President Barack Obama says there won't be a tax hike in the health care bill -- but Sen. Max Baucus's bill says otherwise. | White House Bill says 'tax' when Obama said 'not'

In the most contentious exchange of President Barack Obama’s marathon of five Sunday shows, he said it is “not true” that a requirement for individuals to get health insurance under a key reform plan now being debated amounts to a tax increase.

But he could look it up — in the bill.


Page 29, sentence one of the bill introduced by Senate Finance Committee Chairman Max Baucus (D-Mont) says: “The consequence for not maintaining insurance would be an excise tax.”

And the rest of the bill is clear that the Finance Committee does, in fact, consider it a tax: “The excise tax would be assessed through the tax code and applied as an additional amount of Federal tax owed.”

The bill requires every American, with few exceptions, to carry health insurance. To enforce this individual mandate, the Senate Finance Committee created the excise tax as a penalty for people who don’t have insurance – and it can run as much as $3,800 a year per family.

The House bill also refers to the penalties for not carrying insurance as a tax. It calls for a “tax on individuals without acceptable health care coverage” and amends the tax code to implement it.

The questions from ABC’s George Stephanopoulos highlighted a politically dangerous new aspect of the health reform debate for Obama – as critics from Republican leaders to the U.S. Chamber of Commerce say his reform proposals amount to a middle-class tax increase. Obama promised during the campaign that Americans earning less than $250,000 a year would not see any tax increases from an Obama administration.

Obama strongly denied that the mandate amounts to a tax increase – saying it was no different than requiring people to have auto insurance and charging a penalty if they don’t. He also said it was important for everyone to have insurance so that people who do carry insurance don’t have to shoulder the load for people who don’t. The excise tax is designed as an enforcement mechanism to ensure people will carry insurance.

Obama also told Stephanopoulos that Americans are already facing a “tax increase” from soaring insurance premiums and argued that health reform will curb the future costs and actually save Americans money.

During the campaign, Obama resisted the idea of an individual mandate to own insurance, but since then has been open to it.

But the questions about tax increases are part of an emerging Republican line of attack. Senate Republican leader Mitch McConnell on Sunday said, “I don't know anybody in my Republican conference in the Senate who's in favor of doing nothing on health care. . . . We don't think it's a good idea to raise taxes on small businesses and on individuals in the heart of a recession. There are some serious differences about what ought to be done.”

Obama also was pressed on whether new fees on insurance companies and drug makers to pay for reform would also amount to a tax levy on the middle class, because the companies would be likely to pass through the cost to consumers.

“I can still keep that promise because as I’ve said about two-thirds of what we’ve proposed would be from money that’s already in the health care system but just being spent badly,” Obama told CBS’s Bob Schieffer on “Face the Nation.”

“Now we are going to have to find some additional sources of revenue for the other third or so of the health care plan, and I’ve provided a long list of approaches that would not have impact on middle-class Americans. They’re not going to be forced to pay for this.”

The “Chairman’s Mark: America’s Healthy Future Act of 2009” says people up to 300 percent of the poverty line could pay a maximum of $750 per year if they don’t have insurance, and up to $1,500 per family. Above that line, the excise tax for individuals is $950 per year, with a family maximum of $3,800.

Here's the exchange between Obama and Stephanopoulos on ABC’s “This Week,” taped Friday at the White House:

STEPHANOPOULOS: Probably the most definitive promise you made in the campaign is that no one in the middle class would get a tax increase on your watch.

OBAMA: Right.

STEPHANOPOULOS: Yet this week, Senator Rockefeller and several other Democrats say that this bill by Senator Baucus is a big middle class tax increase.

Do you agree and does that mean you can't sign it?

OBAMA: Well, I don't agree. I think that what they were referring to - and I haven't looked at the quotes. But I think that they were concerned about whether or not this was actually affordable. If you're saying to people, you've got to get health insurance but they can't actually afford it and they have to pay a penalty if they don't get it, then that's a pretty big burden on middle class families. That's a concern I share — making sure that this is affordable.

But the first thing we've got to understand is you've got what is effectively a tax increase taking place on American families right now. The Kaiser Family Foundation report just came out last week. Health care premiums went up 5.5 percent last year, at a time when the rest of the economy, inflation was actually negative. So that is a huge bite out of people's pockets.

And part of what I've been trying to say throughout this campaign - this effort to get health care done — is that if we don't do anything, guaranteed, Americans' costs are going to go up, more people are going to lose health care coverage, the insurance companies are going to continue to prevent people from getting it for pre-existing conditions. Those are all burdens on people who have health insurance right now. And...

STEPHANOPOULOS: That is true, but...

OBAMA: And so -- and so -- just -- just to close the loop on this, the principles I've put forward very clearly, when I spoke to the joint session of Congress, is that we're going to make sure that, number one, if you don't have health insurance, you're going to be able to get affordable health insurance.

Number two, if you have health insurance, we're going to have insurance reforms that give you more security -- you know what you're going to get. You know that if you're paying your premiums, you're actually going to have coverage when you get sick.

Number three, it's going to be deficit neutral -- it's not going to add a dime to the deficit, now or in the future.

Number four, it's going to start driving down our costs over the long-term.

Now, 80 percent of what I'd like to see is actually already in all the various bills that are in Congress. That last 20 percent is tough because we've got to figure out -- making sure that we're paying for it properly, making sure that it really is relief to families who don't have health insurance, making sure that all the various details that are out there line up. And that's going to take some time.

But I think that the effort by the Senate Finance Committee is a serious, strong effort to move an agenda forward. We've seen some positive signs from people who might have been otherwise a little bit shaky on health care, including Republican Olympia Snowe, I think, had some nice things to.

STEPHANOPOULOS: Hasn't signed on yet, though.

OBAMA: Hasn't signed on, but has said that this is a legitimate effort to try to solve the problem. What I want to see is that we just keep on working on it over the next several weeks.

STEPHANOPOULOS: How about a matter of first principles, though. You mentioned these premium increases.

OBAMA: Yes.

STEPHANOPOULOS: But they're not happening as a result of a decision by the government.

OBAMA: Right.

STEPHANOPOULOS: You were against the individual mandate...

OBAMA: Yes.

STEPHANOPOULOS: ...during the campaign. Under this mandate, the government is forcing people to spend money, fining you if you don't

How is that not a tax?

OBAMA: Well, hold on a second, George. Here -- here's what's happening. You and I are both paying $900, on average -- our families -- in higher premiums because of uncompensated care. Now what I've said is that if you can't afford health insurance, you certainly shouldn't be punished for that. That's just piling on.

If, on the other hand, we're giving tax credits, we've set up an exchange, you are now part of a big pool, we've driven down the costs, we've done everything we can and you actually can afford health insurance, but you've just decided, you know what, I want to take my chances. And then you get hit by a bus and you and I have to pay for the emergency room care, that's...

STEPHANOPOULOS: That may be, but it's still a tax increase.

OBAMA: No. That's not true, George. The -- for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase. What it's saying is, is that we're not going to have other people carrying your burdens for you anymore than the fact that right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase.

People say to themselves, that is a fair way to make sure that if you hit my car, that I'm not covering all the costs.

STEPHANOPOULOS: But it may be fair, it may be good public policy...

OBAMA: No, but -- but, George, you -- you can't just make up that language and decide that that's called a tax increase. Any...

STEPHANOPOULOS: Here's the...

OBAMA: What -- what -- if I -- if I say that right now your premiums are going to be going up by 5 or 8 or 10 percent next year and you say well, that's not a tax increase; but, on the other hand, if I say that I don't want to have to pay for you not carrying coverage even after I give you tax credits that make it affordable, then...

STEPHANOPOULOS: I -- I don't think I'm making it up. Merriam Webster's Dictionary: Tax -- "a charge, usually of money, imposed by authority on persons or property for public purposes."

OBAMA: George, the fact that you looked up Merriam's Dictionary, the definition of tax increase, indicates to me that you're stretching a little bit right now. Otherwise, you wouldn't have gone to the dictionary to check on the definition. I mean what...

STEPHANOPOULOS: Well, no, but...

OBAMA: ...what you're saying is...

STEPHANOPOULOS: I wanted to check for myself. But your critics say it is a tax increase.

OBAMA: My critics say everything is a tax increase. My critics say that I'm taking over every sector of the economy. You know that.

Look, we can have a legitimate debate about whether or not we're going to have an individual mandate or not, but...

STEPHANOPOULOS: But you reject that it's a tax increase?

OBAMA: I absolutely reject that notion.