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Generally speaking, I'm a big Robert Reich fan. But his explanation for why the president is going after a variety of tax breaks that help corporations hide international income makes very little sense.
The president needs the cooperation of many big corporations if he's going to get universal health insurance enacted this year. Many of these companies would benefit from lower health costs but they're reluctant to take on Big Pharma, big health insurance companies, and major health providers, all of whom are dead set against a provision in the emerging health insurance proposal that would allow the public to opt for a government health plan. How does it help for him to take on corporate tax havens? Because the president needs as many bargaining chips with the rest of corporate America as possible. The proposed crackdown on foreign tax avoidance is one such chip. He might be willing to take it off the table if big corporations lend him active support on health insurance.The pharmaceutical industry fears comparative effectiveness research, not a public insurance option. This tax change is worth much less to large corporations than the specific provisions in health care reform. It's very hard to imagine a scenario in which these tax breaks, and not the amount employers have to pay into a new health care system, determines their support for reform. Health care reform is too big to trick people on.Reich then argues that the $190 billion Obama would theoretically raise will be crucial to funding health care reform. That might be true. At least $74 billion, however, is earmarked to "permanently extend the Research and Experimentation Tax Credit." But that leaves a good $100 or so billion of money that Obama might find rather useful. Reich, in fact, mentions this point later in his post, arguing that Obama needs "credible ways to pay for universal health insurance." But then it wouldn't make much sense to take that financing off the table. It would be very strange for the president to have proposed a revenue source where his end game is to both have and not have it. I'd suggest that people don't need to engage in gymnastics to justify Obama's proposal. The administrations needs sources of revenue. They've promised not to raise tax on 95 percent of Americans. They're already raising taxes on the remaining five or so percent. If they're going to find more funds, they're going to have to go after corporations. And nothing is less popular than corporate tax breaks.
