WASHINGTON – It has been more than a year in the making and has seen many ups and downs. Now, a Democratic economic package focused on climate change and health care faces obstacles, but appears headed for party-line passage by Congress next month.
Approval would allow President Biden and his party to claim a triumph over top priorities as the November election approaches. They haven’t forgotten that they came close to approving a much larger version of the bill last year, only to see Sen. Joe Manchin, D-W.Va., one of their most conservative and contrarian members, torpedoed it at the eleventh hour.
This time, to everyone’s surprise, Senate Majority Leader Chuck Schumer, D-N.Y., has crafted a compromise package with Manchin, transforming the West Virginian from pariah to partner. The measure is more modest than previous versions, but still ticks off issues that make Democrats giddy.
The measure would raise $739 billion in revenue over 10 years and spend $433 billion. More than $300 billion would be left to trim federal deficits.
There are meaningful cuts in red ink. But they are small compared to the $16 trillion in new debt that the nonpartisan Congressional Budget Office estimates will accumulate over the next decade.
The package will save consumers and the government money by curbing prescription drug prices, and it will subsidize private health insurance for millions of people. It will bolster the IRS budget so the tax agency can collect more unpaid taxes.
The plan would promote clean energy and offshore energy drilling, a balance demanded by Manchin, a proponent of fossil fuels. It would also levy new taxes on the biggest companies and wealthy hedge fund owners.
That’s a fraction of the $3.5 trillion package Biden proposed early in his presidency, which also envisioned money for initiatives like paid family leave and universal preschool. It’s also less than the roughly $2 trillion option the House passed last November, after Manchin demanded cuts and then derailed the deal anyway, citing inflation fears.
IT IS NOW CALLED “THE LAW OF INFLATION REDUCTION”, BUT…
… will it do that? It certainly can, but there are dissenters.
In one inflation measure the Federal Reserve studies closely, prices rose 6.8% in June from a year ago, the biggest increase in four decades. It followed government figures showing the economy shrank again last quarter, fueling recession worries.
“Improved tax collection, Medicare savings and deficit reduction will put downward pressure on inflation,” the Committee for a Responsible Federal Budget said Friday. In what passes for a glowing review, the bipartisan fiscal watchdog group called the legislation “exactly the kind of package lawmakers should be putting in place to help the economy in a number of ways.”
“Deficit reduction is almost always inflation-reducing,” Jason Furman, a Harvard University economics professor who was a top economic adviser to President Barack Obama, wrote Friday in The Wall Street Journal. He said the measure would also “reduce inflation by slowing the growth of prescription drug prices”.
A more sober assessment came from the University of Pennsylvania’s Penn Wharton Budget Model, which analyzes economic issues.
“The bill will greatly increase inflation through 2024 and reduce inflation thereafter,” the group wrote on Friday. “These point estimates are statistically indistinguishable from zero, thus indicating low confidence that the legislation will have any impact on inflation.”
A chorus of Republicans say the Democrats’ bill would be broadly harmful. Senate Minority Leader Mitch McConnell, R-Ky., calls it “a giant package of massive new job-killing tax increases, Green New Deal craziness that will kill American energy, and prescription drug socialism that will give us fewer new life-saving drugs.”
The 725-page measure will probably change somewhat.
Schumer said this past week that Democrats planned to add language to reduce patients’ costs for insulin, the diabetes drug that can cost hundreds of dollars monthly.
Insulin price caps were a highlight of Democrats’ larger package last year, including a $35 monthly cap for patients who get the drug through Medicare or private insurers. But that dropped out this year as the measure was trimmed.
Sens. Jeanne Shaheen, D-N.H., and Susan Collins, R-Maine, have authored a bill that would cap the price of insulin. Prospects for that measure were dimmed after the nonpartisan Congressional Budget Office estimated that it would cost about $23 billion and actually increase the price of insulin. The two lawmakers also have not produced the 10 Republicans that would be needed to succeed in the 50-50 Senate, where most bills need 60 votes.
It’s unclear what Democrats’ new insulin language would do. Earlier language that required private insurers to set a $35 monthly insulin cap could violate chamber rules, which allow only provisions that primarily affect the federal budget.
Additionally, under the process Democrats are using to move the measure through the chamber with a simple majority, with Vice President Kamala Harris’s tie-breaking vote, it will face several changes in a voting session that could go through the night, and there’s no telling if any will pass .
All Republicans seem to be voting “no.”
Democrats will need all 50 of their own votes in the Senate, where unpredictable Sen. Kyrsten Sinema, D-Ariz., has yet to express her views.
Democrats cannot lose more than four votes in the House of Representatives to succeed there. Speaker Nancy Pelosi, D-Calif., said Friday that once the Senate approves the package, “we will pass it.”
Schumer wants the Senate to pass it next week. He acknowledged that the timeline “is going to be difficult” because it will take time for the chamber’s parliamentarians to make sure the bill complies with Senate rules.
This will also require luck. All 50 Democrats, including both independents who support them, must be healthy enough to show up and vote.
It is not guaranteed. The latest, extremely contagious COVID-19 variant is spreading around the country. And the chamber has 33 senators who are 70 or older, including 19 Democrats.
Sen. Richard Durbin, D-Ill., 77, was the last senator to announce that he had contracted the disease. Sen. Patrick Leahy, D-Vt., 82, has been looking for hip surgery. Both are expected back next week.
Please check your email to confirm and complete your registration.
Use the form below to reset your password. Once you’ve submitted your account email, we’ll send an email with a reset code.
