A Seriously Progressive Budget

This is it. The budget details are being leaked, and the most important number so far is $634 billion for health care reform:

Ceci Connolly of the Washington Post and Laura Meckler of the Wall Street Journal have the dollar figure on the "downpayment" for health reform you've been hearing about: $634 billion.

The money will be drawn from new revenues and changes in the way federal insurance programs pays drugmakers, medical providers, and insurers offering coverage through Medicare.* It will underwrite the cost of expanding insurance coverage--through public programs like Medicaid and subsidies for the purchase of insurance--at least for the next ten years. (Ideally, efficiency savings will help offset more of that cost in the more distant future.)

How big an investment is that? It's pretty big--more, I believe, than any president has proposed setting aside for coverage expansions to the non-elderly since Clinton tried for universal health insurance in the 1990s. And it confirms that Obama is serious about pursuing health care reform, beyond small incremental steps.

Even so, the amount will not enough to finance full universal coverage, as discussed previously here and elsewhere. The budget will call for finding that money, although that obviously raises another question: Just how much more would it cost to get everybody (or nearly everybody) covered by decent insurance?

The working number during the campaign was $1 trillion over 10 years. So this comes up about $40 billion/year short. And Congress will have to find that money (I know, the Pentagon budget!). As for where the money in the budget would come from, that would be from phasing out the wasteful Medicare Advantage, possibly capping the amount of tax-excludable health benefits, and through a change to how the rich can itemize:

Under the Obama budget blueprint, about half of the new "health care reserve fund" would come by limiting the tax break on itemized deductions for families with incomes above $250,000. The proposal would reduce the value of tax deductions by about 20 percent, a change which would generate about $318 billion over the next 10 years, according to administration documents provided to The Washington Post.

If you read the New York Times piece, you see that the full budget will really re-imagine the tax code for fairness and progressivity.

Mr. Obama will also propose in the budget outline he releases on Thursday to use revenues from the centerpiece of his environmental policy — a plan under which companies will have to purchase permits to exceed pollution emission caps — to pay for an extension of a two-year tax credit that benefits low and middle-income people.

The combined effect of the two proposals, on top of Mr. Obama’s existing plan to roll back the Bush-era income tax reductions on upper-income households, would be a pronounced move to redistribute wealth and reimpose a substantially larger share of the tax burden on the most affluent taxpayers.

Get ready for the screams of "class warfare!"

Paul Krugman is on board, saying that this is a significant commitment and a signal that the Administration is very serious about achieving serious health care reform. I'd go a step further and say that they're serious about a progressive domestic agenda.