John Podhoretz

John Podhoretz

Opinion

When Righties rally to save a tax hike

A funny thing happened on the way to the debt ceiling: Some conservatives began to express outrage that Republican leaders in Congress were trying to do away with a tax increase — a tax increase those same conservatives oppose.

The tax hike in question is on medical devices. It’s part of the ObamaCare law, and no small levy: It’s supposed to bring in nearly $30 billion over 10 years. And it’s a calamity — a 2.3 percent surcharge on desperately needed products designed, made and sold inside the United States. In imposing it, the feds made the odd choice to place a unique burden on one of the few manufacturing businesses in which our country is the clear world leader.

This is an industry everyone across the political divide should want to thrive, because its innovations are life-enhancing and life-saving. These are consumer products that genuinely make a difference.

If you want less of something, you tax it more. But we don’t want medical devices to be more expensive; we want them to be cheaper. We don’t want fewer of them; we want more of them.

The tax was inserted into Obama­Care for two reasons. First, its designers wanted revenue to offset the bill’s cost wherever they could find it in the health-care system. They needed that $30 billion.

Second, the medical-devices industry is at daggers drawn with a key Democratic fund-raising constituency, the trial lawyers — who love to sue for billions at the merest hint of a possible health scare.

Yet this industry employs 400,000 people directly and claims to employ nearly 2 million indirectly, and makes money exporting manufactured goods outside the nation’s borders. Which makes the tax foolish, short-sighted and ruinous. Even highly partisan Democratic Senate leader Harry Reid calls it “stupid.”

Is this tax the only problem with ObamaCare? Of course not. Is it the kind of tax issue Republicans should be focusing on? Not really: The GOP can only gain ground with the middle-class voters it has been losing by focusing its reformist efforts on improving their lives.

But repealing or delaying this tax has this one simple thing going for it: It’s an excise tax that’s pretty easy to excise, given that many Democrats and most Republicans actually think it’s a bad idea.

So House and Senate GOP leaders, operating under the presumption that they’re representatives of an anti-tax party, decided this might be the one big concession they could secure in the budget shutdown.

All they wanted to do was show they’d gotten something, anything, out of this fight to the death imposed upon them by populists who sent everyone to the battlefield with no rational strategy for victory.

But then, as if to underscore the nature of the division on the right, key populist thinkers and pundits began complaining that the repeal of this tax was some kind of monstrous Washington giveaway.

Remember: We’re not talking about a new subsidy, or a new corporate tax break, but the elimination of a tax hike whose cost is immediately passed on to consumers.

“Did Republicans go through this entire painful government shutdown business,” asks Timothy Carney in the Washington Examiner dismissively, “in order to save Johnson & Johnson 2.3 percent on the sale of its catheters?”

Carney admits that “Congress should repeal this punitive tax.” But not now, apparently. Why? Because the industry hired lobbyists to help make their case.

The brilliant young populist Ben Domenech even wrote that a negotiation featuring a “a medical-device-tax rollback is arguably worse than getting nothing out of the shutdown” because it “actively undercuts the most basic idea of a remade Republican priority list which doesn’t involve running to whatever Wall Street and industry lobbyists want over the impact of policies on the populace.”

The problem is this: The only reason the medical-device tax repeal is on the table is that it’s possible. And politics is the art of the possible. Defunding ObamaCare in October 2013 was never possible, and that was the Quixotic windmill-tilt that began this whole calamitous mess.

By all means, the populists should try to harness their ideas to Senate candidacies in 2014 and a successful presidential candidacy in 2016. Indeed, they must, or the GOP will fail. But making a big show of opposing sensible anti-tax policies that you actually say you support is a mark of how insanely convoluted the conversation on the right is becoming.