James Lawrence, editorial page editor of the Rochester (N.Y.) Democrat and Chronicle, is annoyed at a new TV ad campaign that protests plans to raise taxes on beverages. Perhaps his pique comes from the ad’s effectiveness, its punchy “give me a break” message to government officials: Cut your own budgets, and let me make my own spending decisions. We like it.

Lawrence’s critique relies on the what purports to be an argument: See, see, it’s big corporations that are backing the ad, which runs with the nofoodtaxes.com identifier. (The group is actually called Americans Against Food Taxes.) Lawrence blogs his dyspepsia under the headline, “Coalition Heavy on Corporate Interests.”

And the list goes on.

So Lawrence contends this list proves supporters “are not exactly your next door neighbors.”

Funny. I’ve had plenty of next door neighbors just like that, folks who work at places like Minges Bottling Group, Allen Beverages, ALCOA or American Fuji Seal. They’re people who pay their bills and raise families with paychecks from companies that might lose business if beverage prices go up because of taxes. Why, some of them might even hold the opinion that governments should stop looking for ways to raise taxes and instead reduce their spending.

Take a walk around the block, Mr. Lawrence. We bet some of your neighbors might surprise you and agree with the lady in the ad. You know, “Give me a break!”

Subtitle E, Section 1405 in the House substitute amendment to the health care legislation is “Excise tax on medical device manufacturers”

The section states:

SEC. 4191. MEDICAL DEVICES.
(a) IN GENERAL.-There is hereby imposed on the
sale of any taxable medical device by the manufacturer,
producer, or importer a tax equal to 2.9 percent of the
price for which so sold. 

There are exemptions for eyeglasses, contact lens, hearing aids and items purchased by the general public at retail stores, things like tongue depressors. Even with the exemptions, there’s much covered under the bill’s definiion of “taxable medical device,” which “means any device (as defined in section 201(h) of the Federal Food, Drug, and CosmeticAct) intended for humans.”

From the FDA, “Is The Product a Medical Device?”

Medical Device Definition

Medical devices range from simple tongue depressors and bedpans [presumably exempt as noted above] to complex programmable pacemakers with micro-chip technology and laser surgical devices. In addition, medical devices include in vitro diagnostic products, such as general purpose lab equipment, reagents, and test kits, which may include monoclonal antibody technology. Certain electronic radiation emitting products³ with medical application and claims meet the definition of medical device. Examples include diagnostic ultrasound products, x-ray machines and medical lasers. If a product is labeled, promoted or used in a manner that meets the following definition in section 201(h) of the Federal Food Drug & Cosmetic (FD&C) Act it will be regulated by the Food and Drug Administration (FDA)⁴ as a medical device and is subject to premarketing and postmarketing regulatory controls. A device is:

• “an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:
   
  • recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,
  • intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or

intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of it’s primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.

 Funny how health care “cost controls” so easily morph into tax increases.

Wall Street Journal editorial, “Labor’s $60 Billion Payoff“:

Richard Trumka of the AFL-CIO says this and other concessions mean the excise tax will raise some $60 billion less than the original Senate version. Democrats are probably going to charge investors for this political perk, by extending the 2.9% Medicare payroll tax to capital gains for the first time ever—on top of all the other taxes. Just what the economic recovery needs.

Meanwhile, the extra five-year dispensation gives labor lobbyists plenty of time to negotiate a permanent extension for the Democratic union base, even as labor is being armed with an important new organizational tool: Eliminating the secret ballot in union elections might be unnecessary when unions have an exclusive tax privilege at their political disposal. Right-to-work states will also be punished because they are less unionized.

Radio host and attorney Hugh Hewitt also detects a huge giveaway to Big Labor:

Not only does this carve-out outrageously treat nearly identically-situated Americans differently –same income, same health plan, but the union member is spared an enormous tax burden and the non-union member or his company pay it– the impact of the exemption will be of far more consequence and a far greater advantage to organized labor than even the very controversial “card check” proposal.  Imagine the extraordinary advantage that will fall to companies like GM –already a government car company– when it doesn’t have to pay any of the tax but non-unionized car companies do have to pay it.  The same advantage will roll through the economy, with every unionized business benefitting and every non-union company in effect paying a premium for staying non-union.  Even long time opponents of unionization will have to reconsider their stance given the cost advantage now open to companies providing their health insurance through collective bargaining.

Mickey Kaus, a Democrat who supports health care reform, asks, “Is Health Care Reform Now a Vehicle to Promote Unionization?”

It’s one thing to delay until 2018 the tax on “Cadillac” health plans for existing union-negotiated plans, to let the parties rejigger the balance between wages and benefits. That’s a standard “grandfather” clause, letting people whose existing arrangements are disrupted keep them going for a while (though why it should apply only to union pay packages is a good question).

But it’s another thing to extend this union loophole to collective bargaining agreements that haven’t been negotiated yet, or to not-yet unionized firms that organize and then tap into existing collectively bargaining benefit arrangements. That would in effect give workers a tax bonus if they should organize between now and 2018. The government might as well mail a “first time union member” check of $3,000 to every American who successfully unionizes his workplace. As IBD notes, that would be a pretty good substitute for the stalled “card check” legislation, which would try to spur organizing by letting unions avoid a secret ballot (and call in federal arbitrators to set wages).

Looks like the Haiti earthquake has pushed health care off the Sunday news talk shows.

From the White House press briefing today, Press Secretary Robert Gibbs responding to queries from ABC’s Jake Tapper:

Q    If I can just follow up on a question I asked yesterday?  Now that the details of the deal with the labor unions have been made public, why is it fair for individuals who have so-called Cadillac plans that have been negotiated through collective bargaining agreements to be exempt until 2018 from the proposed excise tax, whereas those who might be in the exact same situation but are not part of labor unions — even if they want to be and their company resisted, or many they’re in right-to-work states — why is it fair for one group to not get a tax and others to –

MR. GIBBS:  I would say this.  I’ve asked to see what numbers they can run.  We’re talking about an exceedingly small number of people I think that the premise of your impact would impact.

Q    It’s a big tax, though, 40 percent.

MR. GIBBS:  Well, it’s a 40 percent tax on the insurance company for the excess of their policy over the threshold, right?  So the new threshold is at $24,000, right?  So –

Q    But if it wasn’t a big deal, the labor unions wouldn’t have pushed so hard to be exempt from it until 2018.

MR. GIBBS:  No, I understand.  What I’m just — it’s not a 40 percent tax.  It’s a 40 percent tax above a threshold on an insurance company, not on an individual or a family.

Q    Well, I meant it’s not an inconsiderable tax.

MR. GIBBS:  I would say that obviously there is — just like there is for the insurance fee, just as there are for fees on manufacturers and other businesses, there’s a phase-in for this fee over a five-year period of time, just as there is, again, on — the administration did not believe it made any sense to treat business and industry and insurance companies different than they treat workers. (continue reading…)

How about a new estate tax paid only by union members?

That’s fair, isn’t it?

As noted below, one of the provisions of the deals Big Labor cut with the White House on the excise tax on high-value health care plans is:

Providing a five-year transition window for state and local employee plans and plans negotiated through collective bargaining agreements before they are subject to the tax, as typically is done when federal laws affecting workers are enacted so that agreements will not have to be renegotiated. 

If the health care bill passes — increasingly unlikely after the latest deal — then union negotiators will look to limit their health care plans and demand increases in other compensation. And that means wages.

Two immediate thoughts:

• In about five years, inflation could be looming thanks to a revving economy and years of federal deficit spending. At the same time, unions will be negotiating for big wage increases.
• Labor’s support for single payer or a public option was always based on the goal of shifting health care costs onto the government, so unions could focus their contract demands on wages. This new deal worked out with the White House achieves the same end, circuitously.

UPDATE (8:55 a.m.): Increasingly unlikely passage? Investor’s Business Daily reaches the same conclusion in its tough editorial today, “Unions Collect A Health Care Payoff“:

[If] the bill passes, unions pay nothing on their health care for years until they can negotiate new contracts, while the rest of us plutocrats shell out a 40% tax on plans worth $8,500 for individuals and now $24,000 for families. No wonder the public is liking this odious legislation less and less.

The AFL-CIO’s Now Blog outlines the details of the deal Big Labor worked out with the White House and Democratic leaders in Congress to exempt labor unions from most of the impact of an excise tax on highvalue health care plans.

Here are the bullet points, as cited in “Health Care Tax: Union Leaders Outline Big Improvements for All Working Families,” which we assume spins various provisions to make them sounder more inclusive than they really are.

• Raising the threshold at which family plans are taxed from $23,000 to $24,000 in 2013 for all working families, with annual increases of Consumer Price Index plus one. The threshold for single plans will be $8,900. (Taft Hartley plans will be considered at the family rate.)
• Raising the threshold on plans further if health care costs grow faster than expected from 2010-2013.
• Exempting dental and vision costs beginning in 2015, which could raise the threshold as much as $2,000.
• Raising the threshold for plans that have significant numbers of women and/or older workers.
• Preserving the original Senate proposal to raise the threshold for plans with workers in high-risk professions, affecting more than 9 million workers.
• Preserving the original Senate proposal that would raise the threshold for plans with retirees age 55 and up.
• Providing transitional relief for employers and workers to adjust to the tax.
• Temporarily raising the threshold for high-cost states, affecting more than 38 million workers. 
• Providing a five-year transition window for state and local employee plans and plans negotiated through collective bargaining agreements before they are subject to the tax, as typically is done when federal laws affecting workers are enacted so that agreements will not have to be renegotiated. 
• The ability for bargaining plans to go into the exchange in 2017.

All working families? All working families? The labor rhetoric is preposterous and dishonest.

The White House, the Democratic congressional leaders, and representatives of Big Labor have reached an agreement to give the unions broad exemptions from the excise tax on health care plans.

Wall Street Journal’s account cuts right to the chase. From “Unions Cut Special Deal on Health Taxes“:

Democratic negotiators acceded to union demands for a scaled-back tax on high-end health-insurance plans, exempting union contracts from the tax until 2018, five years beyond the start date for other workers.

The deal helped Democrats clear a key hurdle, but the break for organized labor added to the pressure to find new revenue to pay for their health bill, which is designed to give coverage to tens of millions of uninsured Americans. Negotiators were considering increasing the financial hit on drug makers, nursing homes and medical-device makers, according to people familiar with the discussions.

Apparently union backing is seen as so critical to passage that everyone else is supposed to carry their weight. But we’d count “drug makers,  nursing homes and medical-device makers” as more important to the quality of the U.S. health care system than political clout of the SEIU, UAW or AFL-CIO.

• New York Daily News, “White House entices Big Labor to back struggling health care reform legislation“
• Seattle Times, “Obama, unions agree to modify high-cost health-benefit tax“
• New York Times, “Accord Reached on Insurance Tax for Costly Plans“
• Fox News (blog), “Labor Effusive With Praise for Excise Tax Deal“
• The Hill, “White House, Dem leaders give concessions to win labor’s support“

ABC News reports on the White House negotiations with Congressional leaders that now seem set to give big labor an exemption from the Senate’s proposed excise tax on high value insurance plans. Included is a comment from White House spokesman Robert Gibbs:

Obviously the president met a few days ago with representatives from labor unions all over the country who are a concerned about the structure of the tax impacting their working men and women. The president has obviously a strong desire to see a bending in the cost curve for health care. But while at the same time not impacting working men and women. Those meetings have taken place in order to find some sort of compromise that does not impact working men and women, while at the same time takes responsible actions to ensure that the amount of money that people are paying for health care, that we change the direction of that.

Our emphasis. Maybe it’s just inartful phrasing, but one could read into Gibbs’ comment: If you are represented by a union, you are a working man or woman. If not, impact away!

The Heritage Foundation’s Morning Bell started the day with a good review of all the breaks for organized labor stuffed into the health care bill. The post concludes:

Big Labor’s high wages and inflexible work rules have already bankrupted our nation’s once proud automobile industry. Across the country, their early retirement and exorbitant pensions are bankrupting states. The health insurance excise tax was once the signature health care spending cost cutter of Obama’s entire health care plan. Now it has been gutted at the altar of Big Labor power. The big loser in all of these cases is you, the American taxpayer.