Biden Jumps Into Democrats’ Big Budget Battle

FILE PHOTO: U.S. President Joe Biden visits the Flatirons Campus Laboratories and Offices of the National Renewable Energy Laboratory (NREL), in Arvada
LEAH MILLIS
By Yuval Rosenberg

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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