Biden Jumps Into Democrats’ Big Budget Battle

Biden Jumps Into Democrats’ Big Budget Battle

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Plus, Democratic drug pricing plan fails a key test
Wednesday, September 15, 2021

Today is Democrats’ deadline day the date Speaker Nancy Pelosi set for House committees to finish writing their portions of the party’s $3.5 trillion tax-and-spending plan. It looks like they’ll meet that goal, with the House Ways and Means Committee approving some $2.1 trillion in taxes focused mostly on the wealthy and corporations — the biggest tax hikes in a generation.

In all, Democrats will have generated what the Washington Post says is some 2,600 pages of legislative text detailing their vision for a historic revamping of the social safety net, health care and the U.S. tax system. But there’s a long, long way to go. Here’s what you need to know.


Biden Jumps Into Democrats’ Big Budget Battle

With House Democrats rushing to meet a self-imposed September 15 deadline for writing the $3.5 trillion spending package that contains much of President Joe Biden’s economic agenda, the president himself on Wednesday jumped into the political battle that could determine whether the proposed legislation ever becomes law.

Biden met with Sen. Kyrsten Sinema (D-AZ) in the morning to discuss the effort and planned to meet with Sen. Joe Manchin (D-WV) later in the day. Both lawmakers have expressed deep reservations about the size and scope of the Democratic proposal, and with no votes to spare in an evenly divided Senate, they will have to be convinced to support the package if it’s to have any chance of passing.

The meetings confirm that Biden, the former senator, will be using his influence in Congress to move his agenda forward. As Rep. Pramila Jayapal (D-WA), chair of the Congressional Progressive Caucus, put it earlier this week, “We are going to need the White House to be all in” in order to get the bill passed.

Sinema’s office provided a positive if non-committal assessment of the discussion: “Today’s meeting was productive, and Kyrsten is continuing to work in good faith with her colleagues and President Biden as this legislation develops,” spokesman John LaBombard said.

Democratic drug pricing plan fails a key test: In another threat to Biden’s agenda, a trio of centrist Democrats shot down a drug pricing initiative that is intended to help offset the cost of the $3.5 trillion spending package by saving the government billions of dollars on pharmaceutical purchases.

With Democratic Reps. Kurt Schrader (OR), Scott Peters (CA) and Kathleen Rice (NY) joining Republicans in voting no, the House Energy and Commerce Committee failed to pass a measure designed to give the government the power to demand lower drug prices from manufacturers and limit price increases over time. The Democrats say they are worried that the proposal could harm innovation. Their critics charge that they are simply putting the financial interests of drugmakers ahead of ordinary citizens.

Democratic leaders said they aren’t giving up on the measure, which could make it into the final package via another legislative route. “Delivering lower drug costs is a top priority of the American people and will remain a cornerstone of the Build Back Better Act as work continues between the House, Senate and White House on the final bill,” said a spokesperson for Speaker Nancy Pelosi (D-CA).

PhRMA, the massive lobbying group representing the pharmaceutical industry, celebrated the failed vote in the Energy and Commerce Committee. “This should be a strong signal to the House leadership that there is broad support for lowering costs for patients without sacrificing access to new cures and treatments,” the group said in a statement Wednesday.

The bottom line: House Democrats are nearing the end of their process of drafting the $3.5 trillion spending bill, but the political battle over its final shape and passage still has a long way to go, with the timeline potentially stretching out for weeks or even months.

Yellen Urges House Dems to Restore Part of Biden Plan to Crack Down on Tax Cheats

Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig are calling on Congress to embrace a proposal from President Biden meant to help crack down on tax cheats.

In letters to lawmakers, Yellen and Rettig expressed their support for a Biden administration proposal that would require financial institutions to report more information to the IRS about money flows into and out of bank accounts with at least $600 or at least $600 worth of transactions. The plan aims to reduce the annual “tax gap” — the amount of taxes owed but unpaid — by reducing tax evasion and helping the IRS better target its audits.

The Treasury Department estimates that the Biden administration proposal would generate $460 billion in revenue over 10 years, while narrower requirements could raise $200 billion to $250 billion.

House Democrats included about $80 billion in new IRS funding meant to help close the tax gap as part of plans they unveiled this week to raise more than $2 trillion in revenue, but they left out the reporting requirement, an indication that there wasn’t enough support for it in their caucus.

“There was a lot of concern expressed by members about the impact on relatively low-income people suddenly being subjected to this, and we get that,” Rep. Dan Kildee (D-MI) said, according to The Wall Street Journal. “I don’t think the issue is completely gone, but we were not ready to move forward on it.”

Banks have pushed back vigorously against the plan, arguing that it would be costly and could put customer information and privacy at risk. Republicans also oppose the idea, along with the broader Democratic plan.

“Not only would such an overly comprehensive IRS database require significant resources to build, maintain, and protect, but it would make the personal financial data of millions of Americans vulnerable to attack,” a group of 141 House Republicans wrote in a letter earlier this week.

Yellen and Rettig sought to respond to some of the concerns that have been raised. “A reporting regime that is broad-based will better assist the IRS in targeting enforcement priorities on the high-end who accrue income in opaque ways,” Yellen wrote in her letter to Rep. Richard Neal, chairman of the tax-writing House Ways and Means Committee. “Any suggestion that instead this reporting regime will be used to target enforcement efforts on ordinary Americans is wholly misguided.” She insisted that audit rates won’t rise for anyone making less than $400,000 in income.

And Rettig suggested that “improved information reporting could result in decreasing audits of compliant taxpayers, saving those taxpayers time and money and increasing efficiency for the IRS.”

The bottom line: Neal reportedly indicated Wednesday that he is working with the administration on a reporting requirement that would not affect the middle class, and the Senate is reportedly developing a plan using a higher threshold than the $600 in the Biden plan.

Quote of the Day

“It clearly is a tax increase, and it clearly has benefits.”

Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, in a Washington Post article detailing a proposal by House Democrats to raise taxes on cigarettes, cigars and vaping to help pay for their social spending plans. The plan “reflects the all-out scramble on Capitol Hill as Democrats scrounge for any money they can find to cover the costs of their new spending ambitions,” the Post’s Tony Romm writes.

Democrats say the changes could raise $100 billion in revenue over a decade — but Republicans are sure to argue that they would violate President Biden’s pledge not to raise taxes on Americans who make less than $400,000 a year. Asked if the idea would break that promise, TPC’s Gleckman told the Post: “Absolutely, no question.”

Number of the Day: 12.2 Million

About 2.8 million people signed up for health insurance through the health care marketplaces during the special enrollment period this year, bringing total enrollment to an all-time high of 12.2 million, the Centers for Medicare & Medicaid Services announced Wednesday. Larry Levitt of the Kaiser Family Foundation cited several reasons for the increase, including the soaring need for coverage amid pandemic-related job losses, the Biden administration’s emergency re-opening and extension of the enrollment period, and larger premium subsidies provided by Congress.

Map of the Day: Most States Have Rolled Back Public Health Powers Since Start of Pandemic

Since the coronavirus pandemic began, lawmakers in all 50 states have proposed legislation to curb the powers used by public health officials to protect against infectious diseases —and at least 26 states have passed such laws, according to an analysis by Kaiser Health News, which notes that Republican lawmakers are behind the efforts. Three more states have seen an executive order, ballot initiative or state Supreme Court ruling rolling back long-established public health authority.

“Public health academics and officials are frustrated that they, instead of the virus, have become the enemy,” Kaiser’s Lauren Weber and Anna Maria Barry-Jester write. “They argue this will have consequences that last long beyond this pandemic, diminishing their ability to fight the latest covid surge and future disease outbreaks, such as being able to quarantine people during a measles outbreak.”

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