Bloomberg

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Union Leaders Warn of Political Toll for Backing Health Tax

January 11, 2010, 08:37 PM EST

By Holly Rosenkrantz

Jan. 11 (Bloomberg) -- Union leaders opposed to a tax on high-end health benefits that’s backed by President Barack Obama warned that Democrats face losses in this year’s congressional elections if they don’t support labor’s agenda.

“This is a moment that cries out for political courage, but it is not much in evidence,” Richard Trumka, president of the 11 million-member AFL-CIO labor federation, said in a speech before a White House meeting between Obama and union presidents. He warned of a repeat of 1994, when Democrats lost control of Congress in mid-term elections, if lawmakers back a health-care overhaul without taking labor’s concerns into account.

Harold Shaitberger, president of the International Association of Firefighters, said Obama “will be held accountable” if he continues to support the excise tax on the employer-provided plans, which would help fund the overhaul.

“The president’s support for the excise tax is a huge disappointment and cannot be ignored,” he said today in a statement about the levy, which would be imposed on insurance plans worth more than $23,000 a year for families.

Trumka, Service Employees International Union president Andy Stern and other labor presidents met with Obama and White House aides to discuss their disagreement over the proposal.

The union presidents declined to discuss the meeting when it was over. Trumka, in a statement, called it a “frank and productive meeting between friends on moving forward on health- care reform.”

“The President and labor leaders had an exchange of views and had a productive discussion” about health reform that will “lower health costs,” and “protect families from unfair insurance company practices,” said Reid Cherlin, a White House spokesman, in a statement.

 

Biggest Issue

The Democratic-controlled House and Senate are trying to reach a compromise on legislation calling for the biggest revamp of the U.S. medical-insurance system since the establishment of the Medicare program for the elderly more than four decades ago.

How to pay for the overhaul looms as the biggest problem. Obama last week urged House Democrats not to oppose the Senate- backed plan to tax insurance plans that offer the most generous employee benefits, according to a Democratic aide.

Labor leaders say their members have traded wage increases for stronger health benefits and that they and other working Americans would bear the brunt of the 40 percent excise tax.

They favor health-care legislation passed by the House in November that includes a 5.4 percent surtax on couples earning at least $1 million a year.

Labor unions spent a record $450 million in 2008 helping to elect Democrats to Congress and Obama to the White House. Democrats have said they are counting on that support again during this year’s elections.

--Editors: Mark McQuillan, Jim Kirk.

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It is a cynch that the WH will yield to the unions on this.



-- Edited by Sanders on Monday 11th of January 2010 09:41:25 PM