Happy Thursday. Here's your daily dose of fiscal sunshine.
House Easily Passes Bipartisan Tax Bill. Will the Senate GOP Derail It?
The House on Tuesday night easily passed a $78 billion bipartisan bill to increase the Child Tax Credit and restore some business tax breaks through 2025. The Tax Relief for American Families and Workers Act of 2024 would also expand the low-income housing tax credit and provide some disaster relief. It sailed through in a 357-to-70 vote that far exceeded the two-thirds majority required for passage, though 47 Republicans and 23 Democrats voted against the legislation.
“Most prognosticators would have told you as recently as a month ago that this bill was destined to die in negotiations or collect dust on a shelf if it ever got introduced,” said Democratic Sen. Ron Wyden, who heads the Senate Finance Committee and negotiated the legislation with Republican House Ways and Means Chairman Jason Smith. “Given the sorry state of our political climate, it’s a real victory to have such strong momentum behind this bill that will help 16 million American kids from low-income families get ahead.”
That momentum could dissipate quickly in the Senate, where some Republicans have already expressed opposition to expanding the Child Tax Credit and concern about passing any bill that might benefit President Joe Biden in an election year.
Senate Minority Whip John Thune of South Dakota reportedly said that the bill will face a filibuster unless Republicans get a chance to amend it. “We need a process that allows for some amendments to try and tweak and fix some of the issues,” Thune said, according to Politico.
Republican Sen. Thom Tillis of North Carolina told Semafor Wednesday that he has been warning colleagues against passing the bill and has been arguing that they would be better off waiting to decide tax policy under a potential second term for former president Donald Trump. Large portions of the 2017 Trump tax cuts are set to expire at the end of next year, and lawmakers will be negotiating — read: battling over — possible extensions of those cuts. “I think everything should be on the table there, including the future of the child tax credit provisions [that] are being proposed now,” Tillis told Semafor.
The Senate also has a lot already on its plate, including ongoing negotiations to try to salvage a supplemental spending bill that would pair border security changes with aid to Ukraine, Israel and Taiwan. Lawmakers also face government funding deadlines on March 1 and March 8 and another March 8 deadline to reauthorize the Federal Aviation Administration. And then there’s the possibility — or likelihood — that the Senate will have to hold an impeachment trial for Homeland Security Secretary Alejandro Mayorkas.
In other words, the Senate calendar is looking pretty full and Republican senators will be seeking changes to the tax bill, all of which could bog it down. “I look forward to working with my colleagues to vet the legislation, address concerns, and make the necessary changes to build support,” Republican Sen. Mike Crapo of Idaho said in a statement.
House Rules Committee advances SALT deal: New York Republicans had been upset that the tax bill does not raise the $10,000 limit on the deductibility of state and local taxes (SALT). To overcome their objections, House Speaker Mike Johnson agreed to bring up a separate bill addressing the SALT cap. That measure, which seeks to eliminate a “marriage penalty” in the cap by raising it to $20,000 for joint filers making less than $500,000, cleared the Rules Committee in an 8-5 vote on Thursday, setting it up for potential consideration on the House floor next week. But it's unclear how many Democrats will support it and some Republicans are adamantly opposed. “People in low-tax states should not have to subsidize people in high-tax states just because local governments want to take more of their money,” GOP Rep. Matt Gaetz of Florida said.
The bottom line: GOP opponents of the bipartisan tax bill will likely face pressure from business groups and others who support the compromise legislation. “Senate Republicans will do the right thing, pick up this bill and deliver for the American people,” Smith, the House Ways and Means chairman, told Semafor. The SALT bill, meanwhile, faces long odds.
Schumer Says Security Supplemental Will Get a Vote Next Week
Senate Majority Leader Chuck Schumer said Thursday that the Senate will vote next week on a long-delayed bill that would stiffen security at the U.S. border and provide additional military aid to Ukraine, Israel and Taiwan.
Although there are still some final details to work out, the bill is “very close” to completion, Schumer said on the floor of the Senate, adding that the text of the bill could be released as soon as Friday and no later than Sunday, with a vote occurring by Wednesday. A procedural vote on the bill is scheduled for Monday.
Schumer’s announcement comes amid growing concerns about the viability of the legislative package, which lawmakers have been working on for months. Axios reported Wednesday that Senate negotiators were “on the verge of abandoning” the bill, but Schumer’s announcement indicates that the most severe disagreements have been overcome, or at least appear to be solvable.
Still, even if the bill can get through the Senate, it faces daunting odds in the House, where Speaker Mike Johnson has declared it is “dead on arrival.” House conservatives say that any bill Democrats are willing to agree to probably won’t be tough enough on border policy for their liking, and a growing number of Republicans are expressing doubts about providing more aid to Ukraine.
Some Democrats may hesitate to back the bill, as well, with Rep. Raúl Grijalva of Arizona saying the border provisions appear to be too punitive. “Right now my instincts are not to support it,” he told The Hill. “I’ve never supported what I hear is in there.”
Quote of the Day
“Why would we do anything right now to help him with that 33 percent?”
− Republican Rep. Troy Nehls of Texas, in an interview with CNN, reiterating his opposition to passing a border security bill that could help President Joe Biden in an election year. Other Republicans have been critical of this line of thinking, especially given that the details of a bipartisan Senate deal have not yet been released. Rep. Dan Crenshaw, also from Texas, told CNN: "The height of stupidity is having a strong opinion on something you know nothing about. ... I'm extremely disappointed in the strange maneuvering by many on the right to torpedo a potential border reform bill.”
Number of the Day: 10
The Biden administration on Thursday kicked off the negotiation process on the prices of 10 widely used drugs covered by Medicare, as enabled by the Inflation Reduction Act. The legislation empowers the Department of Health and Human Services to negotiate directly with manufacturers to lower prices as part of an effort to reduce costs for Medicare beneficiaries and the federal government.
In a statement, the White House celebrated the new system, which changes the way the government interacts with drugmakers, at least on a limited set of products. “This is the first time ever that Medicare is not accepting the drug prices the pharmaceutical companies set,” the administration said.
The 10 drugs selected by the Biden administration for price negotiations include Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and Fiasp. Once the negotiations are complete, the reduced prices are scheduled to take effect on January 1, 2026.
Fiscal News Roundup
- Tax Bill Overcomes Objections From Left and Right, Passes House – Roll Call
- The House Passed a Child Tax Credit Expansion. It Faces a GOP Buzzsaw in the Senate – Semafor
- Schumer Promises Vote on the Border Security-Ukraine Aid Deal Next Week – Politico
- The Real Test for the Senate Border Package Is About to Begin – Axios
- Senate’s Border Bill Faces Unexpected Problem: Democrats – The Hill
- Moderates Who Rebelled Against GOP Leaders Notch Win in Advancing SALT Bill – The Hill
- U.S. Makes Initial Offers in Medicare Drug Price Negotiations – New York Times
- A New Global Tax Is About to Raise Billions. The U.S. Is Missing Out – Wall Street Journal
- US Treasury to Hold Largest-Ever Bond Auctions to Plug Budget Deficit – Financial Times
- Powell Navigates ‘Toxic’ Politics of Rate Cuts as Election Nears – Wall Street Journal
- Interest Rate Cuts Could Be a Boon to Biden – New York Times
- Americans Starting to Feel Better About the Economy but Not About Biden: Poll – Axios
- Controversial Alzheimer's Drug Exits the Stage – Axios
Views and Analysis
- 5 Fights to Watch as Tax Deal Goes to Senate – Tobias Burns and Aris Folley, The Hill
- Why Vulnerable House Republicans Are Still Scrambling to Fix a Tax Law – Nick Reisman, Politico
- Republicans’ Plotting to Block a Democratic President Goes Public – Philip Bump, Washington Post
- Some Republicans Go Back to Fighting the ‘Takers’ – Ramesh Ponnuru, Washington Post
- Powell Goes Off Script and Reduces Flexibility – Mohamed A. El-Erian, Bloomberg
- Central Bankers Gear up for Interest Rate Cuts – Financial Times Editorial Board
- Is the Nation’s Primary Care Shortage as Bad as Federal Data Suggest? – Rae Ellen Bichell, Washington Post
- The Border Crisis Is Everyone’s Problem. It’s Time to Compromise – Mary Ellen Klas, Bloomberg