LINDA WERTHEIMER, host:
That $630 billion the Obama administrations proposal includes will help cover the cost of expanding coverage and improving care.
President BARACK OBAMA: This is a significant down payment thats fully paid for, does not add one penny to our deficit. And I look forward to working with Congress and the American people to get this budget passed.
WERTHEIMER: But some members of Congress, including some of the Democrats, are challenging President Obamas plan to raise that money. NPRs Scott Horsley reports.
SCOTT HORSLEY: About half the money for the presidents health-care fund would come from raising taxes on the wealthy, or to be more specific, from stricter limits on the deductions more-affluent taxpayers can take on itemized expenses like gifts to charity. White House spokesman Robert Gibbs yesterday called it a simple matter of fairness.
Mr. ROBERT GIBBS (White House Spokesman): A middle-class family donates a dollar to charity, they get 15 cents off their income tax. Bill Gates donates a dollar to charity, he takes 35 cents. The proposal that the White House has would simply reduce those levels to the same levels that we saw during the Reagan administration.
HORSLEY: So under the White House plan, if Bill Gates gave a dollar to charity, he could deduct just 28 cents from his taxes, and not just Gates, but any family making more than a quarter million dollars a year. Over the next decade, all those extra pennies would add up to $318 billion for the government, and the Obama administration is counting on that money to help fund its improvements in health care. Critics, like Republican Senator Pat Roberts of Kansas, say the taxing proposal is misguided.
Senator PAT ROBERTS (Republican, Kansas): It will reduce the contributions to charities at a time when Americans are relying more on charitable assistance.
HORSLEY: And charitable gifts arent the only items that would be affected. The White House plan would also reduce the tax deduction that wealthy families can take on their mortgage interest. Economist Lawrence Yun of the National Association of Realtors warns that would mean higher downward pressure on home prices - and not just at the high end.
Mr. LAWRENCE YUN (National Association of Realtors): People on the next rung down, they have to compete with these homes, so they also have to lower the prices, and it will go down the line as a domino impact.
HORSLEY: Yun guesses the proposal might shave $4,000 to $6,000 off the price of a $200,000 home.
Mr. YOON: And in the current market condition, where we are trying to stabilize housing prices, its coming at the worst possible time.
HORSLEY: The administration counters none of its proposed changes would take effect until 2011, by which time the economy, including the housing market, is supposed to be on the mend. If so, Patrick Rooney, of the Center on Philanthropy at Indiana University, says recovery may help offset the drag on charitable giving from the smaller tax breaks in the presidents budget.
Mr. PATRICK ROONEY (Indiana University): You know, the best thing that can happen to philanthropy is if we get the economy moving, and income and wealth is growing again.
HORSLEY: That doesnt mean charities are happy about the presidents proposal, but Diana Aviv, of the non-profit umbrella group Independent Sector, says her members are torn between their concern about contributions and their genuine desire to see health-care reform.
Ms. DIANA AVIV (Independent Sector): And I think that we have to take a look at all the options of how we find a way to do both, and that we dont do the one at the expense of the other, but that we make it possible for nonprofit organizations to serve their missions and we make it possible for us to have health care for everybody.
HORSLEY: Montana Democrat Max Baucus, who chairs the powerful Senate Finance Committee, is urging the administration to consider alternative ways to fund its health-care plan. He suggested that the government start taxing certain gold-plated health benefits that some companies give their employees. Treasury Secretary Timothy Geithner says the White House is reluctant to do anything that might jeopardize employer-based health care. But White House spokesman Gibbs said yesterday, nothing is off limits.
Mr. GIBBS: I think the president is correct in saying that hes listening to all the ideas that people bring to the table.
HORSLEY: And ideas about paying for the new system are likely to raise both the volume and the heat around that table.
Scott Horsley, NPR News, Washington.
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