Reid Demands Baucus Drop Tax on Benefits

Health care talks in the Senate got a bit rough on Tuesday as Senate Majority Leader Harry Reid, D-NV, in a closed meeting with his leadership team and Finance Committee Chairman Max Baucus, D-MT, told the chairman he must drop a proposed tax on health care benefits and stop trying to corral Republican support for reform.

This story was first reported by Roll Call, but that report said Reid revealed his demands through an "intermediary."

A senior aide to a member who was inside the room tells Fox, however, that Reid, himself, gave the orders to Baucus.

Baucus is working with a bipartisan group to come up with a health care reform bill that can pass the Senate with 60 votes. That's the amount needed to break a filibuster.

Reid made it clear he favors a public option, but a number of Democrats have told Fox they don't think the votes are there for such a proposal.

A spokesman for Reid said the story is overwitten, that Reid was expressing a sentiment that the tax is unpopular.

Sen Kent Conrad, D-ND, confirmed that the Finance Committee is, indeed, "examining alternatives" to taxing health benefits. But Conrad was quick to say it is "not off the table."

Conrad said members had heard loud and clear from constituents, though, that this idea is not popular. In addition, Conrad said Democratic senators cites three fairly recent public polls showing the idea is unpopular with Americans.

Only problem -- the current tax proposal provides $340 billion in revenue to help pay for reforms.

Conrad said other options could include placing a cap on the deduction higher-wage earners take on charitable contributions, a proposal known to be vastly unpopular with Baucus.

Another idea being considered, a kind of excise tax of 2% on those earning more than $250,000 per year.

This would appear to set Democrats back once again, as they continue to slog through creating a bill.

And it is unclear what Reid's nose-thumbing at bipartisanship will do to the handful of Republicans that are in negotiations with Baucus: top committee GOP'er Chuck Grassley of Iowa, Maine's Olympia Snowe, and Orrin Hatch of Utah.