Biden Takes Aim at High Gas Prices

U.S. President Joe Biden delivers remarks on the economy at the White House in Washington
EVELYN HOCKSTEIN
By Yuval Rosenberg

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Biden Takes Aim at High Gas Prices

With energy prices hitting multiyear highs ahead of the holiday
season, President Joe Biden on Tuesday ordered the release of a
record 50 million barrels of oil from the nation’s Strategic
Petroleum Reserve.

The release is being coordinated with China, India, Japan, South
Korea and the United Kingdom as part of an effort to put downward
pressure on oil prices globally. Experts expect a total of roughly
100 million additional barrels to be brought to market worldwide in
the coming weeks, the largest single release from reserves in
history.

Gasoline prices are at $3.40 a gallon on average in the U.S., an
increase of more than 50% from a year ago. The release from the
U.S. strategic reserve, which currently holds about 605 million
barrels, should have a noticeable effect on gasoline prices within
a few weeks, GasBuddy.com analyst Patrick DeHaan told
Bloomberg News, resulting in a decrease of 5 cents
to 15 cents per gallon.

But the effect of the release, which will cover about
two-and-a-half days of use in the U.S., could be short-lived. “The
problem is that everybody knows that this measure is temporary,”
Claudio Galimberti of Rystad Energy
told the Associated Press. “So once it is stopped,
then if demand continues to be above supply like it is right now,
then you’re back to square one.”

Inflation looms large: In comments at the White House,
Biden highlighted positive economic news such as strong growth and
a low unemployment rate while portraying the recent surge of
inflation in the U.S. — and higher gas prices — as temporary
problems that his administration is acting to solve. “I will do
what needs to be done to reduce the price you pay at the pump,”
Biden said.

In addition to the release of oil, Biden discussed the “port
action plan” the White House announced earlier this month that is
intended to clear up the supply chain congestion at the nation’s
ports, a key factor in the recent wave of price hikes. Most of the
funds for the effort were provided by the bipartisan infrastructure
package Biden signed into law last week, which set aside $17
billion for port improvements.

The president also said that he had spoken to executives at
retailers and shipping firms, including Walmart, Target, UPS and
FedEx, to make sure that store shelves are fully stocked for the
holidays.

Still, the president’s ability to affect significant changes in
prices is limited, especially when it comes to energy. With
gasoline prices, opening the strategic oil reserve “is the only
thing within policy control at the moment,” Anastasia Amoroso of
iCapital Network told Bloomberg.

More broadly, the White House could have a tough time fighting
inflation, which is hurting Biden politically. Inflation hit a
30-year high in October by one measure, rising 6.2% on an annual
basis — a statistic that will be used to push back against the
Build Back Better bill that contains much of the president’s
domestic agenda.

Will Democrats’ New Insulin Price Cap Survive
in the Senate?

The Build Back Better Act passed by the House last week would
cap out-of-pocket costs for insulin at $35 a month starting in
2023, lowering the cost of the vital diabetes treatment for
millions of people covered by Medicare or private insurance
plans.

As the Senate prepares to take up — and, likely, to revise — the
legislation, Senate Majority Leader Chuck Schumer (D-NY) over the
weekend touted the insulin provision and warned Republicans against
trying to nix the new cap.

“We are here today to tell the GOP to lay off! Do not try to
attempt to kill this provision,” Schumer said at a press conference
in New York. “Ten years ago insulin was cheap and easy and
accessible. But all of a sudden, it’s gone up 12%, 15%, 17% a year,
so now it’s as high as $600. And this is not a drug on patent. This
is not one of those things that’s protected by patent. So there’s
no reason the cost should be so high.”

Schumer said that he would do everything he can to keep the
provision in the bill.

The background: Insulin has been available for nearly a
century, but its price has doubled or tripled over the past decade,
according to a bipartisan Senate report release early this year.
Those surging prices have put insulin front and center in efforts
to tackle high drug prices, with lawmakers in both parties looking
to limit what patients pay for it.

“House Republicans have an alternative to Democrats’ drug
pricing measure, which includes a
monthly $50 cap on insulin and its supplies after
Medicare patients hit their deductibles,” The Washington Post’s
Rachael Roubein
notes. “In the Senate, the
top-ranking Republican lawmakers on the chamber’s health panels
have a bill that includes making permanent a pilot project giving
those on Medicare the option to get a voluntary prescription drug
plan where insulin only costs $35 a month.”

The politics: “Curbing insulin costs is politically
popular – and Democrats seem aware that Republicans could anger
voters by challenging such caps,” Roubein writes, adding
that Republicans have not yet detailed which of the Build
Back Better bill’s health care provisions they may challenge.

The bottom line: While Republicans remain opposed to the
Build Back Better package as a whole, Roubein reports that the key
question now may be whether the Senate parliamentarian nixes the
insulin cap as violating the budget reconciliation rules Democrats
are using to pass the legislation without GOP support. Until that
verdict comes down, Democrats are looking to publicize
their cap and score some political points. “If Republicans want to
defend higher insulin prices going into an election year, that’s a
win for Democrats,” one Democratic aide told Roubein.

Quote of the Day

“It’s sort of a roller-coaster ride when it comes to a net
tax change for folks, both at the bottom and at the top.”

– Garrett Watson, a senior policy analyst at the
Tax Foundation, in a
CNBC article explaining that tax bills may
fluctuate over the next few years if the Build Back Better bill is
enacted, “as tax provisions affecting low and high earners phase in
and out.”

Top earners would face a higher tax rate but would ultimately
pay less in 2022, according to estimates from the congressional
Joint Committee on Taxation. “That may sound like a
counterintuitive outcome,” CNBC’s Greg Iacurci writes. “But the
rich, especially those subject to the [new Build Back Better]
surtax, would likely change their behavior to avoid a higher tax
rate. Specifically, the surcharge would likely cause a ‘shift of
income’ into this year, according to the Committee.”

Number of the Day: $127.5 Million

The federal government has reportedly reached a tentative $127.5
million settlement with the families of victims of the 2018
shooting at the Marjory Stoneman Douglas High School in Parkland,
Florida. Families of the shooting victims sued the Justice
Department over the FBI’s failure to investigate tips that the
gunman was planning an attack. Seventeen people were killed in the
massacre, one of the deadliest school shootings in U.S.
history.

“The settlement comes a month after the Justice Department
agreed to pay $88 million to the families of those killed at a 2015
shooting at a historic Black church in Charleston, S.C. — which
occurred after the FBI did not conduct a thorough gun-purchase
background check of that gunman,” The Washington Post
reports.

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