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Democratic divisions ignite over tax hikes and drug prices

WASHINGTON – On the eve of the self-imposed deadline Democrats to complete committee work on their massive social policy bill, tensions rose in their ranks on Tuesday over how to structure and fund it.

Disagreements over whether to tax the vast fortunes of tycoons like Jeff Bezos and how to control prescription drug prices have become flashpoints as Democrats attempt to rally around what could be the largest expansion of the social safety net in half a century.

Democratic leaders insisted they were on track to complete their work this fall and reach a deal. But liberal lawmakers were pushing for bigger tax hikes on the ultra-rich in the package, while three moderate Democrats in the House threatened to derail efforts to advance their leaders’ plans for price controls in the package. prescription drugs.

The suspension of disputes is an increasing competition for resources. Incorporating all of the party’s priorities into the initial 10-year, fully-funded $ 3.5 trillion price tag was always going to be onerous. But major lawmakers now demand lower spending totals and oppose tapping into certain revenue streams, making compromises more difficult.

“There are a number of conflicting issues,” said Senator Bernie Sanders, a Vermont independent and chairman of the Budget Committee. “How aggressive are you in raising funds for the pharmaceutical industry through medicare negotiations?” When fundraising, how aggressive are you in using Medicare to cover dental care, hearing aids, and glasses? “

“You have to balance all of this,” he added.

The disputes are particularly troublesome as Democrats, facing a wall of Republican opposition, push their plan through a special budget process known as reconciliation, which shields it from obstruction and can pass with a simple majority vote. But their low margins in both chambers will require almost total party unity to achieve this; in the Senate 50-50, they cannot afford a single defection, and in the House, they can spare as little as three votes.

The company is a huge undertaking, fraught with political and procedural challenges. Senate Democrats spent their lunch hour Tuesday reviewing a PowerPoint presentation that lasted at least 35 minutes and detailed the work that had been accomplished and the issues that remained unresolved.

“We had a strong, broad and truly constructive discussion in our caucus today about what lies ahead,” New York Democrat and majority leader Senator Chuck Schumer said at his weekly press conference.

Among the issues to be addressed is one that erupted in the House on Tuesday when two moderate Democrats, Representatives Scott Peters of California and Kurt Schrader of Oregon, spoke out against the Democratic leaders’ drug pricing plan. and came up with a less aggressive alternative that would most likely produce much less savings for the government. Another Democrat and co-sponsor of this alternative, Rep. Kathleen Rice of New York, also said she would vote against the leaders’ plan, which would allow Medicare to negotiate prices for the government and tie the prices of drugs. acceptable to those paid in other countries. .

The powerful pharmaceutical lobby took action to kill the measure, which was supposed to generate at least $ 500 billion in savings to pay a substantial part of the bill. If all three Democrats join Republicans in opposing it, they could prevent legislation from rolling out of the House of Commons Energy and Commerce Committee, robbing Democrats of a substantial share of the income they earn. need to pay for their more ambitious plans to expand health care benefits and benefits.

“I’m open to a lot of revenue increases that the president has proposed, but I don’t think it’s appropriate to jeopardize the future of American innovation to pay for these other things,” Mr. Peters said. in a press release. maintenance.

“I’m swallowing my whistle on a lot of these issues that concern me,” he added. “This is the only issue I raised from the start that I cannot support.”

Another problem is the decision by senior Democratic officials on the House Ways and Means Committee to focus their package of $ 2.1 trillion in tax increases on income tax, rather than levies on income. the billions of dollars in assets held by the richest Americans, which grow every year and are untaxed if not sold.

That would amount to a much bigger tax cut for the poor and middle class in its early years than the $ 1.5 trillion tax review that was the signature legislative achievement of ruling President Donald J. Trump, according to estimates released by the Congressional Fiscal Pointer on Tuesday. But Liberal Democrats have said they don’t think it goes far enough.

“The wealth tax is not something for a bunch of politicians to sit down and think, ‘Great idea.’ This is something the American people say we need for basic equity, ”said Senator Elizabeth Warren, Democrat of Massachusetts, who has proposed a 2% annual tax on household wealth over 50. million dollars, rising to 6% above one billion dollars.

Faced with the delicate politics of a tightly divided Congress, senior House Democrats have chosen to pay more attention to the concerns of moderates than to their party’s progressive ambitions.

Some liberals in the Ways and Means Committee defended this approach on Tuesday. Representative Lloyd Doggett of Texas, the second-largest Democrat on the panel and a veteran progressive, said swing-district Democrats simply could not be subjected to the Republican attacks that a generalized wealth tax would bring.

“People who are not rich think they will be,” he said, “and they don’t want to be punished for their success.”

Other Democrats have suggested that a wealth tax would not be constitutional. But finding the income to pay for all of the proposed social spending won’t be easy without tapping into the huge reserves of billionaire wealth that have gone untaxed year after year.

Margot Sanger Katz, Jim Tankersley and Catie edmondson contributed reports.

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