Bipartisan Health Care Reform?

Friday’s New York Times reported that the Senate is struggling with how to raise $1 trillion to cover the cost of health care reform over 10 years. The article named four key senators—Max Baucus (D-MT), Charles Grassley (R-IA), and Olympia Snowe (R-ME) of the Finance Committee, and Kent Conrad (D-ND), Budget Committee chair. (Of course, the real cost may be at least $1.5 trillion).

The four senators reject the House Finance Committee’s proposal to place a surtax on joint incomes over $350,000 (single payer incomes over $280,000), a plan also in trouble with conservative (“Blue Dog”) House Democrats. Such a surtax would increase the taxes already set to rise on higher incomes from 33% to 36% and 35% to 39.6% in 2011, when Democrats undo Bush’s 2001 tax cuts. The tax increases on higher income—raising the tax rate and adding a surtax—hit small business especially hard. The Tax Foundation has conservatively estimated that 45% of small business income—often earned as personal income—will be subjected to the higher tax rates. And as we know, small business generates most new jobs. No wonder the Senate is balking.

The best hope for health care reform may lie with whatever compromise Democrat Baucus and Republican Grassley [picture] can bring out of the Senate Finance Committee. The two have worked closely together at least since 2001, and they and their staffs are trying to develop a health care plan acceptable to both sides. The joint effort has Obama’s tacit endorsement, though liberal Democrats as well as most Republicans don’t like the partnership.

Perhaps the fact that both sides don’t trust the two plains state senators means we can expect Baucus and Grassley to plow their rows as straight as possible.