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Happy Wednesday morning.
Last night, the Senate finally adopted the PACT Act, a massive $280 billion package designed to help the millions of veterans exposed to toxic burn pits and other harmful substances during their military service. The vote was 86-11, ending a week of GOP-induced drama.
Tuesday’s action cleared the way for the Senate to pass a resolution today supporting Sweden and Finland’s accession into NATO. That resolution will sail through with a huge bipartisan majority, and it marks a big moment for the Western military alliance. The two Nordic countries had long been neutral, but Russia’s brutal invasion of Ukraine in February radically altered their position on joining NATO. Senate Majority Leader Chuck Schumer invited the ambassadors from Sweden and Finland to watch the vote live from the Senate gallery. These votes will be in the 4 p.m. hour – the first votes of the day.
These two big items were on the Senate’s to-do list before the August recess. Now that they’re both completed, or very close, Schumer has just one more task before leaving town for the August recess – passing the $740 billion reconciliation package.
This is the most important moment for Schumer as majority leader and the most important moment for his 18-month old majority. Schumer was keenly aware of these stakes during a Tuesday press conference on the what the Inflation Reduction Act means for Democrats:
“This is a very historic and comprehensive piece of legislation. It’s historic. It’s groundbreaking. It’s things that we have looked at to try to do for a generation.
“The idea that we can finally get prescription drug costs down and allow negotiations; the idea that we can close loopholes and cause wealthy individuals and corporations to pay at least a fairer share of tax; the idea that we can actually reduce inflation while doing all these things and creating good-buying jobs; and the idea that we finally will start leading the world instead of following the world in terms in reducing the amount of carbon – poison carbon – that’s thrown into our atmosphere, it’s just breathtaking. It gives Democrats really a jolt of happiness. As it will give Americans a jolt of happiness.”
So here are the five things to watch this week on reconciliation.
→ Oh parl, where art thou? The timeline of this entire process is dependent on when the Senate parliamentarian, Elizabeth MacDonough, renders her judgment on the agreement cut by Schumer and Sen. Joe Manchin (D-W.Va.). It’s already Wednesday and we still haven’t seen anything from the “Byrd bath” on the legislation. The Byrd Rule controls the reconciliation process, and MacDonough’s job is to determine if the Democrats’ legislation complies with that hyper-complex rule. This takes time, and there are no deadlines.
Sure, Senate Democrats can bring their reconciliation package to the floor without the full guidance from the parliamentarian. Yet that’s risky since Sen. Kyrsten Sinema (D-Ariz.) says she’s waiting for MacDonough’s ruling before deciding how to vote.
There’s already buzz that the Senate could be in session all weekend with a vote-a-rama, which takes two to three days. The House probably will need a day or two to clear this package. Speaker Nancy Pelosi’s chamber is tentatively expected to come back into session at some point next week, but that’s up in the air.
Yet as much as everyone is focused on how long it takes, it’s what MacDonough decides that’s so critical. For instance, MacDonough ruled that the $15 minimum wage didn’t belong in the American Rescue Plan back in February 2021. Despite howls of protest from Sen. Bernie Sanders (I-Vt.) and other progressives, the ruling stuck. Millions of Americans were impacted by that decision. So don’t forget that in all the talk about what’s in or out of this bill.
→ Sinema, Sinema, Sinema. Did we mention Sinema? The entire Democratic agenda is now at the mercy of the 46-year-old senior senator from Arizona, and she’s not sharing her position yet. The view by many – wrong, of course – is that Sinema and Manchin act as essentially one unit. Sinema isn’t one to chat with the Hill press corps either – unless she has something to say. So here we sit, waiting for Sinema to make up her mind on the package. Needless to say, she has a lot of leverage. If Sinema wants something removed from the package, she has the power to do so. Yet this bill is a bit like a Jenga tower. If you remove too many pieces – or the wrong one – the entire thing may fall apart.
→ Will Wall Street win or take it on the chin? Perhaps the biggest question in the reconciliation process is whether the elimination of the carried-interest loophole makes it through Congress. Manchin is pushing for it, and he’s got a lot of other Democrats backing him up.
If you don’t understand carried interest and how it’s taxed, here you go, via the Congressional Research Service:
“[C]arried interest is generally taxed as a capital gain or qualified dividend, often at a rate of 20%. This 20% rate for carried interest is the top rate applicable to long-term capital gains, which applies to carried interest if held for more than three years. (In general, long-term capital gains tax treatment requires assets to be held for one year.) By contrast, the top tax rate on ordinary income—for example, earned income—is 37% through the end of 2025, and 39.6% thereafter.”
In other words, many fund managers are getting a pretty good tax rate on their income due to this provision. Despite all of the attention it’s getting, eliminating this loophole will only bring in $14 billion in revenue – a relatively small amount in a $740 billion bill. Some in the Capitol have surmised that Sinema will ask for this provision to be removed. That would be a major victory for hedge fund and private equity managers. Should it stay in, it would mark a symbolic victory for Hill Democrats.
→ Insulin. Democrats want to include a proposal by Sen. Raphael Warnock (D-Ga.) to cap monthly payments for insulin at $35 per month in the Inflation Reduction Act.
However, the provision could violate the Byrd Rule – if Republicans decide to challenge it. This issue came up when Democrats were trying to craft the Build Back Better Act last year, but since that legislation never moved forward, it was never resolved. It could be now.
→ The amendment vibe. If there’s one thing a vote-a-rama is good for, it’s a series of politically charged amendments lobbed up by the minority. How much pain will Republicans put Democrats through during this process? We predict a lot. But, then again, at the end of this process is the August recess. So maybe Republicans want vacation as much as they want to put Democrats through a series of tough votes.
Also remember this: At the end of the vote-a-rama, Schumer can design what is called a “wraparound amendment,” which basically strips out any amendment that is passed. Manchin has complained about this maneuver in the past, however, so we’ll see what happens.
– Jake Sherman and John Bresnahan
PRESENTED BY HEALTHCARE LEADERSHIP COUNCIL
Seniors are speaking out! A large majority of seniors on Medicare are not supportive of changing the law so that the government can interfere in the successful Part D program.
Yet, Congress is considering policies that will insert the government into this already successful program. Lawmakers must abandon price setting policies and protect the access seniors depend on under Part D.
Key takeaways from Tuesday’s primaries
The packed slate of primaries Tuesday made lots of news. Here are some results and our key takeaways.
Abortion rights supporters shocked the nation with a big win in Kansas.
Republican strategists have been telling anyone who’ll listen that even after the Supreme Court struck down Roe v. Wade, voters just don’t care that much about abortion rights. But they certainly did in Kansas on Tuesday night.
Voters in the Jayhawk State rejected a proposed change to the state’s constitution that would have removed the right to an abortion. It was a stunning win. The pro-abortion rights “No” side garnered around 60% of the vote in a red state that former President Donald Trump carried in 2020 by nearly 15 points.
“Freedom has prevailed. The constitutional rights of Kansas women have been protected,” declared Kansans for Constitutional Freeedom, a group opposing the abortion ban. And President Joe Biden said the vote “makes clear what we know: the majority of Americans agree that women should have access to abortion and should have the right to make their own health care decisions.”
Sen. Roger Marshall (R-Kansas), who is anti-abortion rights, said this:
“Words could never express the sadness and emotion myself and many Kansans are feeling after the Value Them Both amendment was not adopted. This is an enormous blow to efforts to protect the sanctity of life in Kansas.”
Former President Donald Trump’s endorsement still matters.
Blake Masters edged out Jim Lamon for the GOP nomination to take on Sen. Mark Kelly (R-Ariz.). This will be an incredibly expensive race that very well could decide which party controls the Senate in January.
Missouri Republicans can breathe a huge sigh of relief.
Missouri has trended so red over the past decade that statewide elected Democrats are an endangered breed. As a result, Democrats thought they could only compete in the Senate race if Republicans nominated scandal-plagued former Gov. Eric Greitens. Luckily for the GOP, Attorney General Eric Schmitt won the race. Pretty handily.
Retiring Sen. Roy Blunt’s seat will remain in Republican hands, barring any unforeseen developments. In the Democratic primary, Trudy Busch Valentine narrowly beat Lucas Kunce.
Rep. Peter Meijer (R-Mich.) lost to a right-wing primary challenger backed by Trump — and the DCCC.
In a nail-biting defeat, Trump-endorsed John Gibbs eked out a win over Meijer in the 3rd District GOP primary. Meijer, one of 10 House Republicans that voted to impeach Trump in 2021, was seen as the tougher general election opponent by national Democrats. As a result, the DCCC ran an ad aimed at boosting Gibbs among Republican primary voters last week.
The spot angered moderate Democrats and Meijer’s team alike. With Gibbs’ victory, Democrats believe their chances of flipping the blue-leaning seat in November have increased.
AIPAC’s super PAC flexed its muscles and won.
Rep. Haley Stevens (D-Mich.) breezed by Rep. Andy Levin (D-Mich.) in a fractious member-on-member primary. The infusion of cash from the United Democracy Project in support of Stevens was the race’s big storyline.
In the end, the more moderate Stevens triumphed and withstood negative ads from Levin and his allies. These ads tried to portray Stevens as anti-labor and connect Stevens to Jan. 6 insurrectionists.
Washington State Republicans who backed impeachment survive right-wing challenges.
Washington GOP Reps. Jaime Herrera Beutler and Dan Newhouse both appeared set to advance to the general election in November, despite facing Trump-endorsed primary opponents who attacked their votes to impeach the former president in 2021.
It’s a sign that although Trump’s endorsement is significant, it’s far from a kiss of death for Republican incumbents who have crossed him.
The Squad survived.
Reps. Rashida Tlaib (D-Mich.) and Cori Bush (D-Mo.) both easily beat primary challengers on Tuesday. There has been chatter since 2018 among moderate Democrats about unseating the progressives in primaries. But to date, the Squad’s members have continuously repelled their opponents.
— Max Cohen and John Bresnahan
WASHINGTON X THE WORLD
Pelosi in Taiwan: An overview
Speaker Nancy Pelosi is in the middle of her first full day in Taiwan. No House speaker has visited the island in a quarter century.
Here are a few highlights:
→ Pelosi pointed out that members of Congress visit Taiwan all the time:
“I think it’s important to note that members of Congress, several of them, had made trips just earlier this year. Five Senators, bipartisan, came – again, including the chair of the Foreign Relations Committee, Mr. Menendez, came. Not too much of a fuss was made. Individual Senators have made trips or plan to make trips.
“And I just hope that it’s really clear that while China has stood in the way of Taiwan participating and going to certain [international] meetings, that they understand that they will not stand in the way of people coming to Taiwan. It’s a show of friendship, of support, but also a source of learning about how we can work together better in collaboration. So yeah, no, I don’t – I think that they made a big fuss because I’m speaker, I guess. I don’t know if that was a reason or an excuse, because they didn’t say anything when the men came.”
→ As the Chinese government planned military drills in response to Pelosi’s visit, the speaker sought to minimize the controversy. But Pelosi also took a poke at President Xi Jinping.
“I think that whatever China was going to do, they will do in their own good time. What excuse they may use to do it is another thing, but you really know more about that than I do. I do think that the – it’s really important for the message to be clear that in the Congress, House and Senate, Democrats and Republicans are committed to the security of Taiwan, in order to have Taiwan be able to most effectively defend themselves. But it also is about our shared values of democracy and freedom and how Taiwan has been example to the world in that regard.”
The South China Morning Post wrote this about Beijing’s plans:
One analyst said it was also possible that the People’s Liberation Army could take the unprecedented turn of sending unmanned aircraft flights.
Immediately after Pelosi landed in Taipei on Tuesday night, the PLA said it would conduct “important military exercises with live-fire shooting” in six demarcated no-entry zones around the island from noon on Thursday to noon on Sunday.
→ NYT: “Pelosi’s Taiwan Visit Risks Undermining U.S. Efforts With Asian Allies,” by Jane Perlez
→ WSJ: “Pelosi Vows ‘Ironclad’ Defense of Taiwan’s Democracy, as China Plans Live-Fire Drills,” by Brian Spegele in Beijing and Joyu Wang in Taipei
→ Bloomberg: “Pelosi Hints Gender Is Real Reason China Is Mad at Taiwan Trip,” by Jenni Marsh and Sarah Zheng
→ AP: “China blocks some Taiwan imports but avoids chip disruption,” by Joe McDonald in Beijing
PRESENTED BY HEALTHCARE LEADERSHIP COUNCIL
Two-in-three seniors with Medicare prefer drug plans negotiate with the biopharmaceutical manufacturers INSTEAD of government price setting.
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→ Building Back Together is running a new spot in D.C., urging the Senate to pass the Democrats’ reconciliation package.
New: Winning for Women, a group dedicated to electing Republican women, is launching a six-figure digital campaign dinging longtime Sen. Patty Murray (D-Wash.) on public safety.
“Violent crime across Washington is up and there aren’t enough police to stop it,” the ad’s narrator says. “So why is Patty Murray making things harder for law enforcement?”
Murray advanced to the general election on Tuesday and will face Republican Tiffany Smiley in a race that national Republicans are beginning to invest in. While Washington remains a heavily Democratic state, GOP strategists believe Smiley is an effective candidate who could benefit from a wider red wave.
The Winning for Women ad is running on Facebook, Instagram and Hulu, among other platforms.
— Max Cohen
PRESENTED BY HEALTHCARE LEADERSHIP COUNCIL
View senior satisfaction survey here.
9:30 a.m.: President Joe Biden will get his daily intelligence briefing.
Noon: GOP Sens. Mike Crapo (Idaho), Pat Toomey (Pa.) and Rob Portman (Ohio) will talk about the Democrats’ reconciliation bill.
12:45 p.m.: Karine Jean-Pierre will brief.
2 p.m.: Biden will speak virtually about “securing access to reproductive and other health care services at the first meeting of the interagency Task Force on Reproductive Healthcare Access.”
→ “Justice Dept. Subpoenas Pat Cipollone, Trump White House Counsel,” by Maggie Haberman and Luke Broadwater
→ News Analysis: “Killing of Qaeda Leader Crystallizes Debate Over Biden’s Afghanistan Strategy,” by Peter Baker
→ “Trump Meets With Viktor Orban After Immigration Tirade,” by Mario Parker
→ “With 2024 approaching, Hawley takes a Trumpian turn to clip NATO,” by Andrew Desiderio
→ “Vin Scully, forever the voice of the Dodgers, dies at 94,” by David Wharton
PRESENTED BY HEALTHCARE LEADERSHIP COUNCIL
As lawmakers continue to debate prescription drug reforms that could disrupt the Medicare program, Seniors Speak Out went directly to the source to find out exactly how seniors feel about this vital program.
When asked about recent policies being considered in congress, 66% of seniors indicated we should let Part D plans negotiate directly with the biopharmaceutical industry INSTEAD of letting the government set prices.
Despite these findings, lawmakers continue to move forward with bad policy while failing to consider this important input of the beneficiaries who would be directly affected.
Editorial photos provided by Getty Images.
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