Deficit Hawks on the Endangered Species List

Plus, drug industry sets a lobbying record

Budget Deal Moving Ahead, Despite Outrage on the Right

Democratic and Republican leaders have expressed confidence that the bipartisan deal to suspend the debt ceiling and increase federal spending over the next two years will pass the House on Thursday before lawmakers leave town for their August recess.

"We're gonna pass it," House Majority Leader Steny Hoyer (D-MD) told reporters. "I think we'll get a good number [of votes]. I don't know if it's gonna be huge, but we're gonna pass it."

Despite widespread agreement that that the bill will pass, however, not everyone is on board.

Grumbles from the left: Some progressive Democrats have been critical of the deal, portraying it as too easy on Republicans. Worried that the agreement could set up a budget crisis in 2021, Rep. Ro Khanna (D-CA) said he was “concerned that it was a two-year deal. Why not a one year deal?... It seems like it’s basically handcuffing the next president.” Other liberals, noting that Democratic leaders have agreed to avoid “poison pill” riders on controversial issues such as abortion and funding for the border wall in the funding bills that must pass this fall, lamented their loss of leverage in those negotiations.

Outrage on the right: Resistance to the deal was more pronounced on the right, with the hardline House Freedom Caucus announcing Tuesday that it would not support the bill due to concerns about the growing national debt. “Our country is undeniably headed down a path of fiscal insolvency and rapidly approaching $23 trillion in debt. … All sides should go back to the drawing board and work around the clock, canceling recess if necessary, on a responsible budget agreement that serves American taxpayers better—not a $323 billion spending frenzy with no serious offsets,” the 31-member group said in a statement.

The deficit hawks at the Committee for Responsible Federal published “Five Reasons to Oppose the Budget Deal,” which include its purported $1.7 trillion cost over 10 years. CRFB noted that the agreement would increase discretionary spending by 21% during President Trump’s first term, pushing such spending to near-record levels.

Sen. John Kennedy (R-LA) was more colorful in his criticism, saying, “You don’t have to be Euclid to understand the math here. We’re like Thelma and Louise in that car headed toward the cliff.” Nevertheless, Kennedy said he would consider supporting the deal.

Is the deficit hawk dead? The budget deal represents “the culmination of years of slipping fiscal discipline in Washington,” said Robert Costa and Mike DeBonis of The Washington Post, and it highlights the declining influence of fiscal conservatives in the capital, at least as far as policy is concerned. Sen. James Lankford (R-OK) said the Republican Party’s credibility on fiscal restraint is “long gone.”

Although it may be too early to declare the fiscal hawk extinct — plenty of critics say the bird will return as soon as there’s a Democratic president — it certainly seems to be in ill health. As the University of Virginia's Larry Sabato said Wednesday: “A battered bird has been named to the list of endangered species. The ‘deficit hawk’ is on the road to extinction. Rarely spotted around Washington, D.C., the deficit hawk’s last remaining habitat is found in some state capitals.”

Some Republicans said that fiscal conservatism was never really a core Republican value, dating back to President Reagan’s tax-cut-and-spend policies, and that Paul Ryan’s emphasis on fiscal issues was an aberration. “It was never the party of Paul Ryan,” former House Speaker Newt Gingrich told the Post. “He’s a brilliant guy, but he filled a policy gap. The reality here is that Republicans were never going to get spending cuts with Speaker Pelosi running the House, and they didn’t want an economic meltdown or shutdown this summer.”

Is the whole debate missing the point? William Gale of the Brookings Institution, who served on President George H.W. Bush’s Council of Economic Advisers, said he wasn’t sure why the budget deal was producing so much hostility, since it basically maintains the status quo and — more importantly — is focused solely on discretionary spending. “There *is* a long-term budget issue,” Gale tweeted Tuesday, “but cutting [discretionary spending] is not the way to go.”

Instead, Gale says that any serious fiscal plan must focus on the mandatory spending side of the budget, where the rapidly increasing costs of health care and retirement are straining against revenues reduced by repeated rounds of tax cuts. Gale recommends a combination of entitlement reductions and revenue increases — a standard mix of policy options that faces an uncertain future, with well-entrenched interest groups standing opposed to movement in either direction.

The Problem with Trump's Populism

The New York Times’s Jonathan Martin and Maggie Haberman write that President Trump’s actions as president haven’t matched his populist rhetoric — and that, as the 2020 elections grow nearer, Democrats are finding some comfort in that divergence:

“Since he became president, Mr. Trump has largely operated as a conventional Republican, cutting taxes that benefit high-end earners and companies, rolling back regulations on corporations and appointing administration officials and judges with deep roots in the conservative movement. His approach has delighted much of the political right.

“It has also relieved Democrats.

“‘Just imagine if Trump married his brand of cultural populism to economic populism,’ said Representative Brendan F. Boyle, a Democrat who represents a working-class district in Philadelphia. ‘He would be doing much better in the polls and be stronger heading into the general election.’

“It is a question many Democrats still fret over: What would Mr. Trump’s prospects for re-election look like if he pressured Senator Mitch McConnell, the majority leader, into passing bipartisan measures to spend billions of dollars on infrastructure, lower the cost of prescription drugs and increase the minimum wage?”

Read the full piece at The New York Times.

How More State Health Care Spending Can Lead to Worse Health

Squeezed by rising health care costs, states have shifted money away from “social spending” on programs like public education, public health services, housing assistance, food assistance and income support. That shift “is having dire and long-lasting consequences for the nation’s health and community well-being,” warns a new report from the Lown Institute, a nonpartisan nonprofit that advocates for affordable health care.

The report says the United States spends only 9% of its economy on improving such community conditions, much less than other advanced countries. That, in turn, has led to worse health conditions and higher health care spending, creating what the study’s authors describe as a vicious cycle.

In other words, the authors write, more state spending on health care may be eroding Americans’ health.

The report focuses on California, where the authors say that growth in health care spending has far outpaced growth in spending on public health, the environment and social services. Between 2007 and 2018, the state’s spending on health care rose 146%, from $48 billion to $119 billion, the report says, while spending on social services, public health and the environment grew by 36%. That “growing imbalance” means the state “is sacrificing potential long-term health gains for short-term health stopgaps,” the authors write.

They say that as health care costs continue to climb and squeeze other parts of the budget, lawmakers will have to decide whether to raise taxes, rein in health spending or pursue some combination of the two. But, they say, California should look to curb wasteful health care spending and redirect that money toward increased funding for social, environmental and community programs. “The long-term health of the state,” they write, “depends on it.”

Drug Industry Spent a Record Amount on Lobbying in the First Half of 2019

As Congress considers legislation to lower drug prices, the pharmaceutical industry spent a record amount on lobbying in the first half of the year, the Financial Times’s Hannah Kuchler and Kiran Stacey report, based on congressional findings.

The Pharmaceutical Research and Manufacturers of America, a leading industry trade group, spent $16.1 million on lobbying in the first six months of the year, up 4% from the $15.5 million it spent in the first half of 2018. PhRMA spent $27.5 million over the full year in 2018, also a record.

Large drug companies also put significant money into lobbying efforts from January through June, as the FT details.

  • Pfizer: $7.1 million, up from $6.6 million in the first half of 2018
  • Merck: $5 million, up from $4.1 million
  • Eli Lilly: $3.7 million, up 32% from the year before
  • Johnson & Johnson: $3.6 million, up from $2.3 million
  • Gilead Sciences: $2.9 million, up 80% over 2018.

The Pharmaceutical Care Management Association, the trade association representing pharmacy benefit managers, spent $2.1 million on lobbying over the first half of 2019, up 40% from the same period a year earlier.

America’s Health Insurance Plans, the group representing health insurers, spent $5.1 million on lobbying, up 37% from the first six months of 2018.

The American Hospital Association spent $10,2 million, up 10% from the same period in 2018, while the American Medical Association, which represents doctors, spent $11.5 million, up 6%.

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