Senate Infrastructure Deal in Sight After Medicare Agreement

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(Bloomberg) -- A bipartisan group of senators is closing in on a $579 billion infrastructure deal after agreeing to pay for it in part by delaying a costly Trump-era Medicare regulation, but they don’t expect to announce details until at least Monday.

Any deal could still face resistance from Democrats on both sides of the Capitol, making the prospects uncertain as a bipartisan group of 22 senators works out the final sticking points.

Senator Tom Carper of Delaware, a typically reliable Democratic vote and ally of President Joe Biden, signaled Thursday that he would object if negotiators didn’t include more funding for water and sanitation. Other Democrats in the 50-50 Senate have raised concerns about funding for their own priorities, like high-speed rail.

The Medicare rule, promulgated under President Donald Trump, eliminates rebates drug companies give benefit managers in Medicare Part D and was aimed at reducing out-of-pocket costs for patients outside Medicare. Delaying the rule reduces expenditures by the Medicare program, producing a budgetary windfall the negotiators want to use to help pay for roads, bridges and other projects.

The Congressional Budget Office estimated that repealing the rule would cut federal Medicare spending by about $177 billion over a decade. Negotiators are delaying it for less than 10 years, but have not revealed how long.

“We had an agreement on 99% when we walked out yesterday afternoon,” Senator Joe Manchin of West Virginia, one of 22 senators negotiating the infrastructure deal, said in an interview. “The pay-fors are pretty much lined up.”

Senate Finance Chairman Ron Wyden, whose committee has jurisdiction over Medicare, said he is still reviewing the proposal. “I share the view that the Trump proposal was flawed and we’re all talking about it,” he said.

Drug companies, which could lose revenue if the rule is set aside, have lobbied against its inclusion in the deal.

“Despite railing against high drug costs on the campaign trail, lawmakers are threatening to gut a rule that would provide patients meaningful relief at the pharmacy,” said Debra DeShong, executive vice president of public affairs at the industry group PhRMA. “If it is included in the infrastructure package, this proposal will provide health insurers and drug middlemen a windfall and turn Medicare into a piggybank to fund projects that have nothing to do with lowering out-of-pocket costs for medicines.”

Negotiators continued their talks Thursday even as some senators were leaving the Capitol for the weekend.

“The negotiations are going very well,” Maine Republican Senator Susan Collins said. But, she said, they would not circulate any legislative text until at least Monday as they await the CBO’s evaluation of the proposal’s costs and revenue.

Senator Mitt Romney, a Utah Republican, said, “I think it’ll be there on Monday,” referring to the text. “If not, not. So it’ll be a day or two after -- but I think it’ll be on Monday.”

Across the aisle, Senate Democrats had been banking on the support of all 50 senators in their caucus -- making Carper’s last-minute objections notable.

Carper voted to proceed to debate on the bill on Wednesday, but signaled on Thursday that the water and sanitation funding could be a dealbreaker for him. Carper, the chairman of the Environment and Public Works committee, wants the infrastructure plan to fund those programs at the level in a separate bipartisan water infrastructure bill.

Carper Objections

“It’s not every day you get 89 senators to vote in favor of water-infrastructure legislation,” Carper told reporters. “That’s a strong statement.”

Carper also expressed concerns about the surface transportation portion of the emerging agreement, which continues to be a sticking point in the talks.

“In the process of legislating, there are periods where people want to have their voice heard,” White House Press Secretary Jen Psaki said when asked about Carper’s objections. “We support that” and it’s “part of the messy process of legislating,” she said.

Negotiators are still working on exactly how much money to funnel to transit systems, according to Romney and Senator Joe Manchin, a West Virginia Democrat. Some Republicans have argued that, given the large boost in the bill for transit, future highway trust fund disbursement for that area should be reduced to 18% from 20%. Democrats say the traditional 20% share of the trust fund, which is primarily funded by the gas tax, should be maintained.

Senate Majority Leader Chuck Schumer made an attempt Wednesday to start debate on the bill, seeking to accelerate its consideration, but Republicans blocked the move, arguing they needed to see a deal first.

“If it’s not ready for Monday vote, we’re going to lose a couple of weeks on our August recess,” Montana Democrat Jon Tester, another member of the negotiating group, said. “So it’s got to be ready.”

Staying Late

Schumer indicated on the Senate floor Thursday he is prepared to keep the Senate in session past its Aug. 9 recess date to finish work on both the infrastructure bill and a separate, multi-trillion dollar budget bill carrying much of President Joe Biden’s economic agenda.

“My colleagues on both sides should be assured: as majority leader, I have every intention of passing both major infrastructure packages -- the bipartisan infrastructure framework and a budget resolution with reconciliation instructions -- before we leave for the August recess,” Schumer said. “I laid out that precise schedule both publicly and privately and I intend to stick with it.”

Even if the infrastructure bill makes it through the Senate in the coming weeks, it could face some significant resistance among progressives in the House who have clamored for more spending.

“We’re not just going to rubber stamp what the Senate sends our way,” Georgia Democratic Representative Nikema Williams said on Bloomberg Television’s “Balance of Power with David Westin.”

Williams raised concerns that the Senate bill does not do enough to help Black communities still feeling the effects of the 1956 Federal Highway Act.

Williams was one of 30 Democrats on the House Transportation and Infrastructure Committee to sign on to a letter Wednesday to the Democratic leadership in both chambers urging them to include many of the provisions in an infrastructure bill that was previously passed in the House.

“We won’t resolve these problems by continuing the status quo and spending more money through a broken and outdated system,” they wrote.

Oregon Democratic Representative Peter DeFazio, the committee’s chairman, said Wednesday at a progressive rally that the Senate bill had only “a little green dressing on the side.”

“We can’t afford to do that for our people, for our safety, for our climate, for our country, for the world. This is our time,” he added.

(Adds details of Medicare regulation in fourth paragraph.)

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