Close Close

Financial Planning > Tax Planning

Hillary Clinton's Nevada union foes eye repeal of PPACA 'Cadillac tax'

Your article was successfully shared with the contacts you provided.

(Bloomberg Politics) — Tuesday afternoon, Hillary Clinton will address leaders of Nevada’s labor unions—including the state’s largest, which blasted her as “shameless” during the heated 2008 caucus, but now wants her help repealing the so-called “Cadillac tax,” a creation of the Patient Protection and Affordable Care Act (PPACA).

“We don’t look backwards, and I don’t suspect the Clinton camp does either,” says Yvanna Cancela, political director of the 55,000 member Culinary Workers Union Local 226, a Nevada casino and hospitality worker group affiliated with the international union UNITE HERE. (Disclosure: I worked for UNITE HERE in California and Pennsylvania from 2006 to 2011).

In 2008, UNITE HERE was the first national union to back Barack Obama for president, and the Culinary Workers fought hard to help him try and defeat Clinton in Nevada’s Caucus, the first contest to follow Obama’s underdog win in Iowa and Clinton’s comeback victory in New Hampshire.

See also: Bernie Sanders’ eye-popping West Coast swing: 3 days, 70,000 cheering supporters

Things quickly got hostile. Following UNITE HERE’s endorsement, the Nevada State Education Association and five party activists filed a lawsuit seeking (unsuccessfully) to shut down “at large” caucus sites the state Democratic Party planned to place at casinos so that people working that weekend could participate. The plaintiffs said those sites would violate the Constitution’s promise of equal protection; UNITE HERE and the Obama campaign said eliminating them would disenfranchise workers. Hillary Clinton didn’t weigh in on the lawsuit, but her husband fiercely defended it. Days before the caucus, UNITE HERE blasted her in a radio ad. “Hillary Clinton does not respect our people,” the union charged in Spanish. “Hillary Clinton should not let her friends attack the right of our people to vote on Saturday. It’s unforgivable.”

Asked if that’s how her union views Clinton now, Cancela told Bloomberg, “No, I don’t think anything from 2008 could be applicable to today.” As for that “unforgivable” comment, she says, “I think the caucus brought out a lot of emotion… I don’t think members have forgotten that, but I also think members know that this election is a new page, and they’re ready to learn where Senator Clinton is at today, and feel her out, without holding any grudges about what happened in 2008.”

See also: How Obama hurts Clinton (and helps Sanders) with unions

The “starting point” for that assessment, says Cancela, is where she stands on repealing PPACA’s controversial excise tax, a 40 percent tax on expensive health care plans that’s meant to slow the growth in health care spending while raising revenue. “It’s the most important issue we’re looking at right now, and there’s an opportunity for real action and not carefully-worded promises.”

The Culinary, as the union is known, wants candidates to back a House bill introduced in April by Connecticut Democrat Joe Courtney—with support from the AFL-CIO and the U.S. Chamber of Commerce—which would scrap the tax before it takes effect in 2018.

See also: Companies tap brakes on ‘Cadillac’ plan shift amid anti-tax push

When Clinton and her further-left rivals Martin O’Malley and Bernie Sanders address the Nevada AFL-CIO (each will deliver a speech, closed to media, without taking questions), Cancela wants to hear it discussed. “It seems to me like it would be foolish to not address it with this crowd,” she says.

The excise tax is a long-time sticking point for organized labor, which pushed hard for President Obama’s election and for passage of PPACA. Like the Trans-Pacific Partnership and the Keystone pipeline – two other issues where unions are trying to pin Clinton down—it’s divisive among Democrats.

“After decades of fighting for it, we’re finally moving towards a more rational, efficient health care system,” Jared Bernstein, a former chief economist to Vice President Biden and current senior fellow at the liberal Center on Budget and Policy Priorities, wrote last month in a Washington Post essay defending the tax, which he said would help control costs, and keep the bill from increasing the deficit, all while initially hitting few employees. “Let’s not screw that up.”

See also: Kleinbard to Congress: The Cows Must Die

That plea didn’t persuade UNITE HERE president D. Taylor. “Shifting costs to families that already can’t pay their bills is not the same thing as holding down costs, and certainly doesn’t control them responsibly,” Taylor, who helmed the Culinary during the 2008 caucus, wrote in a rejoinder at the Huffington Post.

So far, the Democratic field is echoing unions’ concerns, but not embracing any specific solution. In a questionnaire submitted to the American Federation of Teachers before winning its endorsement, Clinton said she was “examining” the tax, and that, “As currently structured, I worry that it may create an incentive to substantially lower the value of the benefits package and shift more and more costs to consumers.”

In a Monday e-mail, Clinton spokesman Jesse Ferguson told Bloomberg that the Democratic front-runner “continues to seek ways to strengthen and improve PPACA, including examining concerns that many workers have with the so-called ‘Cadillac’ tax.” He said she “supports the intention of trying to get health care costs under control” but also “believes we shouldn’t put cost containment on the backs of consumers and workers.”

In an answer a questionnaire for the Laborers International Union of North America, Sanders cited his proposal during the PPACA debate to use a surtax on millionaires instead of a “Cadillac tax,” and said he’s working on a solution in the Senate. “The challenge will be narrowly crafting legislation that provides relief to union members, while not giving another tax break to high-earning corporate executives,” he wrote.

In an AFL-CIO questionnaire submitted July 2, O’Malley said it was necessary to “consider necessary changes” because the tax “may affect far more people than expected and make it more difficult for individuals to get important, comprehensive medical coverage.”

Clinton, who’s been endorsed by two national unions so far, is expected to land several more over the next few months, though the AFL-CIO itself could hold off until the primary is effectively over. Cancela predicts that the fortunes of Congressman Courtney’s bill will affect when her union decides to endorse. (As in 2008, a formal endorsement would originate with the national union, but as representative of about a fifth of UNITE HERE’s members, the home local of its current president, and a top player in an early caucus state, the Culinary has substantial sway.) UNITE HERE affiliates have sometimes frustrated allies by backing front-runners, like Chicago’s Rahm Emanuel, against more liberal challengers.

For now, says Cancela, there’s “a lack of urgency” from Culinary members about getting behind a candidate. “There’s so much time before election day.”


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.