Washington insiders: Financial restructuring will take a backseat to health care reform this year

Progress on health care reform will finally come this year, though it will be made at the expense of other regulatory- and legislative-reform initiatives, two former political party bosses said yesterday at an insurance industry gathering.
“Politically, my gut says you’re going to see the financial-restructuring bill come out of the committees, in both the House and Senate, but it won’t pass this year,” said Terry McAuliffe, the former chairman of the Democratic National Committee who unsuccessfully ran for his party’s 2009 Virginia gubernatorial nomination. “There is no floor time because of health care.”
In a session at the Insured Retirement Institute’s annual conference in Boston, Mr. McAuliffe parried with Ed Gillespie, the former chairman of the Republican National Committee.
Mr. McAuliffe predicted that a health care bill will be passed this year. Not only has the issue of health care reform been a focal point for the public, but it is also critical to the success of the Democratic Party, he said.
“It’s crucial for the Democrats to get some form of health care out there — and if you’re going to do it, do it right,” Mr. McAuliffe said.
Mr. Gillespie countered that Americans are becoming disenchanted about the fact that the health care reform plan will increase the deficit, and object to some components of the bill — stumbling blocks that will influence the final contents of a bill.
“The president has too much at stake here,” he said. “They’ll have a bill that’s titled ‘health care reform,’ but I suspect it’ll be stripped of Medicare cuts and that it won’t have a public option.”
Mr. Gillespie predicted that the president will indeed come up with a solution with bipartisan support for those who don’t have coverage.
To pay for the plan, Mr. Gillespie said that he expects increases on dividends and capital gains taxes, along with income tax hikes that affect individuals in the upper-income brackets. He noted that President Obama doubled the nation’s debt load in the past year.
“The reason why his approval numbers are down is because of the concern around the deficit, and [the Democratic majority will] try to correct that over time with tax increases,” Mr. Gillespie said.
Mr. McAuliffe also predicted increases in the estate tax as a way to contend with the swelling debt levels.
“All I can tell you is that [Mr.] Obama knows we have to get off this position today of foreigners buying up all of our debt. We also have to have spending reductions and be fiscally responsible,” Mr. McAuliffe said said.
“We have to find revenue,” he said. “The estate tax has to be dealt with.”