Tax Pledge Could be ObamaCare’s Undoing

(Alexander Bolton/The Hill) – The Senate healthcare bill presents a tricky political challenge to Sens. Ben Nelson (Neb.) and Arlen Specter (Pa.), the only two Democrats in the Senate to have signed anti-tax pledges.

Americans for Tax Reform, the group which persuaded Nelson and Specter to sign the pledge, will press both lawmakers on the issue during next month’s Senate healthcare debate, putting them in an awkward position.

“If they vote for this bill as the written it violates the pledge,” said Grover Norquist, president of Americans for Tax Reform, in an interview.

The $848 billion piece of legislation would extend health insurance coverage to an additional 31 million Americans and would impose new taxes and tax increases. An analysis by Republicans on the Senate Budget Committee estimates the bill would raise taxes by $494 billion.

Senate Majority Leader Harry Reid (D-Nev.) appears to need every Democratic senator to support the bill because Democrats have failed to muster any Republican backing. The measure needs 60 votes to clear the chamber.

Nelson, for one, knows the political risks of abandoning a campaign pledge. In 1996, he came under heavy criticism for pursuing a Senate seat while serving as Nebraska’s governor. The bid violated a 1994 campaign pledge that he would serve out his full term as governor before seeking another office.

Nelson lost the race despite high approval ratings. Political analysts said he was hurt by the pledge. He won a Senate seat in 1998 and is up for re-election in 2012.

Americans for Tax Reform aired cable ads at the end of October pressing Nelson to “keep fighting for Nebraska taxpayers” and to “keep the pledge.”

The group argues that Nelson violated his anti-tax pledge by voting for procedural motions to begin debate over the bill and would do so again if he votes to bring it to a final vote.

In an op-ed published Wednesday in the Omaha World-Herald, Nelson defended his vote to begin debate.

“This past Saturday evening, I voted for the Senate to proceed to a full and open debate on healthcare reform with two goals in mind: The first goal is that the Senate, now able to follow normal parliamentary procedures, will produce a bipartisan bill cutting the cost of healthcare for Nebraskans and all Americans,” he wrote.

Nelson argued that his second goal was to avoid the prospect of Democratic leaders bringing up healthcare reform under budget reconciliation rules, which would allow them to pass a truncated version of the bill on a fast schedule with only a simple majority.

“The result of the limits on debate and content could be a convoluted bill passed by only 50 senators,” Nelson wrote. “That is not what the Senate is about.”

Nelson’s spokesman declined to comment specifically on pressure from Americans for Tax Reform.

Specter, who signed the anti-tax pledge as a Republican, appreciates the power of Americans for Tax Reform.

In his 2004 re-election campaign, when he barely survived a primary challenge from then-Rep. Pat Toomey (R-Pa.), Specter touted the fact that Americans for Tax Reform had given him a “Hero of the Taxpayer Award.” Specter won the award for signing the pledge and receiving an 85 percent rating on the group’s scorecard.

Norquist said the fact that Specter signed the pledge as a Republican candidate has no significance. He noted that Sen. Richard Shelby (R-Ala.) signed it as a Democratic candidate.

“That doesn’t get you off the hook,” Norquist said.

Specter was unavailable for comment but an aide said the Pennsylvania lawmaker has repeatedly stated that he is committed to voting for a fiscally responsible bill that does not add to the deficit.

He is up for re-election in 2010 and faces a Democratic primary challenger and a likely rematch with Toomey in the general election.

If Specter votes for the Senate healthcare bill, however, Americans for Tax Reform will press him specifically on the issue of tax increases, more so than deficit spending.

The bill hits individuals and businesses with new taxes and eliminates various deductions.

Individuals would face penalties for failing to purchase insurance and those earning more than $200,000 would see their Medicare payroll tax rise from 1.45 percent to 1.95 percent. The payroll tax rise would hit couples earning $250,000 or more.

The measure would also impose a $2 billion annual tax on medical devices such as pacemakers; a broad $6.7 billion annual tax on the health insurance industry; a 5 percent tax on cosmetic surgery; and would eliminate tax deductions for employer-provided prescription drug coverage in retirement.

An analysis by the Joint Committee on Taxation found that in the year 2019, 77 percent of the cost of the tax increases proposed in the Senate Finance Committee’s healthcare bill would be carried by families earning less than $250,000 a year.

This could also prove a political liability for President Barack Obama, who promised during his presidential campaign not to raise taxes on American families earning less than $250,000.

Many of the tax increases proposed by Finance Committee were included in the healthcare bill slated for floor debate. Reid made a few tweaks to the tax provisions, such as raising the tax threshold for high-cost insurance plans from $8,000 to $8,500 for individual plans and from $21,000 to $23,000 for family plans.

Labor unions have opposed this tax, which funds a substantial portion of the bill, because they argue that it would hit many unionized, working-class families.