Treasury Secretary Timothy Geithner puts down his notes as he hosted the Conference on the Future of Housing Finance, Tuesday, Aug. 17, 2010, at the Treasury Department in Washington,. Sitting behind Geithner is Alex Pollock from the American Enterprise Institute. (AP Photo/Pablo Martinez Monsivais)A proposed special-interest tax break for plaintiffs’ lawyers would add billions of dollars in federal spending and jack up costs to consumers. It’s nothing more than a direct subsidy from taxpayers to ambulance chasers.
That was the message of a strongly worded letter to Treasury Secretary Timothy F. Geithner from the American Medical Association, 42 national medical groups representing specialties such as radiology, cardiology and gastroenterology, and the medical associations of 47 states and the District of Columbia. The Treasury is considering an administrative ruling - as an end run around Congress - that would allow trial lawyers to take tax deductions upfront for client expenses the lawyers can later collect from clients if they win their cases. The AMA is right to blow the whistle on this naked political payoff to the trial lawyers who so lavishly fund liberal Democratic campaigns.
The Joint Tax Committee estimated the tax subsidy would cost the Treasury $1.57 billion. According to the medical associations, the change introduces “a financial incentive” for lawyers to file frivolous suits against doctors and health care organizations, which average $22,000 to defend. “This leads to increased costs for physicians and patients - money that could otherwise be spent expanding coverage to the uninsured,” the association letter states. “Given that … the Congressional Budget Office estimates that effective medical-liability reforms would decrease defensive medicine and save the government $54 billion over 10 years, we find it perplexing that the Treasury Department would consider a change in policy that could add to the cost of health care.”
The reason the Obama Treasury Department is entertaining such a costly policy was revealed last year by former Democratic National Committee Chairman Howard Dean, himself a medical doctor. At a town-hall meeting held by Virginia Democratic Rep. James P. Moran Jr., Dr. Dean explained that Obamacare didn’t contain tort reform “because the people who write it did not want to take on the trial lawyers.” This obeisance is because the top trial-lawyer lobby routinely gives 95 percent or more of its political donations to Democrats.
Sen. Charles E. Grassley, Iowa Republican, wrote to Treasury on July 22 demanding all documents related to the proposed trial-lawyer tax break and an explanation for it. As of yesterday, Treasury hadn’t replied. That’s hardly a surprise, because there is no justification for the payoff.
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