WASHINGTON (AP) — Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama's health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class.
The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.
The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.
That's still only a sliver of the population, given that more than 150 million people currently are covered by employer plans. Nonetheless, in his first campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.
And the budget office analysis found that nearly 80 percent of those who'll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.
Average penalty: about $1,200 in 2016.
Despite Obama's promises to crack down on Wall Street, federal prosecutions of financial fraud hit a 20-year low last year, according to a November study from a watchdog group. The number of these types of prosecutions has been falling every year since 1999 -- in other words, there were more prosecutions during every year of George W. Bush's presidency than during every year of Obama's.
The rich took home a greater share of America's income pie from 2009 to 2010 than they did between 2002 and 2007, according to an April analysis from Emmanuel Saez, a professor at the University of California, Berkeley. That means the gap between the rich and the poor was more pronounced under Obama's presidency than under George W. Bush's.
Some of America's most profitable companies used a variety of loopholes to pay less than zero in taxes between 2008 and 2010, according to a November 2011 report by the Citizens for Tax Justice. But the Obama administration wants to make it even easier for corporations to have a smaller tax bill; Obama proposed a tax overhaul that would cut the corporate tax rate from 35 percent to 28 percent.
Once the health care law takes effect, insurance companies will be footing the bill for millions of previously uninsured Americans and for those who were denied coverage for pre-existing conditions. And health insurance companies will likely pass on to consumers the cost of insuring the new patients. After Massachusetts enacted a similar health care plan in 2006, premiums for an individual plan in the state rose 18 percent over three years.
In 2009, Obama announced the Home Affordable Mortgage Program, promising to help 3 to 4 million borrowers, but as of January -- more than three years into the program -- HAMP had only reached 1 million borrowers. In an aim to give the program legs, administration officials changed the rules in January to make more borrowers eligible. Still, the fixes were likely too little too late, experts said at the time.
The Obama Administration touted the $25 billion mortgage deal it reached with 49 states and the big banks to settle allegations that banks mishandled mortgages. As part of the settlement, banks said they would offer at least $10 billion in loan forgiveness to homeowners. But months after the deal was inked, banks have been slow to hand out the money.
The Democratic National Convention will feature employees of firms run by Bain Capital -- the private equity firm where Mitt Romney was formerly CEO -- likely in an aim to raise questions about Romney's tenure at the now-controversial company. But Democratic candidates and committees had actually netted double the amount of campaign cash from Bain workers as of May than their Republican counterparts since 2008, according to the Boston Globe. Now, Republicans are beating their Democratic colleagues in Bain cash, with 58 percent of donations from Bain employees going to Republican candidates and parties, according to the Center for Responsive Politics. CORRECTION: An earlier version of this slide misstated that Democrats were receiving more donations from Bain employees than Republicans. That was the case in May. As of September Republicans are receiving more donations from Bain employees.
The announcement last month that the Justice Department wouldn't be prosecuting Goldman Sachs over allegations surrounding the financial crisis was a reminder for many that the Obama Administration has largely let banks off the hook for their role in the meltdown. And regulators and officials may be running out of time; the statute of limitations for crimes related to the financial crisis is fast approaching, according to The New York Times.
Many current and former members of the Obama Administration have ties to Wall Street. The list includes the president's current and former chiefs of staff -- Jacob Lew and Bill Daley, respectively -- as well as his former budget director, Peter Orszag, and others.
At the end of 2011, five big banks, including Bank of America and JPMorgan Chase, held 56 percent of the U.S. economy, according to Bloomberg, compared to 43 percent five years earlier. That's right, the too-big-to-fail banks have actually gotten bigger.
Welcome to the U.S. of Low-Wage America. Most of the jobs lost during the recession paid middle wages, while most of those gained during the recovery were low-wage jobs, according to a recent study from the National Employment Law Project.
Median household income fell 6.7 percent between June 2009, when the recession technically ended, and June 2011, according to a Census Bureau study cited by The New York Times. That's more than the 3.2 percent incomes fell during the recession, between 2007 and 2009.
Last December, congressional Democrats managed to save the payroll tax cut for one more year, giving 122 million workers a few extra bucks each paycheck, but now that boost may quietly disappear, according to the Wall Street Journal. That's because the White House won't be pushing for another payroll tax cut extension this year.
Of the top 10 companies with employees donating money to Obama's campaign, three are big banks: JPMorgan Chase, Citigroup and Goldman Sachs, according to the Center for Responsive Politics. Some of Obama's other major contributors include employees from big companies such as Microsoft and Google.
"The bad news and broken promises from Obamacare just keep piling up," said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, who wants to repeal the law.
Starting in 2014, virtually every legal resident of the U.S. will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.
A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.
"This (analysis) doesn't change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it," said Erin Shields Britt of the Health and Human Services Department. "We're no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it."
The budget office said most of the increase in its estimate is due to changes in underlying projections about the economy, incorporating the effects of new federal legislation, as well as higher unemployment and lower wages.
The Supreme Court upheld Obama's law as constitutional in a 5-4 decision this summer, finding that the insurance mandate and the tax penalty enforcing it fall within the power of Congress to impose taxes. The penalty will be collected by the IRS, just like taxes.
The budget office said the penalty will raise $6.9 billion in 2016.
The new law will also provide government aid to help middle-class and low-income households afford coverage, the financial carrot that balances out the penalty.
Nonetheless, some people might still decide to remain uninsured because they object to government mandates or because they feel they would come out ahead financially even if they have to pay the penalty. Health insurance is expensive, with employer-provided family coverage averaging nearly $15,800 a year for a family and $4,300 for a single plan. Indeed, insurance industry experts say the federal penalty may be too low.
The Supreme Court also allowed individual states to opt out of a major Medicaid expansion under the law. The Obama administration says it will exempt low-income people in states that opt out from having to comply with the insurance requirement.
Many Republicans still regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it.
However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s.
It's also a central element of the 2006 Massachusetts health care law signed by then-GOP Gov. Mitt Romney, now running against Obama and promising to repeal the federal law.
Romney spokeswoman Andrea Saul said Wednesday the new report is more evidence that Obama's law is a "costly disaster."
"Even more of the middle-class families who President Obama promised would see no tax increase will in fact see a massive tax increase thanks to Obamacare," she said.
Romney says insurance mandates should be up to each state. The approach seems to have worked well in Massachusetts, with virtually all residents covered and dwindling numbers opting to pay the penalty instead.