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Thursday, July 16, 2009

Surtax on Rich Could be Used to Pay Down the Debt

House Speaker Nancy Pelosi said Thursday she is open to reducing the rate of the proposed surtax on wealthy Americans by "squeezing" more savings out of the current health care system.

But Pelosi quickly added that the federal government could also use that surtax money to pay down the deficit — a comment sure to rankle moderate Democrats already fretting about being forced to take a vote on a major tax increase.

Democrats in the House have introduced a surtax of 1 percent to 5.4 percent on the wealthiest Americans to help offset the $1 trillion price tag of their ambitious health care bill. But the speaker acknowledged Thursday that its authors are still combing the landscape for more savings. If they find enough additional money, Pelosi said they could reduce the surtax, which is expected to generate $544 billion over the next 10 years, after Democrats on both sides of the Capitol have given it lukewarm reviews.

Democrats in both chambers face a crucial conundrum as they head into the committee debate: In vowing to pay for the bill, they need to raise tax revenue and force spending cuts to offset other reforms that could cost the federal government slightly more than $1 trillion over the next 10 years. But the current revenue measures are proving to be a tough sell among the rank and file because it would put them on the record as supporting a tax increase.

The Congressional Budget Office has made that job even harder by refusing to acknowledge changes in the bill that, Democrats argue, would save the government even more money, like a pledge from drug makers to pony up $30 billion to close a coverage gap under Medicare. - Politico Story

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