What You Need to Know
- Here's the status of tax, Medicare, drug pricing and other changes in the latest package, which aims to raise about $1 trillion in revenue.
- Some revenue could be tied to expanded funding for tax audits and a 1% tax on stock buybacks.
- A so-called millionaires surtax, however, is on the verge of being cut from the package.
Crunch time has finally arrived for President Joe Biden’s economic agenda as congressional Democrats scramble for a deal on a slimmed-down version of what was once a multi-trillion-dollar overhaul of domestic policy.
The Senate aims to pass the revised package before its summer recess begins Aug. 8, a move that would line up a win for Democrats defending their slim congressional control ahead of November’s midterm elections.
Democrats appear to have learned from last year, when progressives and the White House tried to force holdout Senator Joe Manchin to accept a bill of up to $6 trillion. They later scaled it down to $2.2 trillion, but the moderate West Virginian — whose vote is pivotal in the 50-50 Senate — ended up walking away.
This time, Senate Majority Leader Chuck Schumer has worked closely with Manchin to reach agreement on prescription drug price cuts and extending Medicare’s solvency. More contentious details on energy spending and tax provisions aren’t finalized between the two senators, but Democrats hope to unveil deals on those this week.
The new bill is expected to raise about $1 trillion in revenue, half of which would be used on new spending and half on cutting the deficit over a 10-year period.
To pass the bill by a simple majority using the budget process, all 50 members of the Senate Democratic caucus will need to be present and vote for the legislation.
But the fragility of the Democrats’ majority was highlighted in late June when Senator Patrick Leahy of Vermont broke his hip. His office says the 82-year-old Democrat will be available to vote as soon as this week, but it’s unclear whether he could withstand the hours-long, late-night voting typical of the budget process.
Meanwhile, another holdout — Arizona Senator Kyrsten Sinema — hasn’t publicly signed on to the potential plan.
There’s also no guarantee of passage in the House, where Democrats can afford few defections. Many progressives there could balk at a bill that has shrunk from the $10 trillion social plan they once envisioned.
How the Biden budget reconciliation bill shakes out will influence what else Congress can accomplish before the midterms.
Here is the status of the components of the Democratic agenda:
The two pieces of the budget bill that Senate Democrats have negotiated so far — drug pricing and raising taxes on the wealthy to extend the solvency of Medicare — have the best prospects for passage in the coming weeks, as long as the Senate’s parliamentarian concludes that they comply with stringent budget rules.
The drug bill would allow Medicare to negotiate the prices of some drugs — generating substantial savings for the government — and cap out-of-pocket costs for seniors at $2,000 per year. The Medicare piece would require so-called pass-through businesses to pay a 3.8% health surcharge on some income.
Democrats also want to shoehorn into the package an extension of expanded subsidies for Obamacare premiums. That would avoid the cost of some plans tripling in January, when the enlarged subsidies phase out — an issue that would certainly turn off some middle-class voters ahead of the midterms.
Separately, Schumer has decided to hold a vote soon on a bipartisan measure that would cap monthly out-of-pocket insulin costs for those on Medicare and with private health insurance at $35.