President Joe Biden advocates taxing the rich in order to pay for Medicare’s insolvency issues.
Key Details
- On Tuesday, the White House revealed a budget proposal that would extend Medicare through 2050. This would involve a combination of prescription-drug price negotiations and high-income taxes, increasing rates above $400,000 annually from 3.8% to 5%.
- The White House is scheduled to release its full budget proposal on Thursday, although it is unlikely to pass the Republican-controlled House of Representatives, Forbes notes.
- Republicans have agreed to changes in exchange for federal spending cuts, and Biden is accusing his opponents of wanting to cut Social Security and Medicare “instead of making the wealthy pay their fair share.”
Why It’s Important
As the White House notes, Medicare is facing an insolvency crisis within the coming decades. A June report by the Medicare Board of Trustees says the Hospital Insurance Trust Fund is in danger of being depleted by 2028. The White House’s move addresses the problem while pushing back against Republican concerns about deficit spending—adding 25 years to the fund’s lifespan and pushing insolvency issues past 2050.
“By asking those with the highest incomes to contribute modestly more, we can keep the Medicare program strong for decades to come,” says the president.
As we previously reported, the Biden administration has made attacks against the ultra-wealthy a core part of its message and appeal. During his State of the Union address, Biden revived his proposed tax on high earners and proposed taxing “unrealized investment gains” from Wall Street. The proposals reflected the administration’s emboldened and confident stance after a higher-than-expected performance in the November midterm elections.
Notable Quote
“For decades, I’ve listened to my Republican friends claim that the only way to be serious about preserving Medicare is to cut benefits … Some have threatened our economy unless I agree to benefit cuts,” President Biden wrote in a New York Times op-ed.
“Millions of Americans have been working their whole lives, paying into Medicare with every working day, and want to know that they can count on Medicare to be there for them when they turn 65. The President’s Budget extends the life of the Medicare Trust Fund by at least 25 years. It achieves these gains with no benefit cuts—indeed while lowering costs for Medicare beneficiaries,” says the White House press release.
Alternative Perspective
As The Wall Street Journal notes, this shifting policy for medicare shows just how shakey the program has been. Biden’s proposal would push the top federal tax rate to between 42% to 45%. It also shifts the burden of health care reform of a broken system by bandaging the problem with prescription rationing and high taxes, “a tacit admission that Medicare for All is a fiscal fantasy.”
“This is a classic story of how destructive taxes inevitably expand. The ObamaCare investment tax was sold as a nibble paid only by the richest—you’ll never even know it’s there—but now government can dial it up to pay for this or that. The investment tax wasn’t indexed to inflation, which means over time it has ensnared more Americans, and all the faster with high inflation.”