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Financial Planning > Tax Planning > Tax Reform

Jeb Bush's struggle to say what he means continues

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(Bloomberg Politics) — During a forum sponsored by Americans for Prosperity, the influential conservative group backed by David and Charles Koch, Jeb Bush told the audience that he wants to “phase out” Medicare.

Afterwards, the former Florida governor was approached by an environmental activist, who was momentarily excited when Bush used the same language to say he preferred to “phase out” tax credits for energy companies.

Neither of those positions are quite what they seem.

While eliminating tax credits might sound great to liberal environmentalists and Tea Party Republicans focused on “crony capitalism,” many of the breaks for Big Oil aren’t technically tax credits.

On Medicaid, Bush’s team complained that Democrats were taking him out of context, an increasingly frequent objection from the candidate who is billing himself as the most experienced and most thoughtful on the trail.

The protest has been justified, to be sure. Democrats, including presidential candidate Hillary Clinton, leaned a bit too far over their skis recently when they suggested that a component of Bush’s economic plan was that Americans should work harder. What Bush said was that he wanted to find more full-time job opportunities for part-time workers. And while the economic reality of that happening is somewhat dubious, the attacks gained some traction and the spin found its way into town-hall questions Bush has faced on the campaign trail.

See also: Jeb Bush hates Obamacare but loves his Apple Watch

Similarly, Bush was confronted Thursday in Gorham, N.H., about his Medicare comments. “Why are you always attacking the seniors?,” an unidentified woman (and possible liberal activist) asked Bush.

“It’s an actuarially unsound health care system,” said Bush, adding that he’s not attacking seniors, according to a Politico report from the event. “The people that are receiving these benefits, I don’t think that we should touch that. But your children and grandchildren are not going to get the benefit of this…because the amount of money put in compared to the amount of money the system costs is wrong.”How it started

The source of the dispute here is somewhat ironic. Speaking about Medicare on Wednesday, Bush was bemoaning the politics of the issue, recalling the 2011 digital ad from the liberal group Agenda Project that showed a Paul Ryan look-alike wheeling an elderly woman off a cliff. The ad was in response to the Wisconsin Republican’s plan to end fee-for-service Medicare for people 55-and-under, and replace it with subsidies for people to buy either a private plan or a government-provided plan.

Bush, whose home state has the highest percentage of seniors in the nation, then went on to say that Americans generally agree that, while current benefits should be protected for those receiving them, the Medicare system needs to be reformed. And here’s where he gets himself into trouble.

“We need to figure out a way to phase out this program for others, and move to a new system that allows them to have something, because they’re not going to have anything,” Bush told his Manchester audience.

“A massive blunder on Jeb Bush’s part,” U.S. Rep. Debbie Wasserman Schultz of Florida, head of the Democratic National Committee, said Thursday on a conference call with reporters. “Maybe Jeb Bush can afford to get by without Medicare—I’m sure the Koch brothers would be fine, too—but millions of Americans count on Medicare when they retire for access to quality, affordablehealth care.”

Bush’s team had a different interpretation. Bush never said he wanted to replace Medicare, spokesman Tim Miller argued, adding that the former governor was referring to the changes he’s been talking about for months on the campaign trail, such as increasing the retirement age and means testing to make wealthier Americans pay more.  ”It’s an obvious attempt to take him out of context,” Miller said.

While Miller’s irritation was somewhat justified a few weeks ago, here the trouble is of Bush’s own causing. The “new program” he was talking about may well have been more Medicare with more means testing, and a higher retirement age. But that language is at best imprecise, particularly for a debate, as Bush himself noted, that easily can be distorted.

While Bush hasn’t released specifics about his own Medicare plan, an often-mentioned change would raise the eligibility age from 65 to 67. The effect of that change would reduce the budget deficit—projected to increase to about $1 trillion over 10 years—by about $19 billion during that time, according to the nonpartisan Congressional Budget Office. A report from the Kaiser Family Foundation notes that such a move may also increase premiums on both the young and old.

Bush also hasn’t been specific about exactly what he means by means testing, a concept that is so popular its been approved several times by Congress. The Medicare Modernization Act, enacted in 2003, increased premiums on individuals earning more than $85,000 a year. High-earners shouldered more of the Medicare burden under the Patient Protection and Affordable Care Act (PPACA), and again this year under a bipartisan plan to maintain reimbursements to Medicare doctors.

After the event in Manchester, Bush was approached by an activist tied to 350 Action, a New York-based environmental group, who wanted to know what Bush was going to do about tax breaks for big oil. Oil tycoons Richard Kinder, Ray Lee Hunt, Jeffery Hildebrand, Trevor Rees-Jones, and T. Boone Pckens all donated to Bush’s campaign, according to disclosures.

Bush, to the activists surprise, said he wanted to eliminate them all. But smile soon faded as Bush explained what he meant by “all.”

“We should phase out, through tax reform, the tax credits for wind, for solar, for the oil and gas sector, for all this stuff,” Bush said, adding that “the best way” was to “let markets decide this.”

When the activist protested about cutting subsidies for renewable energy, Bush pounced. ”You want to pick winners and losers,” the Republican said. “I don’t think we should pick winners and losers. Tax reform ought to be to lower the rate as far you can, and eliminate as many of these subsidies; All of the things that impede the ability in a more dynamic way to get to where we need to get, which is low cost energy that is respectful of the environment.”

The problem here is, again, one of definitions.

Bush hasn’t been very specific yet about what he wants to do with the tax code. But when he talks about eliminating “credits” for energy, that’s likely to have a disproportionate effect on renewable sources.

Solar and wind energy producers get their tax benefits in the form of tax credits. Oil and gas producers typically don’t, instead enjoying faster write-offs, deductions and some favorable accounting rules that aren’t “credits.”

Sahil Kapur and Richard Rubin contributed to this report.

See also: View: Jeb Bush’s Medicaid reforms didn’t go well


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