Lobbyists rush to influence cut inflation law

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As Democrats race to finalize $739 billion in climate, health care and tax legislation that was relaunched last week to the surprise of most Washington insiders, business lobbyists and issue advocates are working to support, modify or entirely derail the bill.

The measure, dubbed the Cut Inflation Act, would provide the biggest investment in US history for clean energy and other efforts to combat climate change. It also aims to reduce health care costs by allowing Medicare to negotiate prescription drug prices, and it would levy a new minimum corporate tax and bolster the Internal Revenue Service’s budget to crack down on tax cheats. .

The sudden resumption of the legislation last week launched a flurry of efforts by pro and con groups, who are using TV and newspaper ads and personal outreach to try to win Democrats on their side ahead of votes. of the Senate.

Much of the fiercest lobbying has focused on the bill’s health care provisions.

Research by Patients for Affordable Drugs Now, which advocates for lower prices, found that leading pharmaceutical lobby PhRMA and its allies have spent at least $18.6 million on TV and digital ads since July 1, including $1 million spent on new TV commercials since the Democrats announced the deal on July 27. That $1 million figure doesn’t include ads that were already running when the deal was announced.

“Clearly the pace of spending has accelerated over the past month,” said David Mitchell, president of Patients for Affordable Drugs Now. “They spent a boatload of money trying to stop this reform.”

Some of the pharmaceutical lobby ads monitored by Mitchell’s group include a July and August broadcast that argues that Medicare “price-fixing” – the government negotiating with manufacturers on drug prices, as the bill allows – would interfere with the ability of older people to get the medicine they need. This ad ran in Washington, Georgia, Nevada, West Virginia and other markets, according to the research.

The ad was run by the Partnership to Fight Chronic Disease, a nonprofit group that has run other ads opposing the Medicare negotiation. A spokeswoman, Jennifer Burke, said the current proposals “will ultimately create an even greater burden on our already struggling healthcare system.”

A targeted ad from the Partnership to Fight Chronic Disease tells Sen. Raphael G. Warnock (D-Ga.) that “Medicare pricing is the wrong prescription.” (Video: Partnership to Fight Chronic Disease)

A PhRMA spokeswoman declined a request for an interview. The lobby group held a briefing last week where leaders argued drug pricing measures would reduce the supply of lifesaving drugs.

On the other side of this policy, A range of groups who see it as a way to lower health care costs for Americans support the measure, including AARP, which launched a new ad buy in Arizona, Nevada and Georgia on Thursday that is expected to continue until Monday and totaling approximately $700,000. The group also has a $3 million ad buy running in the DC area and on national cable, urging senators to stand up to Big Pharma.

AARP members across the country are reaching out to their lawmakers to urge them to support the package, and the group is hosting meetings with senators and their staff to make the case, said Bill Sweeney, senior vice president of government affairs. of the group.

“It’s common sense,” he said in an interview on Wednesday. “Our AARP members are excited about this and they’re ready.”

The bill also provides hundreds of billions of dollars in investments to fight climate change and reduce emissions of greenhouse gases that warm the planet, and outlines requirements for tax credits of a maximum value of $7,500 for the purchase of electric vehicles.

From the end of 2023, the electric vehicle provision allows the credits to be used only for vehicles with batteries manufactured or assembled outside of countries of concern such as China. At the end of 2024, a similar requirement will extend to critical minerals contained in batteries.

The Zero Emission Transportation Association (ZETA), which issued a statement last week calling for the bill to pass, is asking senators to consider extending deadlines by a year or more to make it easier for companies to come into compliance. , said Joe Britton, executive director of ZETA. .

At a press conference Tuesday, Sen. Joe Manchin III (DW.Va.), a key player in the Democrats’ deal, signaled that he was not open to flexibility on the provision.

“Tell them to be aggressive and make sure we mine in North America, process in North America, and stop depending on China,” Manchin said. “I’ve been very, very adamant that I don’t think we should build this mode of transportation on the back of foreign supply chains, and I won’t.”

Automakers say climate bill sets impossible targets

The bill also imposes price limits between $55,000 and $80,000 on electric vehicles for which the tax credit can be used. Rivian, a maker of electric pickup trucks and SUVs, is asking lawmakers for an adjustment that would effectively give it and some other makers a two-year transition period before those limits apply, James Chen said. the company’s vice president for public policy.

While many of Rivian’s vehicles start at below-threshold prices, they’re “right on point” and could easily overshoot when options are added, Chen said. The company has reached out to Senate leaders as well as senators in states where it does business or has plans for a future plant, including Michigan, Georgia and California, he said.

Meanwhile, some business and GOP groups are focused on derailing the bill’s key tax measures, targeting moderate Democratic Sen. Kyrsten Sinema (Arizona) with their advocacy. Sinema only announced Thursday evening that she would vote for the bill, after Democrats agreed to some changes to the tax provisions.

The United States Chamber of Commerce, for example, ran a full-page ad in Arizona newspapers lambasting the original tax provisions. In recent days, Sinema has also heard from Arizona businesses, many of which have called on her to oppose the minimum corporate tax law.

The Arizona Chamber of Commerce and Industry, for example, delivered its message directly during a Zoom call on Tuesday afternoon. Business leaders from the manufacturing, pharmaceutical and energy sectors – flanked digitally by their top lobbyists – implored Sinema to reject the policies, including a proposed 15% minimum corporate tax. This provision, as originally drafted, would bring in $315 billion, a good chunk of the bill’s total revenue.

Danny Seiden, the president of the local chamber, said Sinema “wanted to know about us [if] this bill was drafted in a way that had negative impacts on business,” adding, “She wanted as much information as possible.

Seiden said companies basically told Sinema that the policy would reduce capital investment, limiting domestic supply chains. But he said Sinema “gave us no indication” of his views during the Zoom.

Meanwhile, the America First Policy Institute, a group founded by former economic aides to President Donald Trump, brought together 75 conservative organizations for a conference call Wednesday night to strategize on how to stop the project. of law. The Committee to Unleash Prosperity, which focuses on Arizona, runs ads questioning spending such as upgrading Postal Service trucks, said Stephen Moore, a former Trump adviser who serves on the board. of the group.

Moore said GOP donors were “excited” about the bill and determined in particular to oppose the increased IRS budget.

“We’re scrambling to put together an effective campaign,” Moore said. “We’re trying to figure out what’s the main vulnerability here, what’s the least popular part of this bill. … This line that is not a good time to raise taxes usually resonates with people. The truth is that we don’t have a miracle solution and we are looking for one.

But a K Street lobbyist, speaking on condition of anonymity to discuss sensitive discussions, said opposition among industry groups was partly dampened because they braced for multi-trillion-dollar tax hikes last year – rather than the scaled-back measures that have emerged. Small businesses managed to remove the higher taxes on flow-through entities, while large businesses managed to keep the corporate tax rate at 21%.

Democrats had been pushing to raise the corporate tax rate to 28% – which would have hit far more businesses than their ultimate plan to impose a minimum tax that will only fall on corporations now paying less than 15% .

“If you told people a year ago that they should settle for a minimum tax, that sucks, but that’s certainly a mixed result,” the lobbyist said. “I think a year ago people would have taken that in the blink of an eye.”

The head of a conservative organization, citing conversations with major donors, agreed.

“My anecdotal impression is that there won’t be much pressure against it from the business community, and there are a few things that are arguably good for business,” the person said., speaking on condition of anonymity to discuss private conversations.

Even if passed, the provisions of the bill may not be safe for long.

Doug Holtz-Eakin, former director of the Congressional Budget Office and a White House economist under President George W. Bush, said Republicans are ready to attack “everything” in the bill if it passes. If the GOP takes over Congress in this fall’s midterm elections, it could push to scrap the 95% excise tax on the pharmaceutical industry, saying it would force the rest of the Democrats’ bid to revise drug prices to collapse.

“Once that happens, everything falls apart,” Holtz-Eakin said. “If you choose to use reconciliation to push something across party lines, then regardless of merits, it becomes a political target – the [Affordable Care Act] was a political target; the 2017 tax law was a political target; it will also become a target.

Tony Romm contributed to this report.

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