Unions Push Obama Hard Against the Idea of a Health Insurance Tax

From the AP: Labor leaders irate over a proposed tax on high-value health insurance plans met with President Barack Obama on Monday to express their frustration over his support for the levy. Some labor officials have warned Democrats of political fallout for backing the tax.

The president of the AFL-CIO, Richard Trumka, said there was a frank discussion at the nearly two-hour White House meeting with about a dozen heads of the country's biggest labor unions. Earlier in the day Trumka delivered a broadside to Obama and Senate Democrats who are planning to pay for overhauling the nation's health care system with a tax on insurance plans that union leaders fear could hit their workers.

Trumka warned that Democrats risk catastrophic election defeats similar to 1994 if they fail to come up with a health bill labor likes.

"A bad bill could have that kind of effect – a place where people sit at home" – as happened in 1994, when Democrats lost 54 House seats and eight in the Senate, costing them control of Congress, Trumka told reporters.

The head of the International Association of Firefighters, Harold A. Schaitberger, made similarly threatening remarks in a statement Monday. "The president's support for the excise tax is a huge disappointment and cannot be ignored. If President Obama continues to support it and signs a bill that includes the excise tax on workers, we will hold him accountable," said Schaitberger, who was not among the attendees at the White House meeting.

The AFL-CIO's Trumka made his remarks before delivering a speech in which he bashed the tax proposal in the Senate's health overhaul bill, contending that it "drives a wedge between the middle class and the poor."

"The bill rightly seeks to ensure that most Americans have health insurance. But instead of taxing the rich, the Senate bill taxes the middle class by taxing workers' health plans – not just union members' health care; most of the 31 million insured employees who would be hit by the excise tax are not union members," Trumka said hours before going to the White House. "This is a policy designed to benefit the elites."

A news round-up of Monday's White House-Unions Meeting from Bill Scher at Campaign for America's Future:

WH hints at compromise over health insurance tax after union meeting. NYT: " President Obama told union leaders at a private White House meeting on Monday that he remained committed to taxing high-cost insurance policies as a way to drive down health costs. But he also signaled that he was willing to amend the proposal to 'make this work for working families,' a senior administration official said."

LAT on possible compromise: "Democratic negotiators are exploring a possibility that would not eliminate the tax entirely, but raise the threshold at which it applies in order to ensure that more middle-income Americans are spared. To make up the lost revenue, Democrats might boost the Medicare payroll tax on high-income Americans."

"The union presidents declined to discuss the meeting when it was over," reports Bloomberg.

Earlier in the day, AFL-CIO President warns Dems of consequences if bad bill is passed. AP: "Trumka warned that Democrats risk catastrophic election defeats similar to 1994 if they fail to come up with a health bill labor likes. 'A bad bill could have that kind of effect – a place where people sit at home'"

"Firefighters Rip Obama For Breaking Campaign Promise Over Cadillac Tax" reports TPMDC.

W. Post/Fortune columnist Allan Sloan comes out against the tax: "But if you look at the actual workings of the plan, you come away far less impressed. You discover that more than 80 percent of the money it raises would come from individuals paying higher income, Social Security and Medicare taxes -- not from soulless employers and insurers. You also discover that the biggest portion of the money comes from people who make less than $200,000. That's not exactly rich -- especially not for those of us in high-cost areas on the East and West coasts."