Mandel Ngan/Pool via AP
First Lady Jill Biden at a health care facility in Albuquerque. Health care subsidies in the last COVID relief bill expire in 2022.
It’s April 23, 2021 and welcome to First 100. You can sign up to have First 100 delivered to your email by clicking here.
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The Chief
Parts of the American Families Plan, the second half of Biden infrastructure package, are trickling out. The idea was that the American Jobs Plan was about the physical infrastructure of the country and the American Families Plan was about the infrastructure people need undergirding their lives to make them succeed. It doesn’t completely scan that way, because the AJP has $400 billion for elder care. But that’s the general idea.
Because this is America and Wall Street runs the world, so far the AFP, which will be announced at Biden’s joint address to Congress next week, is getting attention mostly for the revenue offsets, namely the near-doubling of the capital gains tax for people making over $1 million (about 1/3 of 1 percent of the population). Added to a surtax on investment from the Affordable Care Act, the top rate for capital gains would be 43.4 percent. This was always one of Biden’s campaign promises; here’s an analysis of the plan from July 2019. But it certainly revved up investors, who tanked stocks and warned darkly of hurting “competitiveness.” We don’t really have a competitive economy for reasons wholly unrelated to capital gains, and stocks aren’t really how companies gain the money to invest anyway. Biden wisely understands that you must attack capital rents if you’re going to deal with inequality.
I don’t know that Biden will get capital gains equal to ordinary income for the rich (among other things this would wipe out the carried interest loophole), and yes you do need to actually be able to prevent the wealthy responding by holding their assets forever. (Ending step up in basis or a mark to market annual tax would help, and the former is in the plan.) But exactly what will be done with this money? I’m well aware fiscal policy doesn’t work this way, but for the purposes of maintaining the “pay-for” fiction, it looks like this will be the main offset to a Families plan that subsidizes child care costs, creates universal pre-kindergarten, makes community college free, and establishes national paid leave.
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It’s also likely that the child tax credit, expanded and made a monthly advance credit in the American Rescue Plan, will be extended in this legislation, but only through 2025 rather than permanently. There’s a school of thought that you extend this long enough and it becomes permanent by default because nobody wants to kill it, but that’s a huge risk to take with the lives of poor families. And it’s the price tag that’s choking the administration, not a good sign for the gang that allegedly rejected deficit hysteria now and forever. (Really they don’t think Senate Democrats will go for it.)
The bigger problem, I think, is the absence of another support for families: help with their health care costs. “And don’t forget health care” was the final piece of the “It’s the economy stupid” slogan that powered Bill Clinton to victory in 1992. It came from James Carville, who ran Harris Wofford’s surprise win in a Senate special election in Pennsylvania in 1991 after the death of John Heinz. The Democratic Party has pretty much never stopped running on health care ever since, from expanding children’s health insurance to fighting for better prescription drug coverage in the Bush years to the Affordable Care Act to preventing its repeal. It won the 2018 midterms for Democrats.
It was part of Biden’s campaign too, where he promised first a public insurance option and then expanded subsidies for exchange coverage. The letter did get into the American Rescue Plan but only on a temporary basis for two years. White House officials have reportedly decided to defer health care changes out of this package and into a later bill; as it’s difficult (not impossible) to pass anything in an election year, and the makeup of the next Congress is unknown, that risks allowing the affordability protections in place to expire.
Drug pricing, meanwhile, has been something with bipartisan interest for years, and a bunch of the bills Democrats thought they could get done in the last Congress were reintroduced this week. All of these save money to the government, and offer a way out of all the tax-raising. But if there’s going to be one big infrastructure bill, with all the pain and wrangling that comprises, splitting it in three (AJP, AFP, and now this American Health Care Plan I guess) just makes it more likely that whatever’s second or third never happens. The Republican counter-offer that only deals with the first part, in an underweighted way, makes that more likely.
“And don’t forget health care” is good advice.
What Else About Health Care To Not Forget
Of course, the president has a health care agenda: it’s called vaccinating the country. That has experienced turbulence, with a clear bend point in the per-day average over the past week. The lack of Johnson & Johnson shots after the pause could be a factor, and that’s likely to end today, as the vaccine will be restored with a warning label. The bigger issue is that Emergent, the factory where some J&J vaccines are being produced, is fatally flawed, with risks of cross-contamination beyond the 15 million doses already tossed out. Emergent is a big-time government contractor and an example of how contracting oversight really matters and private-sector partnerships don’t always work. But it really sets back J&J, which administration officials are now writing off.
The bigger problem is that the country is running out of willing participants in vaccination. Hesitancy (which some claim is due to the J&J pause, though I’d argue that was a no-win situation) is the main challenge on the road to normalcy, and any effort to improve public health must find a way to get reluctant people interested in the shot. A tax credit for companies who give workers time off for vaccination just doesn’t seem like a killer app to me. Donald Trump loudly endorsing vaccination helps a bit more.
But there’s more to life and even more to COVID than vaccination. I want to know what the government is prepared to do with all these long-haulers, who not only experience COVID-related symptoms for months or possibly years but are at risk for other chronic medical conditions, according to a new study in Nature. These increases in needs for outpatient care and long-term, even lifelong, medical problems is going to have to be dealt with somewhere in our fragmented medical system.
We need a Zadroga program for COVID, what I called last June Medicare for Coronavirus, to deal with lung and heart and liver damage from people who have contracted this disease. Insurance companies will offload these costs through higher premiums; it will be much cheaper for everyone to have a public program take care of these people. I haven’t seen a single proposal along these lines; it’s beyond time to do it.
What Day of Biden’s Presidency Is It?
Day 94.
Today I Learned
- I was on the Lauren Steiner show discussing Biden’s first 100 days. Watch here. (YouTube)
- “The Supreme Court ruled in favor of scam artists” by reinterpreting the Federal Trade Commission Act; Congress can clarify interpretation or the FTC can use other authorities. (Politico)
- Has Biden stated administration policy on the SAFE Banking Act, which got a veto-proof majority in the House this week? Fourth time the House has passed this, the first with the Senate under Democratic control. (Yahoo News)
- Analyzing Biden’s emissions goal, which relies heavily on passing this infrastructure plan. (Grist)
- But the Biden team needs to use international leverage through trade policy and financial diplomacy to make a difference, Kate Aronoff writes. (NYT Opinion)
- Anti-Asian hate crimes bill seems poised to become law. (CNN)
- HUD reverses Trump policy on transgender discrimination in homeless shelters. (HuffPost)
- Unions threatening money cut-off to any Democrat not supporting the PRO Act. (Politico)
