Senate Democratic Leader Harry Reid (Nev.), under pressure from labor allies, is pressing hard for a two-year moratorium of ObamaCare’s “Cadillac tax” in a major tax deal that negotiators hope to wrap up by Monday.
Reid has assured labor leaders that freezing the Cadillac tax on high-benefit insurance plans is a top personal priority, and he wants to get it done now, knowing he has only a year left as Senate Democratic leader.
{mosads}Some Republicans, such as Sen. Dean Heller, also of Nevada, support getting rid of the Cadillac tax, but Reid is doing the heavy lifting to make sure it’s part of a year-end deal, according to sources familiar with the talks.
“Leader Reid feels very strongly, in my opinion from discussions with him, that this needs to be done and it needs to be done now. And I think he is confident that will occur,” said Harold Schaitberger, general president of the International Association of Firefighters, who met with Reid this past week.
Suspending the Cadillac tax in a package that would extend an array of expired tax provisions would be a major win for labor unions, who have at times voiced their displeasure with Democrats this year.
“We are disappointed that between the administration and the Congress we have come up short too many times on issues important to workers and working families,” Schaitberger said.
“At minimum, delaying the implementation of this Cadillac tax would be seen as of major importance to workers and the security of their [health] plans,” he added. “Without taking care of this it will have profound impact in the political arena over the course of the next many months.”
There’s pressure on Reid and House Democratic Leader Nancy Pelosi (Calif.) to deliver because the tax-extenders package and the linked omnibus spending bill could be the last major legislative vehicles to pass before next year’s election. The tax is set to take effect in 2018.
Unions are counting on Reid and Pelosi because President Obama opposes freezing the Cadillac tax, fearing it would undermine his signature healthcare reform law.
White House chief of staff Denis McDonough reiterated at a private meeting with Pelosi and union officials on Dec. 1 that Obama opposes a repeal or moratorium on the tax.
But union leaders think Obama would accept a two-year moratorium as part of a larger package that makes permanent the expansions of the child tax credit, the earned income tax credit and the American Opportunity Tax Credit for college tuition. Those tax breaks were core pieces of Obama’s 2009 stimulus package.
“Given the scale of the package that is being considered, the $9 billion cost of a two-year delay is very small. We are trying to preserve the coverage for millions of workers,” said a labor source.
Reid’s office declined to comment. A spokesman for Pelosi did not respond to a request for comment.
Labor unions detest the Cadillac tax, a major source of revenue for ObamaCare, because it would hit their members especially hard.
Over the years, unionized workers have agreed to smaller raises in exchange for generous health insurance plans.
“We very much support and are pressing forward for the extenders package,” said Candice Johnson, a spokeswoman for the Communications Workers of America (CWA). “We’ve always opposed the Cadillac tax. We’ve called it a misguided approach to healthcare.
“It puts an unfair burden on employers that do provide good healthcare benefits and doesn’t address at all the employers who don’t do anything.”
Johnson said older workers and workers in high-cost areas would bear the brunt of the tax.
CWA sent a letter to senators earlier this month urging them to repeal the tax “immediately.”
“This tax is already negatively impacting the health care costs of more than half of all working Americans — union and non-union alike,” Shane Larson, the union’s legislative director wrote.
Union leaders have been upset with Democrats this year.
They were incensed last month when 24 House Democrats, including Rep. Ben Ray Luján (N.M.), the chairman of the Democratic Congressional Campaign Committee, voted for a bill to block the National Labor Relations Board from exercising jurisdiction over Indian casinos.
“It’s going to affect 900,000 people this Indian gaming exemption they gave them for labor laws. People were so pissed,” said a labor source.
Unions were also upset that 13 Democrats in the Senate and 28 in the House voted in June for fast-track trade authority, something labor went all out to defeat.
Labor leaders decided at an AFL-CIO executive council meeting in February to freeze political contributions to lawmakers to send a message they would not take kindly to giving Obama expedited authority to negotiate the Trans-Pacific Partnership, the biggest free trade deal in history.
In March, AFL-CIO President Richard Trumka warned Democrats not to take labor support for granted.
Speaking at the National Press Club in May, Trumka said, “What workers want is an independent labor movement that builds the power of working people — in the workplace and in political life.”
He said the role of organized labor “is not to build the power of a political party or a candidate. It is to improve the lives of working families and strengthen our country.”
In February, Terry O’Sullivan, president of the Laborers’ International Union of North America (LIUNA) excoriated Obama and congressional Democrats for opposing the Keystone XL pipeline.
He accused Democrats of “perverting” the process for approving the controversial pipeline, which environmental groups vocally opposed.
Although Congress passed a bill approving construction of the pipeline, Democrats sustained Obama’s veto.
“To back up his expected veto, the president has correctly stated that there is ‘a well-established process in place’ to consider approval of major infrastructure projects such as the Keystone XL pipeline,” O’Sullivan said at the time. “What he didn’t say is that he and too many job-killing Democrats have perverted that process.”
If Democrats succeed in scaling back the Cadillac tax, it could go a long way toward mending fences with unions ahead of a 2016 presidential election where their money and manpower could prove critical.