Will Legislature Raise Taxes by $200 Billion for Universal Health Care?

May 30, 2017

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Source: Sacramento Bee

The timing of Monday’s Senate Appropriations Committee hearing was exquisite.

It came hours after a raucous convention of the California Democratic Party, during which ascendant left-wing activists loudly demanded taxpayer-supported universal health care coverage.

The object of their desire, Senate Bill 562, was the biggest item on the committee agenda, and a staff analysis laid out its immense cost – $400 billion a year, or more than three times the entire state general fund budget.

The big number did not deter Sen. Ricardo Lara, D-Bell Gardens, the bill’s chief author.

“Health care spending is growing faster than the overall economy … yet we do not have better health outcomes and we cover fewer people,” Lara told the committee. “Given this picture of increasing costs, health care inefficiencies and the uncertainty created by Congress, it is critical that California chart our own path.”

How would the huge cost be covered?

Lara and other advocates assume that existing federal, state and local government spending on health care would cover about half the total.

However, with President Donald Trump and a Republican Congress bent on changing the Affordable Care Act and reducing health spending, that’s scarcely certain.

Even were it certain, that still would leave a $200 billion nut to be cracked – the equivalent of a 15 percent tax on all of Californians’ earned income layered on top of existing income taxes.

Even if one assumes that California employers are spending $100 billion a year on health care that would be replaced by taxes, another $100 billion would still have to be covered by more taxes.

That’s nearly as much as the state will collect this year in income and sales taxes with the nation’s highest tax rates.

The projected tax bite could play a major role in next year’s campaign for governor.

During the convention, the leading Democratic hopeful, Lt. Gov. Gavin Newsom, embraced the leftist agenda, including free community college educations.

“It’s time to reject timidity…and take real chances,” Newsom told delegates.

That plays well with the activists, but to become governor, Newsom must also make his election pitch to centrist Democrats, independents and Republicans who could flinch at paying heavy new taxes for health care that would benefit at least two million undocumented immigrants.

His chief rivals, former Los Angeles Mayor Antonio Villaraigosa and Treasurer John Chiang, are more circumspect about making expensive promises, and chances are strong that one of them will wind up in a runoff election with Newsom.

Meanwhile, what happens to SB 562 this year?

There’s no way Democratic legislative leaders could persuade virtually all of their members to vote for $200 billion in taxes, especially those in swing districts and especially since Gov. Jerry Brown is leery.

However, those leaders still must contend with the left-wing activists and threats by their leaders, especially the California Nurses Association, to take out Democrats who refuse to cooperate.

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