Wednesday, January 24, 2007
In an overture to the new majority in Congress, President Bush strayed into Democratic territory last night with proposals on health insurance, gasoline efficiency and even the first real tax increase of his presidency.
Rhetorically, the shift was remarkable. The language he used to sell his health plan dwelled on the plight of the uninsured and on a tax on the well-to-do, a pitch that Republicans have dismissed as class warfare. His energy plan asked for new authority to raise automotive fuel-efficiency standards, a regular theme of the Democratic Party's liberal wing.
But senior Democrats for the most part responded with icy disdain, saying that Bush may be on their turf, but that he continues to clutch his conservative, free-market principles with little regard to the radically changed political terrain he faces.
Democratic displeasure stemmed from both the substance of the proposals Bush laid out and the way he did it: Fully formed, without prior consultation and without an acknowledgment of who controls Capitol Hill. If White House officials want to work with Democrats to reach a compromise, then take credit, that would be fine, Democrats said yesterday, before the speech. But they blanched at being dictated to on policies vital to their constituents.
"For some people to think this is bringing us together, I don't get it," said House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.), whose panel will decide the fate of Bush's centerpiece proposal on health insurance and taxes. "To be honest with you, I feel sorry for the guy. It seems to me somebody ought to talk to the guy and see if he can get some goodwill going for him down here."
In calling for an end to the Iraq war and a new emphasis on economic equality, Sen. James Webb (Va.) implored Bush to embrace those Democratic priorities. "If he does, we will join him," Webb said in the Democratic response to the State of the Union address. "If he does not, we will be showing him the way."
White House officials said they are mindful of the new political order in Washington. "Like many before us, we can work through our differences and achieve big things for the American people. Our citizens don't much care which side of the aisle we sit on -- as long as we are willing to cross that aisle when there is work to be done," Bush said in his speech.
But Democrats said they did not see much movement toward them beyond the rhetoric. At particular issue is Bush's proposal to encourage the purchase of individual health insurance policies through tax deductions financed by a new tax on the value of employer-provided health insurance. Under the plan, the government would allow each family to deduct $15,000 a year from its taxable income to offset the cost of health insurance -- and those who file their tax returns as individuals would be allowed $7,500 each. To pay for this tax break, the value of employer-provided health insurance exceeding the deductions would be taxed as income.
White House officials framed the proposal as a progressive plan to help cover the uninsured by taxing those with Cadillac-style health coverage, primarily well-paid workers and executives.
But Democrats did not buy it. Instead, they said they view it as a continuation of Republican efforts to drive workers away from employer-provided health insurance and into the free market. Even some conservatives questioned how it could help the uninsured. The conservative Tax Foundation said 53 percent of Americans without health insurance pay nothing in federal income taxes and would, therefore, get nothing from a tax break on such taxes.
Low-income workers would get a reduction in their Social Security and Medicare taxes, but probably not as large as the White House suggests, Democrats said. Half of those payroll taxes are paid by workers and half by employers. To reach their generous assessment of the proposal for the working poor, White House economists assume that employers would pass on their payroll tax cut to their workers in the form of raises.
"C'mon," scoffed Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means subcommittee on health.
Democrats did marvel that Bush proposed a significant tax boost, but they were not about to embrace what they called a tax increase on the middle class while the president was simultaneously calling for Congress to make permanent the first-term cuts on income and inheritance taxes on the super-rich. The White House said its proposal would affect the highest 20 percent of incomes, starting at around $75,000 to $80,000 a year. That threshold is well above the U.S. median income, but to senior Democrats from high-cost West Coast and Northeastern districts, those are their constituents' incomes.
"I'm all for progressive tax policy," Stark said, " but they are being rather selective here."
Perhaps the biggest problem Bush faces in Congress is the question of trust. Rep. Chris Van Hollen (Md.), the chairman of the Democratic Congressional Campaign Committee, called it a "large credibility gap."
"He's good at identifying the challenges we face as a country," he said. "But he has failed to enact concrete solutions. The challenges he talked about tonight he's talked about for the past six years."
The president's call for an extension of the landmark No Child Left Behind education law might have been expected to be well-received by one of the its authors, House Education and Labor Committee Chairman George Miller (D-Calif.). But in an era of no-growth domestic budgets, Miller was not impressed.
"The task of renewing the law will be made much more difficult if the president's budget fails to provide a substantial increase in funding for schools to carry out their responsibilities under the law," Miller warned.
Staff writer Lyndsey Layton contributed to this report.