Does Dem Bill Raise Middle-Class Taxes?

Good Tuesday evening. House Speaker Nancy Pelosi (D-CA) landed in Taiwan today for a controversial visit. Here at home, Senate Minority Leader Chuck Schumer (D-NY) announced that the Senate will vote again tonight on the Honoring Our PACT Act, legislation to expand health care benefits for veterans exposed to toxic burn pits. More than two dozen Republicans voted against the bill last week after previously supporting it. "I'm very optimistic that this bill will pass so our veterans across America can breathe a sigh of relief,” Schumer said.

Here's what else we’re watching as we digest the details of the blockbuster Juan Soto trade…

The US Insured Rate Hit a Record Low This Year

The national uninsured rate fell to an all-time low of 8% in the first three months of this year, according to newly published federal data.

The Department of Health and Human Services said in a report Tuesday that about 5.2 million people in the United States, including 1 million children, have gained coverage since 2020 as enrollment surged in Medicaid and Affordable Care Act plans. The report is based on data from the National Health Interview Survey. It adds that the 5.2 million figure is a conservative estimate since the uninsured rate rose over the second half of 2020. Comparing uninsured rates from the beginning of this year to the end of 2020 raises the number of people who gained coverage to 7.2 million.

“This progress did not happen by accident,” President Joe Biden said in a statement. “More than 35 million Americans are enrolled in Affordable Care Act related coverage – the highest total on record. This includes over 21 million people who are enrolled in the ACA’s expansion of Medicaid, coverage that is denied to nearly four million Americans who live in states that have refused to expand Medicaid. And, since the beginning of my administration, 5 million more people have gained health insurance coverage – in significant part because of the improvements to the ACA in the American Rescue Plan.”

Biden urged Congress to pass Democrats’ Inflation Reduction Act and its three-year extension of increased tax credits for ACA plan premiums. Without the new law, those higher subsidies would expire this year, leaving millions of people facing higher insurance costs or the risk of being priced out of coverage. An April report from the Urban Institute estimated that 3.1 million people will lose coverage and become uninsured in 2023 if the enhanced tax credits expire.

Progress in peril: The gains in health coverage are also the result of a pandemic provision that prevented states from cutting Medicaid enrollees. Analysts have long warned that, whenever the government ends the official public health emergency for Covid-19, millions of Medicaid enrollees could lose coverage as states redetermine eligibility. A Kaiser Family Foundation report in May estimated that between 5.3 million and 14.2 million people could be disenrolled.

A number to keep in mind: Even with the recent gains in coverage, the new report says that there were still 26.4 million uninsured people as of early this year.

Assessing Dems’ Reconciliation Bill: Does It Really Raise Middle-Class Taxes as the GOP Claims?

As Democrats wait for the results of the parliamentary review of their proposed reconciliation budget bill — and to learn whether Sen. Kyrsten Sinema (D-AZ) gives the plan a thumbs up or thumbs down — economists are busy analyzing how the legislative package would perform over the next 10 years. Here’s a roundup of what they’ve said:

Moody’s: Democrats’ Inflation Reduction Act would benefit the economy overall, analysts at Moody’s found, though the growth and inflation effects would be modest. The bill “raises nearly $750 billion over the next decade through higher taxes on large corporations and wealthy individuals and lower Medicare prescription drug costs, to pay for nearly $450 billion in tax breaks and additional government spending to address climate change and pay for lower health insurance premiums for Americans benefiting from the Affordable Care Act,” the analysts wrote. “The remaining more than $300 billion goes to reducing the federal government’s future budget deficits. Broadly, the legislation will nudge the economy and inflation in the right direction, while meaningfully addressing climate change and reducing the government’s budget deficits.”

Penn Wharton Budget Model: Analysts at the Penn Wharton Budget Model also found relatively modest effects with respect to inflation, forecasting that the bill would raise inflation slightly for a few years before pushing it lower in later ones — though their results were “statistically indistinguishable from zero.” The bill would also lower the deficit while having virtually no effect on growth. “PWBM estimates that the Inflation Reduction Act would reduce non-interest cumulative deficits by $248 billion over the budget window with no impact on GDP in 2031,” the analysts wrote.

The Committee for a Responsible Federal Budget: According to the fiscal hawks at the CRFB, the deflationary effects of the bill are likely to be more important in the long run than Penn Wharton thinks. “Ultimately, we expect the IRA to very modestly reduce inflationary pressures in the near term while lowering the risk of persistent inflation over time and thus make it easier for the Federal Reserve to reduce inflation without causing a recession,” CRFB said.

Overall, the Democratic package “manages to push against inflation, reduce the deficit, and, once fully phased in, it would actually cut net spending, without raising net taxes,” CRFB’s Maya MacGuineas told The New York Times. “That is a pretty monumental improvement.”

The Tax Foundation: A new analysis from the conservative Tax Foundation finds that the Democratic bill would have little effect on inflation but would harm the economy in the long run, reducing economic output and wages by 0.1% over 10 years, while eliminating about 30,000 jobs that would have otherwise been created. “By reducing long-run economic growth, this bill may actually worsen inflation by constraining the productive capacity of the economy,” the analysts wrote.

The Joint Committee on Taxation: The nonpartisan Joint Committee on Taxation released an analysis last week that concluded that the bill would raise taxes on virtually all households, since the corporations would pass the new 15% minimum tax rate onto consumers. The conclusion has been hotly debated this week, with Republicans citing the analysis as proof that Democrats are attempting to create new tax burdens on middle-class families and Democrats saying the JCT analysis is both misleading and incomplete.

“[T]he only things their ‘Inflation Reduction Plan’ will reduce is American jobs, wages, after-tax incomes, energy affordability, and new lifesaving medicines,” Minority Leader Mitch McConnell (R-KY) said Tuesday. “Wow, what an accomplishment.”

A spokesperson for Senate Finance Committee Chairman Ron Wyden (D-OR) responded to the GOP charges, saying, “A family making less than $400,000 will not pay one penny in additional taxes under the Inflation Reduction Act. This is the same trickle down economic argument Republicans have been making for decades, and the American people don’t buy it.”

Appearing on Fox News Tuesday, Sen. Joe Manchin (D-WV), made a similar point. Responding to an interviewer’s assertion that the middle-class families would see a tax hike under the bill, Manchin said: “That’s wrong. That’s a lie. That is a pure, outright lie.”

In less heated language, analysts at the nonpartisan Tax Policy Center attempted to shed some light on the partisan dispute over the JCT analysis, while cautioning readers against accepting JCT’s conclusions too quickly. The assumptions baked into the JCT model may not hold in today’s economy, which diverges from standard economic models by featuring high levels of “rents, excess returns, or excess profits” – all of which would distort the effects of a corporate tax increase and likely reduce the impact felt by ordinary households. “[A] more careful look at how corporate taxes work today calls into question the estimated changes in federal taxes for middle- and lower-income households,” TPC’s William G. Gale and John Buhl concluded.

White House Names Monkeypox Response Coordinator

President Biden on Tuesday named Robert Fenton to serve as the White House’s national monkeypox response coordinator. Fenton is a regional administrator with the Federal Emergency Management Agency and has previously served as the agency’s acting administrator. The White House also named Demetre Daskalakis, director of the CDC Division of HIV Prevention, as a deputy to Fenton.

The Biden administration has faced criticism from public health leaders and LGBTQ advocates who say the federal response has been inadequate and demonstrates a troubling lack of urgency.

More than 5,800 cases of monkeypox have been confirmed in the United States, The Washington Post’s Dan Diamond reports, adding that public health experts fear that the epidemic, which has thus far mostly affected the gay and bisexual community, will continue to spread.

“We look forward to partnering with Bob Fenton and Demetre Dasklalakis as we work to end the monkeypox outbreak in America,” said Health and Human Services Secretary Xavier Becerra said in a statement. “Bob’s experience in federal and regional response coordination, and Demetre’s vast knowledge of our public health systems’ strengths and limits will be instrumental as we work to stay ahead of the virus and advance a whole-of-government response.”

Number of the Day: 10.7 Million

The number of job openings in the U.S. economy fell to 10.7 million in June, down from 11.3 million in May, the Labor Department said Tuesday. Job openings peaked at 11.9 million in March and have been above 11 million since November, so the decline indicates that the labor market is cooling slightly.

Hiring also slowed in June, falling 2% to 6.37 million. The number of quits remained steady at levels below highs seen earlier in the year.

Still, the labor market remains tight by historical standards, with about 1.8 open jobs per unemployed worker. "The labor market may be cooling off, but the temperature decline is far from a plunge," said Nick Bunker of Indeed Hiring Lab. "The outlook for economic growth may not be as rosy as it was a few months ago, but there's no sign of imminent danger in the labor market."

Opinion of the Day: A Push for Medical Price Transparency

One of your co-authors, Yuval, has an MRI scheduled for later this week (don’t worry, he’s fine). The cost of the scan is $7,224, according to the hospital, with insurance covering 80% of the total because the annual deductible has been met. That will leave $1,444.80 for Yuval to cover out of pocket. Ouch — but at least Yuval knows what he’s facing.

In a new opinion video at The New York Times, photographer Martin Schoeller looks at how unusual it is for patients to be able to find pricing upfront for their MRIs and other medical treatments — and how devastating the unexpected bills can be to patients. Despite a new federal rule requiring hospitals to provide pricing for the services they provide, a study released early this year by an advocacy group found that just 14.3% of 1,000 hospitals reviewed were providing the required prices.

“Hospitals have successfully concealed prices and not just from patients,” Schoeller says in the video. “Employers, unions, even the government often can’t see prices, and without price transparency health care costs will remain high and even continue to rise.”

The federal government just recently began slapping hospital with penalties for failing to list their prices, and Schoeller calls for robust enforcement of the transparency rule by the government.

Policy wonks can analyze and debate the extent to which price transparency will help reduce systemic costs and whether patients will actually shop for medical care, but it’s worth taking a few minutes to hear some of the stories from patients who have been shocked by their medical bills.

Watch the video here.

• Democrats Race to Ready Inflation Reduction Act for Vote This Week – Washington Post
• Battle Erupts Over Claim Manchin Bill Raises Middle-Class Taxes – Bloomberg
• Analysis Deems Biden’s Climate and Tax Bill Fiscally Responsible – New York Times
• Democrats’ Climate Deal Isn’t Done Yet. Here Are the Remaining Hurdles. – New York Times
• White House Retrofits Infrastructure Bill to Better Help Poor Communities – New York Times
• Government Workers Feel Inflation’s Pinch as Wages Lag – Washington Post
• Democrats Call on IRS to Review Right-Wing Group’s ‘Church’ Status – Washington Post
• Bikes Get Slighted in Compromise Climate Deal – Washington Post
• Rents and Home Prices Are Still Soaring, but at a Slower Pace – Washington Post