Happy Tuesday! We’ve made it to the final fortnight of the presidential race! Both campaigns spent part of the day courting Latino voters, a group that still favors Vice President Kamala Harris, but at much smaller margins than Democrats enjoyed in 2016 and 2020. Harris was off the campaign trail but had plans to tape interviews with NBC and Telemundo. Former President Donald Trump, meanwhile, held a summit with Latino community leaders at his Miami-area golf course in the morning before a scheduled evening rally in North Carolina, where he also spent time on Monday.
As the campaigns push to get out the vote, Eminem will reportedly introduce former President Barack Obama tonight at a rally in Detroit and Bruce Springsteen will reportedly perform series of swing-state concerts for Harris. Trump is reportedly set to tape an interview for Joe Rogan’s popular podcast on Friday.
Here’s what else you should know.
Biden and Harris Tout $1 Billion in Savings From New Medicare Spending Cap
President Joe Biden and Vice President Kamala Harris on Tuesday hailed a new report from the Department of Health and Human Services that said that the 2022 Inflation Reduction Act saved Medicare enrollees nearly $1 billion in the first half of this year.
The Inflation Reduction Act, passed by Democrats with Harris’s tie-breaking vote in the Senate, established a cap on out-of-pocket prescription drug costs for Medicare beneficiaries. For this year, that cap is around $3,500 on average for people with very high prescription drug costs. Next year, the cap will be lowered to $2,000 for everyone enrolled in Medicare’s Part D prescription drug plan.
The Department of Health and Human Services said in its report Tuesday that, as of June 30, nearly 1.5 million people had reached the cap, meaning that they will have no additional cost-sharing for the rest of the year, as will others who hit the cap before January. Before the Inflation Reduction Act, many of those people would have still been responsible for 5% of their drug costs, with no limit on out-of-pocket costs.
HHS says that more than 500,000 Part D enrollees who do not qualify for a low-income subsidy hit the cap over the first half of 2024 and saved a total of $979 million, with average savings of $1,802 per enrollee so far.
If the out-of-pocket limit was already at the 2025 level of $2,000, some 4.6 million enrollees would have hit the threshold
At an event in New Hampshire, Biden and Sen. Bernie Sanders of Vermont highlighted the administration’s efforts to lower drug and healthcare costs. Biden touted the projected healthcare cost savings under the Inflation Reduction Act, which also allowed Medicare to negotiate some prescription drug prices for the first time and capped monthly out-of-pocket insulin costs for seniors at $35 in addition to the $2,000 annual Medicare cap on prescription spending for 2025.
“This change is expected to save 19 million seniors and other people on Medicare, save them — just those ones on Medicare — $7.4 billion out-of-pocket spending starting in January,” Biden said. “But here’s the deal: It’s also going to save the American taxpayers billions of dollars.”
Biden also took aim at former President Donald Trump, who said at his presidential debate against Harris that he has “concepts of a plan” to replace and improve upon the Affordable Care Act. “He has no concept of anything,” Biden said. “No plan."
In a statement, Harris highlighted her tie-breaking vote and said there was much more to come on healthcare costs. “All Americans should be able to access the health care they need – no matter their income,” she said, adding, “I will never stop fighting for the health, wellbeing, and financial stability of the American people.”
Fatima Hussein and Will Weissert of the Associated Press note that while the cap on annual out-of-pocket prescription costs is set to save Medicare recipients more next year, “the change has come at a price for others – it’s contributed to rising drug plan premiums that the government has tried to keep down by paying insurers billions of dollars from the Medicare trust fund. Still, some insurers have raised plan prices significantly – or pulled plans from markets.”
Chart of the Day
Analysts at Morgan Stanley Research predict that the budget deficit will increase next year, no matter who wins the election. However, as CNBC’s Carl Quintanilla highlights, one scenario stands out: “A ‘Republican sweep’ scenario will likely raise the Federal deficit more than other outcomes,” the analysts say.
IRS Releases New Tax Brackets for 2025
The IRS announced Tuesday that the standard deduction would increase by $800 for the 2025 tax year, rising to $30,000 for couples filing jointly. Single filers will see a $400 bump, to $15,000.
The tax agency also released new tax brackets for 2025:
* 37% for incomes over $626,350 ($751,600 for married couples filing jointly);
* 35% for incomes over $250,525 ($501,050 for married couples filing jointly);
* 32% for incomes over $197,300 ($394,600 for married couples filing jointly);
* 24% for incomes over $103,350 ($206,700 for married couples filing jointly);
* 22% for incomes over $48,475 ($96,950 for married couples filing jointly);
* 12% for incomes over $11,925 ($23,850 for married couples filing jointly);
* 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
Here’s a reminder of how the tax brackets work, via The Wall Street Journal’s Ashlea Ebeling: “Your effective tax rate will be lower than your top rate. That is because the first slice of income is taxed at 10%, the next slice at 12%, and so on. A single person who makes $120,000 and takes the standard deduction in 2025 would have a sliver of income taxed at 24% but a 15% effective tax rate, according to Stan Veliotis, a CPA and tax lawyer at Fordham University’s business school.”
Other adjustments announced Tuesday include an increase in the threshold for the estate tax. In 2025, an individual estate can shield $13.99 million from the estate tax, up from $13.61 million this year. The limit for tax-free gifts will rise, as well, up to $19,000 from the current $18,000.
At the other end of the wealth spectrum, the maximum value of the Earned Income Tax Credit will increase, too, rising to $8,046 for taxpayers with three or more qualifying children, up from $7,830 in tax year 2024.
Quote of the Day
“Monetary and fiscal authorities have engineered a soft landing for the U.S. economy after a series of shocks.
“The U.S. economy is outperforming in growth and employment, and in controlling inflation, without causing the economy to fall into an extended period of slow growth or outright recession. It’s a remarkable policy achievement.”
– Joseph Brusuelas, chief economist at RSM, writing Tuesday about the United States’ “outperformance in the global economy.” The U.S. economy was 8.7% larger in the second quarter of 2024 than it was at the end of 2019 — the strongest growth by far among the G7 nations. The European Union, by comparison, was just 1.9% larger over the same period, while Germany and Japan saw their economies shrink.
Brusuelas attributes the strong performance to the fact that the United States remains one of the most attractive places to invest in the global economy, an appeal sustained by smart public policy and management. “This success of the U.S. economy can be traced to bold monetary and fiscal policies that have hardened supply chains, bolstered energy independence and started the rebuild of the nation’s infrastructure,” Brusuelas says.
Brusuelas’s comments come as the International Monetary Fund upgrades its growth outlook for the U.S. economy. “The IMF's World Economic Outlook, out Tuesday morning, projects that the United States will grow 2.8% this year, an upgrade of 0.2 percentage point from its July forecast,” Axios reports. “That is set to be the fastest growth among the G7 major economies, as was also the case in 2023.”
Fiscal News Roundup
- Biden and Bernie Sanders Highlight Lower Prescription Drug Costs in New Hampshire Stop – Associated Press
- Biden Highlights Drug Cost Savings, Hits Trump on ‘Concepts’ of ObamaCare Plan – The Hill
- House GOP Braces for Bitter Fight Over the Power to Oust a Speaker – Politico
- U.S. Economy Again Leads the World, IMF Says – Wall Street Journal
- IMF: The Global Fight Against High Inflation Is ‘Almost Won’ – Associated Press
- America’s Most Famous Inflation Gauge Is Easing — But Some of Your Biggest Expenses Are Left Out – Bloomberg
- Yellen Says Isolationism ‘Made America and the World Worse Off’ in Speech to Global Finance Leaders – Associated Press
- IRS Raises Standard Deduction, Adjusts Tax Brackets for 2025 – Washington Post
- Treasuries Plunge Like It’s 1995 as Traders See Soft Landing – Bloomberg
- U.S. and Europe Agree to $50 Billion Ukraine Loan Backed by Russian Assets – New York Times
- Biden Administration to Provide $325 Million for New Michigan Semiconductor Factory – Associated Press
- Majority of Americans Are Stressed by the Election, Survey Finds. Here's How to Cope – CBS News
- How Elderly Dementia Patients Are Unwittingly Fueling Political Campaigns – CNN
- The Many Links Between Project 2025 and Trump’s World – New York Times
- Rudy Giuliani Ordered to Turn Over NYC Apartment, 26 Watches to Georgia Election Workers – Associated Press
Views and Analysis
- Harris’s Agenda Is Way More Popular Than Trump’s (if That Matters) – Drew Goins, Washington Post
- Voters Prefer Harris’s Agenda to Trump’s — They Just Don’t Realize It. Take Our Quiz – Catherine Rampell and Youyou Zhou, Washington Post
- Why Harris Is Struggling With Blue-Collar Voters in Detroit – Farah Stockman, New York Times
- A Second Trump Administration Would Be a Carnival of Corruption and Greed – David Dayen, New York Times
- Trump and the Millionaires: How the Republican Party Bet on the Very, Very Rich – David Weigel, Semafor
- Why Are So Many Silicon Valley Billionaires Supporting Donald Trump? – Robert Kuttner, American Prospect
- A Trump Victory Would Make America Poor Again – Eduardo Porter, Washington Post
- Trump: ‘I Need the Kind of Generals That Hitler Had’ – Jeffrey Goldberg, The Atlantic
- What’s Wrong With Donald Trump? – Ezra Klein, New York Times
- Simple Economic Explanations Keep Breaking Down. Here’s Why – James Mackintosh, Wall Street Journal