Gabriele Holtermann-Gorden/Sipa USA via AP Images
The more progressive drug-pricing bill, which allows Medicare to negotiate drug prices, would provide the federal government with huge cost savings.
The particulars of Joe Biden’s infrastructure package continue to trickle out. Now a two-part, multitrillion-dollar omnibus, part new spending, part tax credit, the bill features some of the biggest Democratic priorities from all over the party platform. The first part, some $2 trillion in spending, was announced yesterday; the second part is expected in the coming weeks. All told, there’s money for ports, roads, and bridges; for housing, broadband, and manufacturing R&D. There’s money to replace every lead pipe in every water system in America. There’s money for elder care and workforce training. There’s money for various climate-related initiatives, including capping orphan oil and gas wells and electrifying the federal vehicle fleet. Scientists and progressives say it’s not nearly enough; Republicans say all of it is way too much.
Much like the American Rescue Plan, the fate of Biden’s Build Back Better package will in some measure come down to moderate Democrats, who have made it clear that they want to be placated yet again. So far, their objection has taken a peculiar form. Moderates in both the House and the Senate have requested assurances that the bill will come equipped with “pay-fors” in equal or near-equal measure. This will mostly take the form of tax increases on the rich and corporations; the corporate-side tax hikes were announced yesterday.
This is not something moderates usually fight for, and it’s certainly not something progressives would oppose. And given that Republicans are firmly opposed to raising taxes, particularly on the wealthy and corporations, it would seemingly end any hopes for cross-aisle support, which moderates constantly claim to want. But here we are.
Are moderates serious about lowering the ultimate cost of the bill, or are they just showcasing a reflexive desire to gum up the process and limit the ambitions of the final product? Thankfully, we’ll have an answer to that question shortly. Many progressive priorities, stuff that moderates would oppose in this package, are actually cost-savers for the federal government. So moderates will be forced to either embrace progressive reforms, or abandon their commitment to making sure every dollar of spending is paid for.
One of these priorities is drug-pricing reform. It’s extremely popular, and even succeeds on the basis of the hallowed b-word: bipartisan support. Even Republican voters want meaningful action on the cost of prescription drugs. Democrats ran on it in 2018 to huge success; they promptly bickered over what to do about it, and went with a watered-down, toothless option preferred by corporate moderates, over a more robust bill that would have lowered drug prices for millions of Americans considerably. It was all for naught anyway. H.R. 3, the weak-tea outcome, died in the McConnell-controlled Senate.
But drug pricing is back, expected to be announced in the second part of the infrastructure package. And the debate over which version of the drug-pricing bill to pursue will be a perfect showcase of moderates’ commitment to saving money and bringing down the bill’s cost. The progressive drug-pricing bill, which allows Medicare to negotiate down prices, widens eligibility for generic drugs, and removes the tax deduction for drug corporation advertising, would save the federal government a ton of money. The moderate-preferred drug-pricing bill, H.R. 3, which does less to empower Medicare to negotiate, would save the government little.
In early 2019, House Democrats dueled over two different visions of how to tackle drug pricing. The first, introduced by Sen. Bernie Sanders and Rep. Elijah Cummings, would have dramatically reduced prescription drug prices for all Americans, pegging all drug prices to their median cost across five countries—Germany, England, France, Canada, and Japan—while allowing the Department of Health and Human Services to negotiate drug prices for all 40 million Medicare enrollees and ending a ban on importing drugs at cheaper prices from foreign countries. The other bill, in darkly comical form titled the Elijah E. Cummings Lower Drug Costs Now Act, or H.R. 3, would have given the federal government power to negotiate prices on 25 specific drugs, delivering markedly lower savings for some Americans and no savings at all for many others. Speaker Nancy Pelosi and House Democratic moderates crushed the former in favor of the latter. Then Trump gleefully trashed Pelosi’s bill on Twitter, and McConnell drowned it on his desk for good measure.
The issue didn’t go away. Drug pricing was also a priority of the Biden-Sanders unity task force. The platform, hammered out by Sanders affiliates and Team Biden in the summer of 2020, resulted in progressives making major concessions on health care—Medicare for All, of course, was abandoned. But that task force did resolve to make major reforms on health care and drug prices in particular, most of which was absent in the first legislative package, the American Rescue Plan Act. Progressives in the House have been given every indication that this second bill will be the health care one. The task force’s solutions look much more like the Sanders-Cummings bill than the bill moderates inappropriately cloaked in Cummings’s name.
Moderates will be forced to either embrace progressive reforms, or abandon their commitment to making sure every dollar of spending is paid for.
Taking on pharmaceutical companies to deliver huge cost savings would technically satisfy moderate Dems on all the counts they claim to hold dear. It would drive down the cost of the package, and it would win wide-reaching popular support even from Republican voters. Trump himself did some half-hearted pharmaceutical reforms, which brought down the cost of insulin and little else ahead of his November election loss. What could be more bipartisan than building on what Trump started?
So, moderate Democrats cannot credibly whinge that another one of Biden’s major campaign priorities is too expensive to take up, while simultaneously opposing one of the very proposals that would make it so cost-saving.
When the American Rescue Plan was being deliberated, a similar process played out. Moderate Dems, particularly in the Senate, signaled some minor discomfort with the price tag, before circling the wagons to down a $15 minimum wage proposal that, according to some analysts, would have saved the federal government billions. (The Congressional Budget Office, using some dubious projections, said it would cost money.)
That battle will also be restaged in this go-around. Chuck Schumer has indicated that he will push for a $15 minimum wage again in this package. And Bernie Sanders, in tandem with the Congressional Progressive Caucus, has indicated that there, too, will be a push to lower Medicare eligibility to 50 or 55 years old, which would also save Americans money, by getting millions of cheaper and healthier people on the Medicare rolls and taking them out of private health insurance pools. This makes both of those pools healthier, and should be reflected in lower premium prices. That should also appeal to sensible moderates getting sticker shock.
And yet, the one thing moderate Democrats have thrown the bulk of their weight behind is a shedding of the state and local tax (SALT) deduction cap, which limits the amount of state and local taxes households can deduct from their federal taxes at $10,000. That’s a tax cut, not a tax hike, that will cost some $200 billion, with 86 percent of the benefits going to the top 5 percent. New Jersey Rep. Josh Gottheimer, moderate extraordinaire, said he would not vote for any bill that doesn’t feature that tax cut, and at least three other House Democrats from New York and New Jersey have joined him.
So far, Biden seems to have been cowed by the threats of moderates. The size and ambition of part one of this package, and the fact that the package has been split in two, has underwhelmed. The $2 trillion figure Biden is championing in his messaging is a far cry from the $10 trillion progressives had been hoping for. Certainly, on climate, it doesn’t meet the ambitious proposals Biden committed to via the task forces and subsequently ran on. Progressives can play this game too, and will be pulling hard in the opposite direction to increase that number.
But there are plenty of places to make a smaller top-line number have a bigger societal impact, not vice versa. Biden should have the courage to pursue them, and his moderate colleagues, of which he was once proudly one, can put their money where their mouth is.
