Bad week for higher taxes

Oregon voters passed judgment Tuesday on a plan that would have made their state children’s health insurance program “universal.” Sound familiar?

It should, because Oregon reproduced the current Schip fracas in D.C. on the state level — and the referendum took a major shellacking, with voters siding three to two against. Oregon’s expansion was almost identical to the one backed by Congressional Democrats, so let’s conduct a post-mortem, which may also be a portent.

Like Beltway Democrats, Governor Ted Kulongoski and his legislature wanted to broaden eligibility for Oregon’s “Healthy Kids” Schip program to 300% of the federal poverty level. They would also allow all families to opt in, regardless of income, though higher earners wouldn’t get subsidies. Again like Congress, Salem intended to pay for the expansion with cigarette taxes, which would increase to $2.02 from $1.18 a pack. That would be one of the highest state tobacco levies in the nation.

Democrats couldn’t dredge up the three-fifths approval required for a tax increase in the legislature, so they kicked the expansion over to the ballot. And already, Measure 50’s defeat is being blamed on $12 million in advertising by Big Tobacco. “What happened was, the tobacco industry bought the election,” Governor Kulongoski declared yesterday.

We’re surprised the Governor thinks voters in his left-leaning state are so easily gulled — especially in a contest between “healthy kids” and cigarettes. More persuasive is the notion that voters didn’t want to pass a state tax increase to finance a health-care expansion that Congress might soon pass, along with buckets of federal dollars. But most likely, voters understood that a tax increase on cigarettes is still a tax increase, and a highly regressive one at that. Only about 20% of Oregonians smoke, and most of those are lower income.

…As for 2008, most of the national press corps has already assumed “universal” coverage will both carry Hillary Clinton to the White House and march easily into law. The message from the Oregon trail is — not so fast, especially if her Republican opponent advances a credible free-market alternative.