Joe Biden: Economic Sense = Bad for America
September 11, 2008
Same error as Joe Klein made. The St. Louis Post-Dispatch reported that Sen. Biden made an explicit error in a speech he made on Tuesday talking about McCain's health care plan. However, the article describes an explicit error, whereas if you watch the video, it's more of either economic ignorance or a complete lack of faith in the labor market to properly reward workers:
Here's what the Post-Dispatch said:
But taxing American workers' health care is not the answer, he said. Under McCain's plan, Biden said, a person earning $50,000 a year, with employer-provided health care worth $12,000 a year, would be subject to income taxes on all $62,000. Now, no taxes are levied on their health care benefits.
McCain has been highlighting his proposed $5,000 a year tax credit to offset some of that tax hike, but Biden said that at least $7,000 would still be subject to the tax.
Repeat after me: a tax credit is not the same as an exclusion or a deduction
But if you watch this video that I found, this isn't exactly what Biden said:. He said (near 5:00 mark):
They want to, first time in American history, tax your health care benefits. Not a joke. I am not making this up. I am not making this up…here are the facts.
John McCain has reached down into the neo-conservative economic gospel and pulled out a proposition that makes some economic sense. Bad for America, but economic sense.
He says that there's no difference between your employer raising your salary a dollar and giving you an extra dollar in healthcare….
The average value of each of your health care plans is around $12,000. So if you're making $50,000, when you file your taxes, you pay taxes on the $50,000…
Well if your health care plan is worth $12,000, what John is proposing is the following:
If your pay is $50,000 and your health care plan is worth $12,000 you will now have to pay taxes on $62,000. So that's a change…
He's got another change in health care. The other change is to give everybody a $5,000 tax credit. That's a good idea. But your health care plan is worth $12,000. As soon as he gives you $5,000, a lot of employers are going to say "I don't have to provide it any more." And you have to make up $7,000. That is a bridge to nowhere.
So according to Joe Biden, economic sense = bad for America. But on the issue of health care and taxes, it appears as if Biden didn't gaffe at the difference between a credit and a deduction/exclusion as the newspaper article implied (and as we initially reported), but just believes in the following: employers now providing an employee with a $50,000 wage and $12,000 in health insurance would respond to McCain's health care tax credit by eliminating health insurance yet continue paying the employee only $50,000. That begs the question: if they can get away with paying an employee at a cost of only $50,000, why are they paying $62,000? Or are the employers just stupid