President Joe Biden will relaunch today the battle for federal health subsidies, in which he already participated as Barack Obama's number two 13 years ago. In the presentation of his budget project, the president will propose to increase from 3.8% to 5%, and only for those who earn more than 400,000 dollars, the tax that citizens with higher incomes pay for the Medicare system of medical assistance to people over 65 years of age and patients with serious illnesses. Biden intends to guarantee the solvency of this program for at least 25 more years, while reducing the price of medicines, and, through an increase in the tax burden on the rich and big companies, reduce by three trillion dollars the huge US deficit over the next ten years.
To reduce spending and increase the here limited public aid to health, "the president's budget cuts subsidies to big pharmaceuticals" while "asking the rich to pay their fair share," said the press secretary of the White House, Karine Jean-Pierre.
In addition to the increase in the specific Medicare tax, applied since 2013 after being established in 2010 within the Obamacare plan, Biden's project is expected to include the "minimum tax for billionaires" that he announced a year ago. It is about those who have fortunes greater than 100 million dollars to pay 20% annually on their income and on the "unrealized profits" corresponding to the appreciation of a good that has not yet been sold.
In practice, the greatest burden of this new tax would fall on those who amass more than a billion dollars, that is, the 680 richest Americans, grouped into some 400 families. His contribution, if the leader succeeds in pushing the plan through Congress, could generate up to 361 billion additional tax revenues in ten years.
The president's budget proposal also includes, always as advanced by the White House or Biden himself, quadrupling the 1% tax on the repurchase of shares that was approved in 2022 within the tax, health care and climate law, baptized as "inflation reduction".
In total, the leader's tax reforms would provide the country's coffers with up to 700,000 million in a decade, according to government estimates. The calculations of independent institutes reduce the figure and place it close to 500,000 million.
The budget plan calls for Medicare managers to expand price negotiations for the most expensive prescription drugs, so that drugmakers lower prices as soon as they are launched on the market. This measure is added to the precepts of the law against inflation, which, on the one hand, require pharmaceutical companies to pay reimbursements to Medicare when their price increases exceed the inflation rate and, on the other, establish a limit on costs total number of drugs prescribed to the elderly.
Such price negotiations, along with reimbursements for excessive inflation and caps on drug costs, would reduce the shortfall by hundreds of thousands of dollars, Biden said in a podium published yesterday in The New York Times. It would be part of a total cut in the deficit that the White House spokeswoman placed yesterday at three trillion dollars: one trillion more than the two that the president pointed out in the State of the Union address on February 7.
In that speech, Biden made an enthusiastic defense of the tax justice that he would like to implement in order to narrow the gap of inequalities in the nation: "Our current tax system is simply unfair," he said, adding: "In 2020, 55 of America's largest companies made $40 billion in profit and paid zero federal income taxes. Now, with the law I signed (the Reduction of Inflation), multi-million dollar companies have to pay a minimum of 15%. But that's less than what a nurse pays,” he noted. And he indicated that, although with his plan "no one who earns less than $ 400,000 a year will pay an additional penny in taxes", what cannot be is "that a billionaire should pay a lower tax rate than a school teacher or a firefighter"; a phrase that he repeated this Monday in a meeting with leaders of the International Association of Firefighters.
But Biden's practically social democratic discourse collides head-on with the proposals and interests of the Republican camp, which now has a majority in the House of Representatives. Conservatives reject both tax increases and regulatory measures to force down drug prices. So it is unlikely that the president's budget package will pass as is in Congress. In fact, the Republican leader in the Senate, Mitch McConnell, advanced on Tuesday that the project "will not see the light of day."
But, with the 2024 presidential elections in sight, the debate acquires a strong electoral component. As he did in the state of the nation address, Biden will accuse Donald Trump's party of wanting to cut health spending, as in fact he has tried in the past. Now Republicans deny that claim. But they have not yet presented their figures, and the Democrats will insist that they show them and prove once and for all how they plan to contain the deficit and the debt. The White House assured yesterday that the policies proposed by the opposition would raise the debt "by 2.7 trillion over ten years."
The perspective of the elections will mark in any case the initiatives and the arguments of each other in the dispute over the budgets. The discussion is also highly conditioned by the need to raise the debt ceiling so that the country does not go into suspension of payments. The Treasury has already adopted extraordinary measures to avoid default until June, once the limit has been exceeded. But the necessary negotiation is a powerful weapon in the hands of the Republicans. Biden has it tough.
