Senate Rejects Dueling Healthcare Plans With ACA Subsidies on the Line

Good evening. The Senate failed to pass a pair of healthcare bills today, meaning that enhanced Obamacare subsidies appear likely to expire as scheduled at the end of this month. Here's your Thursday update.

Senate Rejects Dueling Healthcare Plans With Obamacare Subsidies on the Line

The Senate on Thursday rejected dueling Democratic and Republican healthcare bills, leaving Congress with no clear path to extend expiring Affordable Care Act subsidies and prevent steep cost increases or coverage losses for millions of Americans in 2026.

The Democratic plan called for a straight 3-year extension of the Covid-era subsidies, at a cost of about $83 billion over a decade, while the Republican bill from Idaho Sen. Mike Crapo Louisiana Sen. Bill Cassidy would have let the enhanced tax credits expire as scheduled and replaced them with pre-funded health savings accounts providing $1,000 a year to people aged 18 to 49 and $1,500 for those 50 and up. To be eligible for those accounts, enrollees would have to make less than 700% of the federal poverty level and choose "bronze" or "catastrophic" insurance plans with lower premiums and higher deductibles.

Democrats blocked the Crapo-Cassidy plan in a 51-48 vote that fell short of the 60 votes needed. Sen. Rand Paul of Kentucky was the lone Republican to vote against the bill, while Sen. Steve Daines of Montana did not vote. Republicans then blocked the Democratic bill, also 51-48. Four GOP senators voted with Democrats: Susan Collins of Maine, Josh Hawley of Missouri and Alaska's Lisa Murkowski and Dan Sullivan.

Both votes were expected to fail, making them little more than political messaging exercises after the two sides failed to make any significant progress toward a compromise on the subsidies, which were at the heart of this fall's government shutdown fight.

The clash over the subsidies, and over Obamacare more broadly, continued on the Senate floor Thursday, as Democrats argued that subsidies should be extended to prevent a looming healthcare crisis and Republicans countered that the Affordable Care Act has raised costs and needs to be overhauled.

Senate Minority Leader Chuck Schumer panned the GOP's offering as essentially giving people $80 a month and forcing them onto "bare-bones bronze plans with sky-high deductibles" that could run as high as $7,000 or $10,000 for individuals and tens of thousands for couples. "The Republican bill is not true healthcare reform. It is not a healthcare plan whatsoever. It is junk insurance," he said. "The Republican plan is a 'when-you-get-sick-you-go-broke' plan."

Senate Majority Leader John Thune slammed the Democratic bill for not including any reforms to tackle waste, fraud and abuse or changes to reduce the "spiraling" costs of Obamacare. "Apparently, they think that a three-year extension with no reforms, to try and disguise the real impact of Obamacare's spiraling costs, is actually a plan. I don't know how you can call it a plan," he said. "They want to extend the status quo - a failed, flawed fraud program that is increasing costs at three times the rate of inflation."

What's next: The likelihood of Congress extending the more generous ACA subsidies appears slim. But there are glimmers of hope for those who don't want to see premiums spike.

In the House, Republican leaders who are trying to pull together a plan of their own reportedly offered their members a menu of ideas on Wednesday rather than a formal proposal ready for a vote. But rank-and-file lawmakers are offering up their own legislation. The backers of two bipartisan efforts to extend the expiring subsidies launched discharge petitions Wednesday seeking to force Speaker Mike Johnson to hold floor votes on their plans.

One bill, led by Pennsylvania Republican Rep. Brian Fitzpatrick, would extend the expiring tax credits through 2027, expand access to health savings accounts and enact reforms to the Affordable Care Act. "Congress cannot sit idle while American families face a preventable crisis," Fitzpatrick said in a statement Wednesday. "If these protections expire, millions of Americans will be hit with premium increases they simply cannot afford, forcing impossible choices about their health, their finances, and their futures. They deserve a concrete solution now - not promises of one later."

The other bill, led by Republican Rep. Jen Kiggans of Virginia and Democratic Rep. Josh Gottheimer of New Jersey, calls for a one-year extension of the enhanced tax credits with reforms meant to crack down on fraud om the program and prevent so-called "ghost beneficiaries" or "phantom enrollees." The bill also would require a vote by July 1, 2026, on another year of premium savings and additional reforms.

"Our legislation implements income caps, puts up guardrails to protect against waste, fraud, and abuse, and even implements broader healthcare reforms," Kiggans said in a statement. "This legislation is proof that compromise works and that Democrats and Republicans are capable of working together on behalf of the American people."

Each of the petitions quickly gathered enough Republican signatures that Democrats could get them to the required total of 218 if they choose to do so.

The bottom line: The expanded Affordable Care Act subsidies expire in just under three weeks and hopes for a bipartisan solution are dimming. If the tax credits do sunset as scheduled, average premium payments for subsidized enrollees are projected to rise by 114%, creating hardship for millions of Americans and leaving healthcare costs as a potent political issue heading into the 2026 midterm elections.

Tariff Threats Help Shrink Trade Deficit, but Americans Are Paying a Price

The U.S. trade deficit in September fell to its lowest level since mid-2020, according to data from the Commerce Department released Thursday.

The gap in trade of goods and services shrank to $52.8 billion, an 11% reduction from the month before. The trade deficit hasn't been that small since June 2020, when it totaled $49.2 billion.

A 3% increase in the value of exports helped shrink the deficit, driven by gold and pharmaceutical products. Imports increased by 0.6%.

The increase in gold exports is likely related to one-time factors. Earlier this year, fearing that President Trump would put tariffs on gold, traders reportedly imported large amounts of the precious metal. Now that Trump has refrained from taxing gold imports, the flow has reversed, contributing to the largest surplus on record with Switzerland as investors shipped gold back to their Alpine vaults.

Overall, the trade deficit is still larger through the first nine months of the year than it was in 2024. The year-over-year increase of 17% is driven largely by the rush to import goods after Trump took office, as U.S. firms stockpiled supplies ahead of his promised tariff hikes.

Tariffs cost households $1,200, study says: Trump's unilateral tariff hikes are pushing up prices for American consumers, and a new study by Democrats on the bipartisan Joint Economic Committee finds that the import taxes cost U.S. households about $159 billion between February and November. That translates to roughly $1,198 per household in just 10 months.

If tariff-related cost increases remain at the November level of $24 billion per month in aggregate and $181 per household, consumers can expect to pay about $2,100 per year.

"While President Trump promised that he would lower costs, this report shows that his tariffs have done nothing but drive prices even higher for families," Sen. Maggie Hassan, the senior Democrat on the Joint Economic Committee, said in a statement. "At a time when both parties should be working together to lower costs, the President's tax on American families is simply making things more expensive."

Other experts have come to similar conclusions. Kimberly Clausing, an economist at UCLA School of Law and the Peterson Institute for International Economics, has estimated that the Trump tariffs amount to a $1,700 per year tax increase on U.S. households. Clausing told the Associated Press that the tariffs are "the largest tax increase on American consumers in a generation, lowering standards of living for all Americans.''

The Trump administration denies that U.S. companies and consumers pay the cost of the tariffs, which are taxes collected from importers inside the country, but virtually all economists agree that the burden of tariffs is incurred largely domestically.

White House spokesperson Kush Desai claimed the tariffs will help Americans by fostering new investment agreements with foreign firms. "President Trump's tariffs have actually secured trillions in investments to make and hire in America as well as historic trade deals that finally level the playing field for American workers and industries," Desai told the AP.

Poll of the Day

Just 31% of American adults approve of President Trump's handling of the economy, according to a new Associated Press-NORC poll, down from 40% in March - and the lowest economic approval rating he's had in this poll in either term.

The new poll also finds Trump's overall approval rating to be 36%, down from 42% in March.

The poll of 1,146 adults was conducted from December 4 to 8 and has a margin of sampling error of plus or minus 4 percentage points.

Number of the Day: $3.5 Billion

In an effort to save money on its next generation of small warships, the U.S. Navy decided to borrow an existing design for a frigate already in service with the French and Italian navies, to be built by Marinette Marine, a Wisconsin-based firm owned by the Italian shipbuilder Fincantieri.

But as The New York Times explains in a piece titled "America Can't Make What the Military Needs," the Navy developed a list of alterations to the basic design of the ship, known as the Constellation-class guided missile frigate, and that list kept growing, changing the features and dimensions while running up the cost. Facing rising expenses, the Navy canceled the contract in November, ending a program that cost $3.5 billion without producing a single frigate. The Navy says it will take delivery of two ships currently under construction, but it's not clear that the shipyard can meet its deadline in three years - or ever.

The program's failure highlights serious problems with the U.S. industrial base, the Times says. The U.S. once had more than 300 commercial shipyards, which relied on federal subsidies to remain in business. "President Ronald Reagan, trying to shrink government, canceled the subsidies in the early 1980s, and American shipyards lost many of their private sector customers," the Times reports. "Tens of thousands of workers lost their jobs as foreign competitors picked up the business. American shipbuilding collapsed."

Fiscal News Roundup

• Senate Rejects Extension of Health Care Subsidies as Costs Are Set to Rise for Millions of Americans – Associated Press
• 4 GOP Senators Break Ranks to Vote for Democratic Extension of Obamacare Subsidies – The Hill
• House GOP Leaders Could Unveil Health Plan This Weekend – Politico
• Tariffs Have Cost U.S. Households $1,200 Each Since Trump Returned to the White House, Democrats Say – Associated Press
• GOP Lawmakers Unhappy With Trump's Affordability Message: 'You Can't Call It a Hoax' – The Hill
• Trump's Handling of the Economy Is at Its Lowest Point in AP-NORC Polling – Associated Press
• White House Says Tariffs Means Children's Dolls Might Cost 'a Dollar or Two More' – Associated Press
• $2B in Pentagon Funds Diverted to Immigration Operations, Congressional Democrats Say – ABC News
• Treasury Secretary Bessent Calls for Looser Regulations for the U.S. Financial System – Associated Press
• Vote to Overhaul FEMA Canceled After Leaked Report – Politico
• Minnesota Fraud Case Is Biggest Among Many Multimillion-Dollar Pandemic Scams. Here Are the 10 Most Costly – CBS News
• The US Threatens to Cut Aid to South Sudan, Citing Its Treatment of Humanitarian Groups – Associated Press

Views and Analysis

• The Senate Voted Down Dueling Health Proposals. Here's What's at Stake for Americans – Ali Swenson, Associated Press
• Another $12 Billion for a Tariff Bailout – Wall Street Journal Editorial Board
• A Divided Fed Cuts Rates Again-but Why? – Wall Street Journal Editorial Board
• Powell's Last Rate Cut Would Send Sparks Flying – Jonathan Levin, Bloomberg
• Trump Says $1 Million "Gold Card" Visa Could Be Lucrative for the U.S. Here's How It Works – Aimee Picchi, CBS News
• Destroying the CFPB Will Blow Back on Business – Bloomberg Editorial Board
• America Can't Make What the Military Needs – New York Times Editorial Board
• FEMA Hired a Conspiracy Theorist. What Could Go Wrong? – Mark Gongloff, Bloomberg