Trump’s Plan: Win in 2020, Slash Spending in 2021

Plus, is this why your generic drugs cost so much?

Trump Team’s Plan: Win in 2020, Slash Spending in 2021

The federal government may be headed for a fiscal cliff later this year, as lawmakers must agree to a spending deal for 2020 by the end of September or face the prospect of $125 billion in automatic cuts to defense and non-defense appropriations. Shortly thereafter, the federal government’s borrowing limit will have to be raised in order to avert a potential market-rattling default on U.S. debt.

“It's a mess everyone knows is coming, and yet no one seems to have a plan -- at least at the moment -- for averting disaster,” CNN’s Haley Byrd and Phil Mattingly wrote on Sunday.

“It’s one of those cartoonish anvil-over-head moments," one senior Republican congressional aide told CNN: "We all look around knowingly like 'Man, we're about to get crushed by this,' but nobody's really sure how to get out from underneath it right now."

While lawmakers hope to reach a bipartisan spending deal to raise budget caps and avoid those automatic cuts known as sequestration, the White House reportedly has a different strategy, Axios’s Jonathan Swan reports:

“Senior administration officials — including acting Office of Management and Budget director Russ Vought and fiscally conservative chief Mick Mulvaney — have told Republicans that the president doesn't want Congress to strike a spending deal in September when current funding runs out. Instead, Team Trump wants a short-term solution to preserve the ability to fight for massive spending cuts in the fifth year of a Trump presidency.”

The White House reportedly wants a one-year “continuing resolution” that would extend 2019 spending levels through fiscal 2020, then another short-term extension to fund the government past the elections. Assuming Trump wins another term, the next step would be “an epic 2021 spending battle,” Swan writes, with the president freed up to push for massive cuts.

“Trump wants to spend more on prized projects,” according to Swan, including defense, veterans, NASA, infrastructure and border security, “but still views most of government as a mass of fraud and waste — ripe for slashing.”

Generic Drugmakers Colluded to Jack Up Prices: Lawsuit

Forty-three states are suing some of the largest generic drug manufacturers in the U.S., accusing them of conspiring to inflate prices for more than 100 widely used medications, including antibiotics and treatments for arthritis, depression, high cholesterol, diabetes and cancer.

Connecticut Attorney General William Tong said that the firms worked together to raise prices on similar drugs while agreeing to maintain market share and avoid competing on price. As a result of what Tong called “an industry-wide conspiracy,” prices for many generic drugs skyrocketed. In one year alone, between July 2013 and July 2014, the prices of more than 1,200 generic drugs jumped by an average of 448%, the suit says. Some individual drug prices rose by more than 1,000%. (The 524-page lawsuit filed Friday is available here.)

Here are some key details about the suit:

  • The drugs named in the suit produce billions of dollars in sales annually in a generics market worth $100 billion.

     
  • Most of the collusive activity occurred between July 2013 and January 2015, but the pricing effects persist.

     
  • Medicare and Medicaid, health insurers and individuals were all affected. 

     
  • The 20 companies named in the suit include Teva, Novartis, Sandoz, Mylan and Pfizer.

     
  • The suit also names 15 individual executives at the firms responsible for sales, marketing, pricing and operations.

     
  • The accused companies have denied the charges.

Tong told CBS News’s “60 Minutes” on Sunday that this may be the largest case involving a cartel in U.S. history. He also said that, in his view, the drugmakers were “too big to care” about hurting consumers in a market in which “there’s just too much money to be made.”

Tong also said that he has hard evidence to back up his claim: "We have emails, text messages, telephone records, and former company insiders that we believe will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs.” In the end, the enormous price hikes on generic drugs that American consumers have been dealing with had nothing to do with market forces or product shortages, Tong said. Instead, he said, “It was about profit. It was about cold, hard greed.”

Pentagon Shifting Another $1.5 Billion to the Border Wall

The Department of Defense has identified several more military programs that will be used as sources of funds to build part of President Trump’s border wall with Mexico. According to a document reviewed by The Washington Post, the Pentagon will shift $1.5 billion originally intended for projects including:

  • Updates to the Minuteman III ballistic missile system, which will be delayed;

     
  • The Airborne Warning and Control System (AWACS) program;

     
  • A “space test experiment” by the Defense Advanced Research Projects Agency (DARPA);

     
  • The new Blended Retirement System, which Pentagon officials said was less popular than expected;

     
  • Two funds that support coalition forces and Afghan troops within the Overseas Contingency Operations budget, which is intended to be used for war-fighting efforts.

While the Post did not report individual dollar amounts for each program, the Associated Press said that the OCO account would provide $604 million in reprogrammed funds, the largest amount in the group. The AP also said that $251 million would come from a project targeting chemical weapons, while various Air Force programs would be contributing $344 million and the retirement system would add $224 million.

The Pentagon previously identified $1 billion that was being reprogrammed from Army personnel recruiting accounts, as well as $3.6 billion that was being redirected from military construction projects.

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Chart of the Day

Ten years into what will soon be the longest economic expansion in U.S. history, 40% of families say they are still struggling, according to a new report from the Urban Institute.

“Nearly 4 in 10 nonelderly adults reported that in 2018, their families experienced material hardship—defined as trouble paying or being unable to pay for housing, utilities, food, or medical care at some point during the year—which was not significantly different from the share reporting these difficulties for the previous year,” the report says. “Among adults in families with incomes below twice the federal poverty level (FPL), over 60 percent reported at least one type of material hardship in 2018.”

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