Biden Bets on Taxes and Health Care

Reuters
By Yuval Rosenberg

Good Tuesday evening! President Joe Biden is set to give his second State of the Union address — a high-profile chance to boost mediocre poll numbers and convince Americans that his policies are working and the country is headed for better days, contrary to the pessimism seen in surveys.

"President Biden will highlight the historic progress we have made to bring the economy back from the pandemic and create more jobs in a two-year period than under any other president on record," the White House said in a document previewing the speech.

The speech begins at 9 p.m. ET. Here’s what else to watch for:

Biden to Call for Unity as Era of Divided Government Gets Underway

As President Biden addresses Congress and the nation tonight, he’ll be looking to sell the American public on his accomplishments and lay the groundwork for his re-election bid. You’re sure to hear about 12 million new jobs created, a 54-year low in the unemployment rate and an inflation rate that has fallen for six straight months, for example.

With new House Speaker Kevin McCarthy (R-CA) seated behind him and a new Republican House majority before him, Biden will revive talk of the "unity agenda" he laid out in last year’s speech and tout his bipartisanship. Legislative accomplishments will likely be much harder to come by over the next two years, but Biden will look ahead and float some policy ideas. "It wouldn’t be the State of the Union if the president didn’t propose a few pieces of fantasy legislation that stand zero chance of clearing Congress," Morgan Chalfant writes at Semafor.

Here are a couple of key areas in which Biden will propose new policies.

TAXES

In the midst of a showdown with House Republicans over raising the debt limit, Biden will tout the deficit reduction achieved on his watch and push for additional deficit reduction "through additional reforms to ensure the wealthy and largest corporations pay their fair share," the White House says.

That means taxes.

Biden is set to renew his push for a minimum tax on billionaires. "This minimum tax would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters," the White House says.

Biden will also propose a quadrupling of the 1% excise tax on corporate stock buybacks enacted as part of Democrats’ Inflation Reduction Act. And he will call for a renewal of the expanded Child Tax Credit that helped reduce child poverty to a historic low in 2021.

The Outlook: Republicans won’t be lining up behind these ideas, and since they now control the House, none of Biden’s proposals are likely to go anywhere beyond election talking points. The right-leaning Tax Foundation largely panned the proposals, with analysts Erica York and Alex Muresianu writing that they "signal how President Biden thinks about tax policy, and, unfortunately, the picture that emerges is one of a highly complex, narrowly targeted tax code rather than a simple, efficient, and pro-growth one."

HEALTH CARE

Biden will boast about the record 16.3 million people who signed up for Affordable Care Act coverage this year and a national uninsured rate that fell to an all-time low. He’ll also highlight the new law that will allow the government to negotiate certain prescription drug prices, caps the cost of insulin in Medicare at $35 a month and limits annual out-of-pocket costs under Medicare Part D to $2,000 tops. And he’ll talk about how millions of Americans are now being protected from surprise medical bills for out-of-network care.

Looking forward, Biden will call on Congress to make permanent the increased subsidies for Obamacare plans, which were extended only through 2025 and which the White House says have lowered annual premiums by an average of $800 per person. He will also ask lawmakers to extend the insulin price cap to Americans with private insurance, not just those with Medicare — a plan Republicans blocked last year. And he’ll press to extend Medicaid coverage to more than 2 million more adults in 11 Republican-controlled states that have not expanded Medicaid under the Affordable Care Act.

Biden will also talk about fentanyl trafficking and efforts to reduce opioid overdose deaths. Dr. Rahul Gupta, director of the White House Office of National Drug Control Policy, told reporters that overdose numbers have fallen for five straight months. "That’s almost 3,000 people who have not died and instead are at the dinner table each night," he said, adding that the administration will work to stop more fentanyl from entering the country, hold traffickers accountable, educate young people on the dangers of the drug and expand access to treatment.

The outlook: The ideas may be popular, but they don’t stand much chance of being enacted this year. "[T]he reality is, none of those goals will get done in a newly divided Congress with Republicans controlling the House and a slim Democratic majority in the Senate," The Washington Post’s Rachel Roubein writes. "So instead, the speech will offer a glimpse of what a 2024 White House bid could look like with Biden touting his health accomplishments, while arguing more time is needed to see his agenda through."

Quote of the Day

"The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy. But it has a long way to go. These are the very early stages."

— Federal Reserve Chair Jay Powell, speaking at the Economic Club of Washington on Tuesday. Underlining comments made last week, the Fed chief said he thinks there will be more monetary tightening ahead given the continued strength of the economy, especially when it comes to the demand for workers. "We think we are going to need to do further rate increases," he said. "The labor market is extraordinarily strong."

Powell reiterated that the Fed’s path depends on what happens in the economy in the coming months – and that path could include more interest rate increases than currently expected. "The reality is we’re going to react to the data," he said. "So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in."

Separately, Federal Reserve Bank of Minneapolis President Neel Kashkari gave his opinion on how high the Fed funds rate, currently in a range between 4.5% and 4.75%, will have to be raised to bring inflation under control. "Right now, I’m still at around 5.4%," Kashkari told CNBC.

More Than 100,000 New Energy Jobs Since Climate Bill Became Law: Report

Companies working in clean energy have announced 101,036 new jobs since the Inflation Reduction Act became law in August 2022, according to a new report from Climate Power, a group that advocates for a robust private and public response to climate change.

The Inflation Reduction Act provides billions of dollars in tax credits to spur the development of clean energy technology, with the goal of cutting U.S. emissions by 40% by 2030. Climate Power identified 90 new or expanded projects in 31 states focused on clean energy, including wind, solar, batteries and electric vehicles, with investments totaling $89.5 billion. The projects include battery manufacturing sites in Michigan, Arizona and South Carolina; electric vehicle manufacturing in Illinois and Oklahoma; and wind and solar manufacturing in Ohio, Colorado and Texas.

"This is only the beginning—we’re months after the passage of the Inflation Reduction Act and we’re already at the precipice of a renewed manufacturing, Made in America boom that will create opportunities for millions of Americans, all while reducing toxic emissions that harm the health and wellbeing of our communities," said Lori Lodes, Executive Director of Climate Power.

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