Saturday, August 13, 2022

Editorial: Democrats in Array

Democrats finally passed a climate, health and tax reform bill through the Senate on Aug. 7 the only way they could—by remaining unified. Facing unified obstruction by Republicans, Majority Leader Charles Schumer (D-N.Y.) finally got resistant Sens. Joe Manchin (D-W.V.) and Kyrsten Sinema (D-Ariz.) to sign off on a bill that will spend about $370 billion on reducing greenhouse gas emissions by 40% by the end of the decade, as well as limiting prescription drug costs for the elderly.

The long-anticipated bill, the centerpiece of President Joe Biden’s economic agenda, was considerably scaled back from the $2 trillion Build Back Better Bill, in order to gain the elusive support of Manchin and Sinema, who were needed to get the chamber to 50-50. That allowed Vice President Kamala Harris to cast the deciding vote. But Republicans were determined to deny Democrats the legislative victory heading into the midterm elections.

Republicans showed how deep their sociopathy runs on July 27, when Schumer and Manchin announced Democrats were going ahead with what was renamed the Inflation Reduction Act using the budget reconciliation process, which only requires a simple majority to pass budget-related bills.

In retaliation to Democrats’ announcement they would proceed with the reconciliation bill, Republicans reneged on their support for the Promise to Address Comprehensive Toxics (PACT) Act, which would pay for health care and benefits for millions of veterans injured by exposure to toxins, from Agent Orange in Vietnam to burn pits in Iraq and Afghanistan. The bill had passed the Senate with bipartisan support in June, but after the House sent it back with technical corrections, 29 Republicans switched their votes, and the bill fell five votes short under filibuster rules. Republican sociopaths high-fived each other on the Senate floor after blocking the vets’ health bill.

After veterans’ groups, Jon Stewart and the media blasted the Republicans for their perfidious temper tantrum, most Republicans caved and the Senate finally passed the PACT Act Aug. 2 on an 86-11 vote.

Getting back to the Inflation Reduction Act, Democrats had to make major concessions to gain Manchin’s support. Much of the social spending the BBB included, such as child tax credits, universal pre-K, child care, paid family and medical leave for workers, and more, was cut because Manchin thought they were inflationary. Closer to home, Manchin got promises to clear the way for a controversial natural gas pipeline cutting through the Appalachian Mountains. The IRA requires the federal government to allow more public lands and waters for oil drilling. It expands tax credits for carbon capture technology that could allow coal or gas-burning power plants to keep operating with lower emissions.

Despite criticism by some environmental activists, the deal was the only way to move the bill through the Senate. And an analysis by Princeton University found that, by 2035, the IRA will deliver more than 90% of the emissions reductions that BBB would have achieved. As Paul Krugman wrote in the New York Times, “After all that legislative drama, Biden’s climate policy has emerged essentially intact.”

The bill extends health insurance subsidies another three years for about 13 million Americans who buy coverage through state and federal exchanges under the Affordable Care Act. These people currently receive discounted coverage under a coronavirus-era program set to expire this year, and the bill saves them from premium increases in September.

It cuts costs for seniors enrolled in Medicare by capping out-of-pocket costs at $2,000 annually and gives Medicare the ability to negotiate drug prices, beginning in 2026. Pharmaceutical giants, which opposed the bill, will be required to pay rebates to the government if they raise Medicare drug prices beyond the rate of inflation.

Republicans were able to remove the Democrats’ proposal to cap the price of insulin at $35 per month, after the Senate parliamentarian ruled that the insulin price didn’t affect the federal budget. Only seven Republicans supported capping insulin prices, not enough to beat the Republican filibuster, so diabetics will still face bills of hundreds of dollars monthly for their insulin needs.

The bill finally passed the Senate Sunday, Aug. 7 on a party-line 51-50 vote. The House approved the Senate version Friday, Aug. 12 on a party-line 220-207 vote, sending the bill to the White House for Joe Biden's signature.

The price for Sinema’s agreement to support the bill was that Democrats not repeal the tax cut for billionaires that the Republican Congress enacted in 2017, and also keeping intact the “carried interest” loophole, which allows private equity and hedge fund investors to be taxed at the capital gains rate, which is typically 20%, compared with 37% for the highest bracket of earners. That cost $14 billion.

Sinema has a special place in her heart for private equity executives, perhaps because they have given her more than $500,000 during the current election cycle, the Financial Times reported. She can answer to her constituents for that in 2024. But Sinema agreed to other tax increases estimated to generate $300 billion over the next year, including a minimum tax rate of 15% on all US corporations that earn more than $1 billion per year in profits, and a new tax on corporations that buy back their own stocks, which drives up the value of the stock. A 1% tax on stock buybacks would raise roughly $73 billion.

The bill also includes $80 billion for the IRS to rebuild its staff, which was cut by 20% between 2010 and 2020. allowing it to pursue wealthy tax cheaters. Former IRS and Treasury officials estimate the IRS can raise $1.4 trillion in additional tax revenue.

Krugman wrote that the Inflation Reduction Act will have little effect on inflation. It calls for spending less than $500 billion over a decade, compared with the American Rescue Plan’s $1.9 trillion in a single year, but IRA will actually reduce the deficit.

Biden, Schumer and Nancy Pelosi deserve full credit for getting the Inflation Reduction Act across the finish line. Lyndon Johnson may have passed more bills in 1965-66, but he had a Democratic supermajority in the House and Senate when he passed his “Great Society” legislation, including establishment of Medicare and Medicaid and passage of the Voting Rights Act. And if LBJ lost a conservative Southern Democrat, he likely could find a liberal Republican to fill in. Biden needed to keep all his cats in a row. If he leaned too hard on either Manchin or Sinema, Mitch McConnell could be majority leader the next morning, and then Biden could not only write off his legislative agenda, but also forget about seating any more federal judges.

If Democrats want bigger things, they need to get out to vote in November to keep a majority in the House and get a real majority in the Senate, by holding onto vulnerable Democratic seats in Arizona, Georgia, Nevada and New Hampshire, while picking up open seats held by Republicans in North Carolina, Ohio and Pennsylvania, and knocking off Marco Rubio in Florida and Ron Johnson in Wisconsin.

Meanwhile, Republicans continue to embrace Trump’s hoax that Democrats stole the 2020 election. Congressional Republicans have tried to sabotage Democrats’ efforts to help working families while state Republicans roll out laws to suppress voting rights in their attempt to steal the 2022 and 2024 elections. Dems must stay in array! — JMC