Happy Wednesday! President Joe Biden talked about drug prices while his budget chief sparred with lawmakers over the White House budget and the president's charge that Republicans want to cut Social Security.
Here’s what we’re watching while waiting for Aaron Rodgers to officially join the New York Jets.
CBO Analysis Highlights Difficulty of GOP’s Balanced Budget Goal
Although they are united in their opposition to President Joe Biden’s budget proposal for fiscal year 2024, House Republicans have yet to release their own version of next year’s budget. The timeline for doing so has reportedly slipped to later this spring as conservative lawmakers struggle to agree on a spending plan that would achieve their stated goal of balancing the budget within 10 years while avoiding cuts to essential programs including Social Security and Medicare.
In the absence of a solid GOP budget offering, Senate Budget Chair Sheldon Whitehouse (D-RI) and Senate Finance Chair Ron Wyden (D-OR) asked the Congressional Budget Office to take a look at how Congress might balance the budget under the general conditions set by Republicans.
While considering different scenarios, CBO found that if lawmakers make no cuts in Social Security, Medicare, defense and veterans benefits, the rest of the discretionary budget would need to be reduced by 86% in order to achieve balance. Add in the Republican goal of extending the 2017 Trump tax cuts, which would reduce revenues relative to the current baseline, and the remaining discretionary spending would need to be eliminated entirely.
“CBO found that the cuts to programs like health care, infrastructure, and public safety would be massive,” the senators said in a statement. “Moreover, it found that balancing the budget in 10 years would be mathematically impossible if Republicans kept Social Security, Medicare, defense, and veterans’ programs whole while also making permanent the Trump tax breaks for the very wealthy.”
Whitehouse said the CBO report casts serious doubt on the ability of Republicans to achieve their budgetary goals. “As this analysis shows, no amount of cuts can make their math add up,” he said. “It is a farce.”
The senators also warned that raising the debt ceiling could be far more difficult — and dangerous — if it gets caught up in impossible budget demands. “Today’s analysis from Congress’ own nonpartisan authority on the budget makes it clear: Republican promises not to cut Social Security or Medicare on their way to balancing the budget just don’t add up,” Wyden said. “These numbers show that Speaker McCarthy made impossible promises to land his job, and that’s seriously alarming with a catastrophic default getting closer every day.”
The CBO report jibes with a similar recent analysis by the Committee for a Responsible Federal Budget, which found that “the path to get to balance within ten years is likely infeasible, and it is virtually impossible if major parts of the budget and tax code are exempt from change.”
Quote of the Day
“The biggest threat is that in 10 years or so the Social Security trust fund runs out of money and benefits get automatically cut by 25 percent.”
– Sen. Mitt Romney (R-UT), in part of a heated exchange at a hearing Wednesday with White House Office of Management and Budget Director Shalanda Young. With President Biden and administration officials targeting Republicans over the program, Romney pressed Young to name a GOP lawmaker who wants to cut benefits. Per Politico, Young replied: “Current members have well-known policies out there to cut Social Security and Medicare.” Romney replied that Young was “simply wrong.” He also asked why the White House budget had proposed steps to shore up the Medicare trust fund but did not include a plan to extend the solvency of Social Security’s trust fund.
Number of the Day: -0.1%
The producer price index, which measures wholesale prices paid by businesses, fell by 0.1% on a monthly basis in February, the Bureau of Labor Statistics reported Wednesday. The results were below expectations for a 0.3% increase. One of the main contributing factors was a decrease in the wholesale price of eggs, which fell by 41.3% from January to February.
The wholesale inflation numbers suggest that inflationary pressures continue to ease and add another data point for the Federal Reserve to consider as central bankers mull their next move on interest rates. Bloomberg’s Reade Pickert and Augusta Saraiva wrote that the report gives “Federal Reserve officials more room to potentially pause interest-rate hikes as they weigh the impact of a banking crisis against inflation risks.”
Biden Admin Names First Drugs to Be Hit With Medicare Rebate Penalties
Starting in April, some people on Medicare will start paying less out of pocket for more than two dozen prescription drugs that saw their prices rise faster than inflation, the Department of Health and Human Services announced Wednesday.
The department released a list of 27 drugs administered by doctors and covered by Medicare Part B for which coinsurance payments will be lower as the result of changes passed as part of last year’s Inflation Reduction Act. The law’s Medicare Prescription Drug Inflation Rebate Program requires drug companies to provide rebates for drugs that saw price increases above the rate of inflation. Medicare beneficiaries who take these drugs could save between $2 a $390 per dose, HHS said.
“It’s going to change the way drugs are priced and lower the costs for seniors long-term,” Biden said of the provisions at an event in Las Vegas on Wednesday.
The list of drugs subject to rebates will be updated quarterly, HHS said.
“Continued implementation of the new drug law strengthens Medicare, faithfully guards taxpayer dollars, and improves the long-term sustainability of the program for generations to come,” Centers for Medicare & Medicaid Services Administrator Chiquita Brooks-LaSure said in a statement.
The rebate announcement comes in the midst of a broader push by the Biden administration to highlight its efforts to lower costs for American families. At his event, Biden highlighted the prescription drug pricing changes enacted by the Inflation Reduction Act, which, among other things, allowed Medicare to negotiate the cost of certain drugs for the first time. HHS on Wednesday released its initial guidance on the negotiation process and said it would publish the first 10 Medicare Part D drugs subject to pricing negotiations by September. The negotiated prices will be announced by September 2024 and the prices will take effect in 2026.
A separate report released by HHS on Wednesday said that 3.4 million people on Medicare would have saved nearly $70 on average on out-of-pocket costs for vaccines in 2021 had the Inflation Reduction Act already been in effect. That adds up to more than $230 million.
National Cost of Dementia Will Approach $1 Trillion a Year by 2025: Report
About 6.7 million people aged 65 and older are living with dementia due to Alzheimer’s disease, and that number is expected to rise to nearly 13 million by 2050, according to a new report from the Alzheimer's Association.
The organization, dedicated to dedicated to Alzheimer’s care and research, says that the national cost of caring for people with Alzheimer’s and other forms of dementia will reach $345 billion this year, up $24 billion from last year. By 2050, that cost could rise to almost $1 trillion, the group says.
The report estimates that the total lifetime cost of caring for someone with dementia tops $390,000, with 70% of that borne by family in the form of unpaid caregiving and out-of-pocket expenses. It adds that more than 11 million caregivers provided an estimated 18 billion hours of unpaid assistance to dementia patients last year — work valued at nearly $340 billion.
- Biden Says He’s Focused ‘Intensely’ on Lowering Drug Costs – Associated Press
- Mitt Romney Castigated Biden’s Budget Chief Over Democrats’ Insistence That Republicans Want to Cut Social Security – Politico
- Biden Seeks to Make Freedom Caucus His Foil — and the Face of the GOP – The Hill
- Sweeping GOP Energy Bill Would Sweep Away Biden’s Climate Agenda – Politico
- ‘Unfortunate and Wrong’: Angry Taxpayers Respond to Latest Bank Bailouts – The Hill
- Populist Fury Grips Congress in Echo of 2008’s Bailout Backlash – Bloomberg
- Biden’s Private Concerns, a Rescue Plan and the Political Firestorm That Ensued – Washington Post
- The 72-Hour Scramble to Save the United States From a Banking Crisis – Washington Post
- Free IRS TurboTax Competitor Is Closer After Biden Funding – Bloomberg
- Some Seniors Could Start Paying Less for Certain Drugs Whose Prices Rose Faster Than Inflation – CNN
- As Alzheimer’s Burden Grows, Ability to Care for US Seniors Faces Critical Challenges, Report Says – CNN
- Veterans to Get Coverage of Alzheimer's Drug Medicare Won't Pay For – Axios
- Some Uninsured Americans Are Turning to Quack Cures — Like Drinking Bleach – Bloomberg
Views and Analysis
- Politicians’ Social Security Plans Need to Live Up to Their Pledges – Andrew G. Biggs, The Hill
- After Silicon Valley Bank, Scrap the Bank Deposit Insurance Limit – Lev Menand and Morgan Ricks, Washington Post
- Blaming SVB on ‘Woke’ Banks Masks Republican Divide – Jonathan Bernstein, Bloomberg
- The Silicon Valley Bank Rescue Just Changed Capitalism – Roger Lowenstein, New York Times
- How the Last Banking Tumult Fuels Today’s Populist Politics – Will Weissert, Associated Press
- Congressional Democrats Continue to Push a Broken Narrative on Inflation – William J. Luther, The Hill
- The Worst Covid Strategy Was Not Picking One – Bloomberg Opinion
- Jeremy Hunt's UK Budget Is a Minimalist Master Class – Marcus Ashworth, Bloomberg