Senate Nanny Staters Seek Soda Tax

You knew that this idea wouldn't die, not with the massive deficits being run up by the states and the federal government. They need the revenues and are more than willing to tax the bejeebus out of anyone and everything.

With that in mind, there are US Senators looking to impose a national sales tax on soda and other sugared beverages to pay for President Obama's massive health care proposal (despite the President saying that he would not raise taxes on most Americans).

The taxes would pay for only a fraction of the cost to expand health-insurance coverage to all Americans and would face strong opposition from the beverage industry. They also could spark a backlash from consumers who would have to pay several cents more for a soft drink.

On Tuesday, the Senate Finance Committee is set to hear proposals from about a dozen experts about how to pay for the comprehensive health-care overhaul that President Barack Obama wants to enact this year. Early estimates put the cost of the plan at around $1.2 trillion. The administration has so far only earmarked funds for about half of that amount.

The Center for Science in the Public Interest, a Washington-based watchdog group that pressures food companies to make healthier products, plans to propose a federal excise tax on soda, certain fruit drinks, energy drinks, sports drinks and ready-to-drink teas. It would not include most diet beverages. Excise taxes are levied on goods and manufacturers typically pass them on to consumers.

Senior staff members for some Democratic senators at the center of the effort to craft health-care legislation are weighing the idea behind closed doors, Senate aides said.

The Congressional Budget Office, which is providing lawmakers with cost estimates for each potential change in the health overhaul, included the option in a broad report on health-system financing in December. The office estimated that adding a tax of three cents per 12-ounce serving to these types of sweetened drinks would generate $24 billion over the next four years. So far, lawmakers have not indicated how big a tax they are considering.

Never mind that the soda tax would never cover the costs, which are in the hundreds of billions (just think of the costs relating to the federal prescription drug program established under President Bush).

That benefit will run $1.2 trillion. This tax would raise a fraction of that total. Never mind that the costs to implement the latest sin tax would erode the revenues raised in the first place, and would further drain the pockets of all Americans, especially those in the low income brackets because it would be a disproportionate and regressive tax on those people.

It's all about the sin taxes and that government knows better than the individual what's good for them.

Well, everyone should know by now that President Obama's statements and positions come with expiration dates, but the imposition of still more taxes will not solve a problem that doesn't exist. Health care is available to everyone in the nation, but people can and do get sticker shock from the costs. Not everyone has health insurance, but that doesn't mean that they can't get health care. The health care debate has muddied the waters on that front and conflated access to health care with affordability of that care.

What this comes down to is that the government under the Obama Administration thinks that it should be the answer to all areas of the economy, rather than letting the market dictate prices and availability of services. We've repeatedly seen that the government cannot get service delivery right - whether it is the decades long problems with providing health care to current and former military service members or the ballooning costs for federal entitlements.

The Administration continues spending more than it is taking in, and yet another major program will only add to the deficit, which is rising faster in Obama's first 100 days than at any other point in the nation's history.

UPDATE:
Don Surber notes that we might be better off if the nation stopped subsidizing sugar in the first place. Well, that and people made the personal choice to stop eating so many donuts and sugared beverages. The former is far more likely to happen than the latter, and both are pretty unlikely to happen.

According to CATO, the US subsidizes sugar prices to the tune of $2 billion annually. That more that doubles the cost of sugar in the US, and that inflates the costs of food products as well.

I'd also note that higher sugar prices sent food processors to seek out alternative sweeteners, which resulted in corn syrup being the product of choice, until those prices rose as the government mandated the use of biofuels. Now, some of those same food processors are back to using sugar because it is cheaper.

UPDATE:
To reinforce the collapsing house of cards that are otherwise known as Social Security and Medicare, a new report finds that both programs will become insolvent far sooner than previously indicated because the recession is sapping the funds for both. In fact, the situation with Medicare is dire, and nothing that Obama proposes provides a fix:

The trustees for Social Security and Medicare are scheduled to provide their annual report on the finances of both programs on Tuesday. In advance of the release, many private analysts said they expected both programs could run out of cash sooner than last predicted.

A year ago, the trustees projected that the Social Security trust fund would start paying out more in benefits than it collects in taxes in 2017 and that the trust fund would be depleted in 2041.
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For the Medicare trust fund, which pays for hospital care, the situation was more urgent. It was projected to start paying more in benefits than it collects in taxes within a year, and the trustees forecast that it would be depleted by 2019.

But many analysts said the worst recession in decades will produce a bleaker forecast for both Social Security and Medicare in the new trustees' report. The downturn has resulted in a loss of 5.7 million payroll jobs since it began in December 2007 and an unemployment rate that hit a 25-year high of 8.9 percent in April.