Happy Friday! Democrats headed into the weekend hopeful that they'll be able to pass a bipartisan infrastructure bill as soon as next week. Progressives, who handed President Joe Biden and House Speaker Nancy Pelosi a setback Thursday by again forcing a delay on the bill, sounded optimistic about both the infrastructure bill and the broader Build Back Better social spending and climate framework. We'll see ...
Democrats’ Drug Pricing Reform Plans Not Dead Yet: Reports
The Build Back Better plan that the White House issued Thursday doesn’t include a proposal to allow Medicare to negotiate prescription drug prices, an idea with broad public support that President Joe Biden backs, as do many other Democrats and patient advocates. But Democrats haven’t completely abandoned pricing reforms even as intraparty differences have made it difficult to reach consensus on a plan that can garner enough votes to pass given the party’s narrow majority in the House and an evenly divided Senate.
House Speaker Nancy Pelosi’s office is working to drum up support for a version of the plan that would allow Medicare to negotiate prices for a narrower group of drugs, STAT News reports.
The latest proposal is being developed by House Energy and Commerce Committee Chair Frank Pallone (D-NJ) and Rep. Scott Peters (D-CA), who had objected to a broader reform plan included in a House version of the Build Back Better plan due to concerns that it would hurt drug development and innovation. "We're going to get a bill that has negotiated prices, and that's going to make a difference in terms of people being able to afford their drugs," Pallone said Thursday evening, according to The Hill.
The new proposal would allow negotiations on medications administered by doctors (Medicare Part B) and at the pharmacy counter (Part D) — but only after the drugs were past the “exclusivity period” granted by the Food and Drug Administration to protect them from competition. “The tentative deal would also penalize drug makers for raising prices faster than inflation in both the employer-sponsored insurance market and Medicare,” STAT’s Rachel Cohrs writes. “Seniors would have their out-of-pocket drug costs capped each year.”
Peters’s office told reporters that he will require the support of 50 senators before committing to a deal.
That will likely put the focus back on Sen. Kyrsten Sinema (D-AZ), who supports the idea of lowering drug prices but opposes the broad reforms and negotiating power included in past Democratic legislation. Sinema reportedly reached a deal with Biden on a plan that would limit the medications subject to Medicare negotiations in line with a proposal from Peters, but the idea was nevertheless left out of the framework announced by the White House Thursday. “Many progressives view the Peters proposal as insufficient, and a senior administration official said that drug pricing reform lacks the votes in Congress at the moment to advance,” Politico reported.
A long history of failure: If Democrats fail to reach an agreement on drug pricing changes, Biden would join the roster of recent presidents who have seen their reform efforts thwarted thanks in large part to the fierce lobbying efforts of thousands of pharmaceutical industry representatives, The Washington Post’s Dan Diamond and Amy Goldstein write:
“For nearly 30 years, U.S. presidents have tried and failed to contain the price of drugs like insulin. Now Biden appears likely to join a list which includes former presidents Bill Clinton, Barack Obama and Donald Trump. All of them pledged to tackle high drug costs, and all of them failed at the hands of the deep-pocketed industry, which has spent more than $1 billion on lobbying and advertising over two decades to torpedo initiatives that could rein in its profits, according to data tracked by OpenSecrets, a government transparency group. Which is why, experts say, Americans pay roughly twice as much for their prescriptions as consumers in comparable countries.”
Both Sinema and Peters have received hundreds of thousands of dollars in campaign contributions from the pharmaceutical industry, but a spokesman for PhRMA, the powerful drug industry trade group, downplayed the role of donations. “I can’t speak to why a member of Congress may take a certain position on a certain issue,” PhRMA’s Brian Newell told the Post. “Our focus has been educating policymakers about the solutions we are for to lower costs for patients and the concerns we have with proposals like direct government negotiations.”
The bottom line: “Barring a last-minute reversal on Capitol Hill, the United States will continue to be an outlier among wealthy, Western nations with such a scant government role in determining the prices consumers pay for the medicines they need and, as a result, drug costs far out of line with those in other countries,” the Post’s Diamond and Goldstein write. And such continued failure comes at a high cost: The Post cites one estimate by researchers that said that the government could have saved between $1 billion and $4.4 billion in just one year had Medicare been allowed to negotiate the price of just one drug, insulin.
Quote of the Day
“Do I think we were hurt? No, I think we were disappointed. I think 90% of the caucus was disappointed. I think we’re going to pass the bipartisan infrastructure bill at some point in time. Soon is in the eye of the beholder.”
— House Majority Leader Steny Hoyer (D-MD), talking to Punchbowl News about the failed effort to vote Thursday on the infrastructure bill that has been on hold since August. Despite efforts by House Speaker Nancy Pelosi (D-CA) to hold a vote, it was delayed once again as progressives pushed for reassurances about the substance and fate of the larger Build Back Better bill, which they want to advance at the same time as the infrastructure bill. “It never helps you not to get what you want when you want it,” Hoyer said. “But people forget pretty soon. You get by this.”
Democrats’ Tax Plan Focuses on Corporations and the Wealthy
The framework released Thursday for President Joe Biden’s Build Back Better plan contains nearly $2 trillion in tax increases, most of them targeting businesses and high-income households. Alan Rappeport of The New York Times has a rundown on some of the central provisions:
Taxing the rich: Democrats have proposed a new surtax on high-income households. Those with annual incomes over $10 million would pay an additional 5% tax, and those over $25 million would another 3%. The plan would “effectively raise the top tax rate on ordinary income to 45 percent for the highest earners,” Rappeport says. The Biden administration estimates that the taxes would bring in $230 billion over 10 years.
Democrats also want to close loopholes some high-income households use to avoid paying a 3.8% Medicare surtax. The proposed rule change is projected to bring in $250 billion over a decade.
Taxing corporations: The White House proposes to create a 15% minimum tax for large businesses, so no company can avoid paying taxes altogether. Administration officials estimate that the tax, which would affect about 200 companies, would bring in $325 billion over 10 years.
A separate proposal would apply a 1% surcharge to stock buybacks, a move that would produce an estimated $125 billion over a decade.
And Democrats want corporations to pay more on their international earnings, which sometimes disappear into tax shelters overseas. A minimum tax rate of 15% on foreign earnings is projected to produce $350 billion over the next 10 years.
Reducing the tax gap: With the goal of bringing in billions of dollars in taxes that are owed but go uncollected, the Democratic plan calls for increasing IRS funding by $80 billion over 10 years. That investment is projected to produce $400 billion in additional revenue.
Reducing the deficit: With nearly $2 trillion in projected revenues and $1.85 trillion in spending, the Democratic proposal would shrink the federal budget deficit. The overall proposal is still a work in progress, though, and one provision that could end up in the final bill — a temporary repeal of the limit on state and local tax deductions — could push the plan into the red. And even without any additional spending, it’s not clear that the Congressional Budget Office will agree with the administration’s revenue projections, raising the distinct possibility that the official score for the bill will fail to show deficit reduction.
Debt Default Could Occur Between Mid-December and Mid-February: Analysis
You probably haven’t heard much about the debt ceiling lately, but get ready to start hearing about it on a regular basis over the next few weeks.
According to the Bipartisan Policy Center, the day on which the U.S. Treasury will no longer be able to pay all its bills due to restrictions imposed by the debt ceiling will arrive sometime between the middle of December and the middle of February.
The so-called X Date was pushed back from mid-October when Congress approved a $480 billion increase in the debt ceiling earlier this month, with the expectation that the funds would hold the Treasury over until at least December 3.
But that “was only a temporary fix,” BPC’s Shai Akabas said in a statement. The Treasury has already hit the new debt limit, BPC reports, and is once again resorting to “extraordinary measures” to keep payments flowing.
The two-month range for the potential debt default reflects in part the high degree of uncertainty over the status of the bipartisan infrastructure bill. If that bill passes, the X Date could move up, since the legislation calls for a $118 billion transfer from the Treasury Department to the Highway Trust Fund. Just how that transfer will play out is unclear, though, leading to more uncertainty than usual around the Treasury’s short-term payment requirements.
An even bigger uncertainty is how Congress plans to go about raising or suspending the debt ceiling for more than just a few weeks. Republicans want Democrats to raise the limit on their own, via the budget reconciliation process they plan to use to pass President Biden’s Build Back Better bill. But not all Democrats agree, meaning there may be another showdown over the issue in just a few weeks.
- The President’s Plan Is Imperfect, but a Big Step Forward for the Country – Washington Post Editorial Board
- Biden Aims to Pass Popular Spending Bill — by Shedding Popular Proposals – Aaron Blake, Washington Post
- How The Democrats’ New Millionaire Surtax Would Work – Howard Gleckman, Tax Policy Center
- If Congress Adds Dental Coverage to Medicare, Should All Seniors Get It? – Bram Sable-Smith, Kaiser Health News
- Shortening Programs Won’t Help Democrats Build Back Better – Ben Ritz and Brendan McDermott, The Hill
- Doing Popular Things Won’t Save the Democratic Party – Osita Nwanevu, New Republic
- A Last-Minute Free-for-All Is No Way to Do Tax Reform – Bloomberg Editorial Board
- Congress Is Doing Better Than You Think – Jonathan Bernstein, Bloomberg
- What the Democrats’ Plan Would Do for Parents – Claire Cain Miller, New York Times
- Here’s How Biden Can Address High Drug Prices, Without Help From Congress – Lev Facher, STAT
- Inside Biden’s Surprising Confidence That He’s on the Cusp of a Big Victory – Greg Sargent, Washington Post
- Why Biden’s Social Agenda May Prove Less Resilient Than Obamacare – Philip Klein, National Review
- Joe Manchin Just Handed Trump a Potent Issue for 2024 – Helaine Olen, Washington Post
- Why the Biden Administration Would Pay as Much as $450,000 to Separated Immigrant Families – Aaron Blake, Washington Post