In all of Mitch McConnell’s horse-trading to get to 50 votes on Trumpcare, the most cynical might be the offer to get rid of the tax cut that looks the worst to voters in order to offer a pittance of relief to all the people getting kicked off of their health insurance. The version of the bill McConnell first released repealed an increase in the capital gains tax that was included in the Affordable Care Act.
Not only did McConnell get rid of that tax increase, he made it retroactive to the first of this year. After a public uproar over that, a handful of senators told him they just couldn’t vote for a bill that made them look that bad—taking insurance away from millions to pay for egregious tax cuts for the rich. McConnell is talking about taking that cut out, now, and putting that money back in.
Which is pretty much a scam, as Greg Sargent puts it.
A Tax Policy Center analysis found that more than two-thirds of the Senate bill’s tax cuts would go to earners in the top fifth of the income distribution. One of these tax cuts is accomplished by repealing the 3.8 percent tax on net income investments, which hits those over $200,000. The Senate GOP bill would cut spending on Medicaid by $772 billion over 10 years, leaving 15 million fewer covered by that program (22 million overall would lose coverage). Moderate GOP senators have expressed deep dismay about the Medicaid cuts, and GOP governors in states that have expanded Medicaid are pressuring these senators not to accept these cuts. Thus, some GOP senators have argued for restoring this tax, and one place the resulting revenue could be restored is Medicaid.
But how much would this actually accomplish? Probably not that much.
The Senate GOP bill’s repeal of the tax on investment would result in a loss of $172 billion in revenues over ten years, according to the Congressional Budget Office. Larry Levitt, a senior vice president with the Kaiser Family Foundation, points out to me that if you restored all of that money to Medicaid, that would only restore around 22 percent of the $772 billion in cuts to the program.
So that makes the job of governors trying to figure out who gets kicked off of Medicaid—the disabled? The elderly? Children?—22 percent easier. But still miserable. If McConnell takes out this provision, any moderate Republican touting it as a win for them and their constituents would be lying. It is a scam, one that wouldn’t keep millions of people from losing their insurance.