Hard-Line Republicans ‘Itching for Fight’

Hard-Line Republicans ‘Itching for Fight’

The House speaker faces some tough choices.
By Yuval Rosenberg and Michael Rainey
Monday, September 11, 2023

Good evening. Today marked the 22nd anniversary of the 9/11 terrorist attacks that killed 2,977 people. Tomorrow, House lawmakers will return from a nearly seven-week recess to see if they can avoid a government shutdown after September 30. Here’s what you should know.

Kevin McCarthy Faces a September Full of Fights

When House lawmakers return on Tuesday after a 47-day August recess that extended well past August, they will have to scramble to deal with funding the government past the end of the current fiscal year on September 30. It will not be easy.

They’ll also consider emergency funding for Ukraine, disaster relief and border security, areas where there are significant differences between Republicans and Democrats — and between Republicans and Republicans.

Roll Call’s John T. Bennett offers this preview: “Several rounds of negotiations on federal spending levels, border security and additional aid to Ukraine will dominate the balance of September, senators from both parties said last week. Both chambers also must hammer out a compromise version of the fiscal 2024 defense authorization bill, then send a final version to Biden’s desk — but House conservatives are vowing a fight over a bill once considered must-pass.”

House Speaker Kevin McCarthy reportedly will be looking to pass a short-term spending bill that would keep the government open and give House Republicans time to pass some of the annual appropriations bills that have this far been delayed by intraparty clashes. McCarthy is reportedly angling for leverage ahead of a battle with the Senate over 2024 spending levels, with far-right members of his conference insisting on deeper cuts than the Senate will approve. “Smart House GOP lawmakers understand that they have zero leverage over a Senate that’s passing appropriations bills with big bipartisan margins,” Punchbowl News reported Monday. “The House will have less than zero leverage if Republicans can’t move any spending bills after years of crying for regular order.”

It’s not clear, though, whether his most right-wing members will give McCarthy any leeway — or whether McCarthy might rely on Democrats to help pass a stopgap spending bill and thus open himself up to a challenge from House Freedom Caucus members who are itching for a fight.

The bottom line: McCarthy faces lots of important decisions that will determine how September’s funding fight will play out. One senior House Republican reportedly told Punchbowl that there’s a 75% chance of a shutdown. Stay tuned.

Quote of the Day

“Various cliches come to mind as it relates to this fall-winter legislative schedule, but I am thinking they focus on Speaker McCarthy: ‘On the horns of a dilemma’ and ‘painted into a corner’ and ‘Hobson’s choices.’”

G. William Hoagland, a former staff director of the Senate Budget Committee and advisor to then-Republican Senate Majority Leader Bill Frist, as quoted by Roll Call. Hoagland said that the Senate is in position to force McCarthy to choose between averting a prolonged government shutdown and facing a motion from his right flank to vacate his speakership.

$1.5 Trillion Deficit in First 11 Months of Fiscal Year: CBO

The federal budget ran a surplus of $90 billion in August, according to the monthly budget review released Monday by the Congressional Budget Office. The August tally brings the deficit for the 2023 fiscal year, which began in October 2022, to $1.586 trillion so far.

By comparison, the cumulative deficit in the first 11 months of the previous fiscal year was $946 billion — a difference of about $600 billion. Outlays were 3% higher during the October to August period in 2023 compared to 2022, CBO said, while revenues were 10% lower.

CBO noted that the Supreme Court’s rejection of President Joe Biden’s plan to forgive hundreds of billions of dollars in student loan debt played a role in the size of the deficit numbers, both this year and last.

“The deficit was larger in 2022 and is smaller in 2023 by amounts that are largely offsetting because of actions related to the Administration’s planned cancellation of outstanding student loans for many borrowers,” CBO said.

Last year, the cost of the planned program was recorded as $370 billion; now that cost has been largely reversed since the program will not go into effect, with a reduction in outlays of $330 billion. (The difference between the two figures is attributed to the cost of the administration’s new income-driven student loan repayment plan.)

The credit for the student loan program significantly affects CBO’s estimate for the full-year deficit, which now stands at an estimated $1.7 trillion. “Without the outlay savings recorded in August 2023 to reflect the Supreme Court’s ruling, that shortfall would be about $2.0 trillion,” CBO said. At the same time, excluding the cost of the plan from the 2022 deficit numbers would reduce the size of last year’s deficit to roughly $1 trillion. “Excluding the effects of the changing plans for student loans, the deficit is on track to double from $1.0 trillion in 2022 to $2.0 trillion in 2023,” CBO added.

The deficit hawks at the Committee for a Responsible Federal Budget noted the effect the now-canceled student loan plan was having on the budget numbers. “The deficit is on track to be double what it was last year after excluding the effects of the President’s overturned student debt cancellation plan,” the group said in a statement. “That is doubly disturbing given that the economy is growing and unemployment remains low; usually the deficit shrinks, not grows, during economic expansions. It’s just another sign of the deteriorating fiscal conditions of the federal budget and the immense challenges we face in turning the tide towards fiscal sustainability.”

Note: The original version of this item stated that the federal budget recorded a $90 billion deficit in August; the text has been corrected to reflect that the budget produced a surplus of the same amount. 

Why Generic Drugs Can Still Cost an Arm and a Leg

Generic drugs are supposed to be cheap — a key reason they are seen as one key tool in the effort to control healthcare costs. But a new Wall Street Journal analysis finds that certain generic drugs are still costing thousands of dollars, with prices marked up by insurers empowered by industry consolidation.

As an example: The cancer drug Gleevec went generic in 2016 and can cost as little as $55 a month, the Journal’s Joseph Walker reports. But CVS Health and Cigna can charge $6,600 a month or more for the drug. The companies have similarly large markups on other drugs, too.

“They are able to do that because they set the prices with pharmacies, which they sometimes own,” Walker explains. “Across a selection of these so-called specialty generic drugs, Cigna and CVS’s prices were at least 24 times higher on average than roughly what the medicines’ manufacturers charge, the Journal found.” At UnitedHealth Group, prices were 3.5 times higher on average.

A systemic problem: The structure of the drug and insurance industries has undercut the pricing promise of many generic drugs. “The reason, health researchers and industry officials say, is the very companies that are supposed to keep a lid on drug spending can maximize their profits by marking up the prices,” Walker writes. “Other companies in the drug-supply chain won’t stop them, because consolidation has swept many of the businesses under the same parent.”

Cigna, CVS and UnitedHealth own the three top pharmacy benefit managers in the country — companies that serve as middlemen and get paid to manage drug spending for businesses and government groups. The companies all pushed back on the analysis, arguing that the prices they charge varies and that most patients pay less out of pocket through their insurance.

Still, Walker notes: “PBMs try to pay as little as possible for drugs distributed through independent retail pharmacies. But when their own pharmacies dispense prescriptions, PBMs profit from the higher prices.”

Read more at The Wall Street Journal.

Send your feedback to yrosenberg@thefiscaltimes.com.

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