The latest comments came with discussion of the so-called “Cadillac tax” which mandated that insurance companies would be taxed under the Act. It was the idea of then Senator John Kerry, who Gruber describes as his “hero” in using the naiveté of voters against them. He explains that taxing individuals would have been “politically impossible” so Kerry and the Administration opted to tax the companies with full knowledge that the cost could be passed on to citizens:
“So basically it’s the same thing. We just tax the insurance companies, they pass on higher prices that offsets the tax break we get, it ends up being the same thing. It’s a very clever, you know, basic exploitation of the lack of economic understanding of the American voter.”
In another view taken from at an October 2013 event at Washington University in St. Louis, Gruber also refers to the “Cadillac tax,” and says “They proposed it and that passed, because the American people are too stupid to understand the difference.”
In fairness to Gruber, (putting aside his obvious low opinion of the American people) his frank discussions are consistent with speaking as an academic. However, such machinations are rarely confirmed by high-level consultants or officials. The ACA was pushed through by a muscle vote on a handful of votes while the Administration made claims that he later had to admit were misleading at best, such as the President’s repeated assurance that citizens could keep your current insurance policy if you liked it. There was a great deal of cynicism and misleading representations made during the ACA debates — reflecting a deep-seated contempt for the intelligence of the American voter. Gruber however seems to celebrate the success in using what he viewed as the stupidity of citizens, to quote his earlier comments, to secure passage of the ACA. It is the triumph of the ends over the means — the mantra of Beltway denizens who view more principled actors as naive chumps. What is shocking for many outside of the Beltway is of course the moral relativism and cynicism reflected in such comments, but Gruber is the norm in Washington. He is the face of the consequentiality morality that has long governed this city.
What is different is that he admits it.
The video below shows an honest and frankly insightful account of how the tax issues are addressed as well as the merits of such tax systems. It is the type of lecture that occurs on many campuses but the lecturer is rarely the architect of the underlying legislation. It is the combination with the earlier videotapes that has fueled the ongoing controversy, even though this is less confrontational. Actually, the far more significant statements were found in the first videotape where Gruber expressly endorses the theory of challengers in King and Halbig. Those statements are likely to be cited in the ongoing litigation and Gruber later effort to dismiss them as unintentional or off-the-cuff seemed less than honest.
The fact is that academics are often caught in a dilemma in moving between the political and academic worlds — worlds based on different values. Where the political world values opaqueness and evasion; the academic world values transparency and clarity. Gruber is a brilliant and highly distinguished academic and his lectures satisfy his obligation to be honest and accurate. That is precisely why his former associates in the Obama Administration may now find him less than ideal as a political ally.
