Democrats Battle Over Cuts to Biden’s Agenda

By Yuval Rosenberg

Good news on the Covid front as a key FDA panel
expresses support for booster shots for millions of people who have
already received the Moderna vaccine. Meanwhile, President Biden
encourages the 66 million unvaccinated Americans to get their
shots. And the two baseball teams with the best records in the
majors prepare for an elimination game in San Francisco Thursday
night.

Democrats Battle Over Cuts to Biden’s
Agenda

With just over two weeks to go before a self-imposed October 31
deadline, the White House and congressional Democrats are
reportedly agonizing over the overall size and specific details of
their Build Back Better economic plan.

Here’s the one-paragraph summary of where things stand, via

Bloomberg’s Nancy Cook and Laura Davison:

“Speaker Nancy Pelosi and Democratic centrists want to scale
back the bill to focus on a handful of well-funded programs that
can be quickly implemented, so Democrats can boast about the
accomplishments in 2022 mid-term campaigns. But progressives want
to keep the legislation expansive, even if programs are partially
funded or expire after only a few years.”

Democrats reportedly are
debating whether to slash funding for a paid leave
program from $494 billion to $300 billion, which would mean
covering three or four weeks of leave rather than the 12 proposed
by President Joe Biden and included in a House version of the
plan.

They’re also discussing a
potential choice between including Biden’s plan
for free universal pre-K and his plan to make daycare more
affordable.

And they’re reportedly likely to
axe or weaken
at least one of the major climate provisions under
discussion, making it easier for coal and natural gas plants to get
clean energy funds in a bid to win over Sen. Joe Manchin
(D-WV).

Plans to expand Medicare coverage to include dental, vision and
hearing benefits could be on the chopping block, despite the
demands of Sen. Bernie Sanders (I-VT) and House progressives, and
limiting the new child tax credit has also come under
discussion.

White House pushing to move forward: If perchance you’re
getting tired of hearing about the legislative sausage-making, know
that the White House seems to be getting tired of it, too. Jake
Sherman of Punchbowl News reports
that White House patience is running out. One unnamed source close
to the White House tells Punchbowl:

“The White House feels that serious progress has been made and
that members representing each viewpoint are operating in good
faith, but that the time for negotiations is nearing an end because
there is an urgency to pass both components of the President’s
economic plans for the middle class and that now, because of the
needs of families, is the time to be decisive and get down to brass
tacks.”

How do you solve a problem like Manchinema? Among the
many factors that have complicated negotiations, the two Democratic
senators who objected to the initial $3.5 trillion price tag for
the package —Manchin and Kyrsten Sinema — reportedly are at odds
over key elements of the plan.

“Manchin and Sinema want very different things, both in terms of
revenue and programs,” one source told
Politico. “If you just took their currently
presented red lines you wouldn’t have enough left to get this past
progressives in the House and Senate. It wouldn’t raise enough
money and it wouldn’t do enough big programs.”

Sinema reportedly is objecting to prescription drug pricing
reforms, including a plan to allow Medicare to negotiate prices
with pharmaceutical companies — a proposal that is both popular and
a crucial source of revenue to help pay for other elements of the
Democratic plan.

“The most robust version of this plan to allow Medicare to
negotiate drug prices would bring in some $500 billion of revenue
at the expense of the pharmaceutical industry,” Politico noted on
Wednesday. “But we’re told that Democrats would be lucky if they
managed to convince Sinema to support a version of drug pricing
reform that raises even $200 billion. That’s not enough to fund the
expansion of Medicare benefits that Sen. Bernie Sanders (I-Vt.)
wants or the expansion of the ACA that Speaker Nancy Pelosi
wants.”

Manchin, meanwhile, is reportedly open to drug pricing reforms
but is also pushing for his own plan to tax prescription
opioids.

Manchin, from coal-producing West Virginia, and Sinema, who
started her career in Arizona’s Green Party, are reportedly also
miles apart on climate proposals. “Here’s where Manchin is really
driving his colleagues crazy,” Politico said: “There are tens of
thousands of coal jobs in West Virginia that are going to disappear
as the economy transitions to clean energy. But when Democrats have
proposed expensive programs to subsidize those workers’ income as
they find new jobs, Manchin, we’re told, ‘rejected it out of hand,’
calling the idea ‘welfare.’”

The bottom line: Senate Majority Leader Chuck Schumer
said in a letter Thursday that Democrats are still aiming to pass
their economic plan this month. (He also announced that he would
set a vote for next Wednesday to start debate on voting rights
legislation).

"To pass meaningful legislation, we must put aside our
differences and find the common ground within our party," Schumer
wrote. "As with any bill of such historic proportions, not every
member will get everything he or she wants. I deeply appreciate the
sacrifices made by each and every one of you. At the end of the
day, we will pass legislation that will dramatically improve the
lives of the American people. And we must aim to do that in the
month of October."

Despite that goal, and White House pressure, Democrats still
have many differences to resolve before they can be sure they’ll
have the votes they need. While the October deadline is tied to the
expiration of funding for surface transportation programs, that
funding has already been extended once, meaning the month-end
deadline might be less than firm.

Number of the Day: 293,000

Initial jobless claims fell to 293,000 last week, the Labor
Department said Thursday. Daniel Zhao, an economist at Glassdoor,
noted that the jobless claims number marks a pandemic-era low.
“Initial claims are now within striking distance of their
pre-pandemic level, which could be reached later this year as the
Delta wave recedes & hiring improves,” he wrote.

America’s $500 Billion Tax Haven on the
Prairie

One of the least populated states, South Dakota is probably best
known for the vast expanses of the Badlands and the presidential
carvings on Mount Rushmore. But according to a review of millions
of pages of financial records by the International Consortium of
Investigative Journalists, the state is also a surprisingly popular
place for wealthy business owners, investors and heirs to park
billions of dollars in private trusts.

Known as the Pandora Papers, the financial records reveal that
South Dakota is now home to trusts worth half a trillion dollars.
“We’re the Cayman Islands of the prairie,” one local critic

told Bloomberg News.

The state has no income tax or capital gains tax, a big part of
its appeal to a global assortment of the superrich. But there’s
another key reason for the state’s popularity: It allows unlimited
amounts of money to be placed in so-called dynasty trusts, which
continue in perpetuity. The arrangement provides the safety
inherent in American economic and political stability, such as it
is, while saving beneficiaries millions in federal tax bills as
their capital continues to grow forever, tax-free.

South Dakota’s defenders say the great majority of the trusts
are from legitimate sources, with the global rich representing only
a fraction of the total, so there’s little reason to worry about
the state’s growing reputation as a tax haven. But the secrecy
around the trusts is troubling to some critics.

“My concern is that … we become like Switzerland or Panama,”
former South Dakota state senator Craig Kennedy (D)
told The Washington Post, which participated in
the analysis of the financial records. “I don’t know who the
beneficiaries are, what kind of assets are being managed. People
use banking and trust laws for inappropriate purposes. I can’t say
that’s happening in South Dakota. But I don’t know.”

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