Obama's Recession Remedy: Tax the Poor!

Michelle Malkin

1/14/2009 12:01:00 AM - Michelle Malkin

"Everybody's going to have to give," President-elect Barack Obama warned over the weekend. And some people will have to give more than others -- starting with low-income smokers.

Democrats are rushing this week to impose massive tax hikes of at least 61 cents on every cigarette pack sold in America, in addition to new increases on other tobacco products. The money will fund a long-plotted federal expansion of the State Children's Health Insurance Program (SCHIP).

Yes, this is Dr. Big Nanny's prescription for recession: punitive tax increases on the poor to feed a universal health care Trojan horse.

Obama and his liberal Democratic colleagues sure have a funny way of demonstrating "progressive" values, don't they? Health surveys show that smokers are more likely to be blue-collar workers, minorities and have less than a high-school education. The National Taxpayers Union noted that tobacco taxes take a 50 times larger share of income from those earning less than $20,000 than those earning more than $200,000. Put another way: Families making less than $30,000 per year pay more than half of all taxes paid on cigarettes, while families making more than $60,000 pay only 14 percent.

That's the dictionary definition of "regressive," not "progressive."

And what will that money buy? SCHIP, you'll recall, is the joint federal-state program that covers health insurance for children and families at or near the poverty line. During the last two years, President Bush and the Republicans took a rare fiscally conservative stand against widening eligibility criteria far beyond the working poor. Democrats wanted to be able to enroll families with incomes at 300 or 400 percent of the poverty level -- adding an estimated $35 billion over five years to the existing SCHIP funding costs.

Opponents of this HillaryCare-esque push were lambasted as cruel child-haters for arguing that the program should not be extended to include well-off families, illegal aliens and single adults. They were attacked as heartless penny-pinchers for questioning the wisdom of subsidizing the SCHIP expansion with a dwindling and unstable funding source (smoking is on the decline and cigarette tax revenues are shrinking). Left-wing comedienne Joy Behar called me a "b*tch" on national television for reporting that the Democrats' poster family for SCHIP expansion to cover the "poor," the Frost family of Baltimore, owned middle-class assets including two properties and three cars.

But if these do-gooders truly cared about The Children, they'd be cursing mightily over the squandering of current SCHIP funds and the cheating of the very children the program was intended to help. State data analyzed by the Department of Health and Human Services reveal that 13 states spent more than 44 percent of their SCHIP funds in 2008 on people who are neither children nor pregnant women. Michigan topped the list with more than 70 percent of its federal children's health insurance funds earmarked for adults who have no kids.

In New Jersey, people earning as much as $295,000 were enrolled in its SCHIP program, dubbed "NJ FamilyCare." Like many states, New Jersey failed to check eligibility for all program enrollees and refuses to conduct stringent assets tests.

As I've noted before, the refusal to do assets tests on federal health insurance programs is why federal entitlements are exploding and government keeps expanding. After an audit found that the New Jersey program had paid $43.1 million to participants without knowing whether they were eligible, Republican Assemblyman Richard Merkt observed that it "called into serious question the state's competence to run health insurance programs." Multiply that by 50 states.

How will the Democrats prevent such fraud? I'd give you more details about the Obama/Democratic tax hike on the poor to expand children's health care coverage for the non-poor and non-children, but as of Tuesday afternoon, there was no legislation text available. And no hearings are planned before the expansion is rushed through for Obama to sign.

The Wall Street Journal did report that Democrats plan to lift decade-old restrictions to allow legal immigrant children to tap into SCHIP. But there's no word on whether citizenship eligibility requirements will be strengthened. Democratic leadership hasn't responded to Republican entreaties on that issue, either. Hurray for the deliberative process.

What I can tell you for sure is that the SCHIP expansion is a rest stop on the road to a universal health insurance entitlement built on the backs of overtaxed low-income workers. Welcome to the era of "shared sacrifice."