Republican budget nerds reviewing the latest reconciliation bill still believe they can knock out certain provisions. On Thursday, for the latest episode of the Playbook Deep Dive podcast, we sat down with two of the party’s leading experts on the process: Eric Ueland, who spent 25 years in the Senate, including as staff director of the Budget Committee, and lobbyist Greg D’Angelo, who spent nearly a decade on the committee. Both men were intimately involved with drafting language for reconciliation bills in the Trump years — including the successful effort to use reconciliation to open the Arctic National Wildlife Refuge to oil drilling and ending the individual mandate in Obamacare.
The fight over the individual mandate is instructive. MacDonough rejected the original GOP plan to repeal the legal requirement to have coverage, which she argued ran afoul of reconciliation rules because the policy effect of repeal outweighed any budgetary effect, one of the core tests of what’s allowed in a reconciliation bill. Democrats thought they had won the fight. But D’Angelo returned to MacDonough with a new idea: Rather than eliminating the mandate, what if they simply eliminated the tax penalty used to enforce it? MacDonough agreed that keeping the mandate on the books but dialing the penalty down to zero was within the rules. (Her guidance on the issue led to a heated exchange behind closed doors when Democratic staff learned of what they perceived as her reversal.)
In the current Byrd Bath debate, D’Angelo said he “would focus like a laser” on three policies.
1. The drug negotiation price setting program in the Democratic bill. The policy allows Medicare to negotiate prescription drug prices, which would bring costs down for beneficiaries. To expand those savings to Americans outside of Medicare, pharmaceutical companies would have to offer prescription drugs to private insurers at the Medicare prices or face a 95 percent excise tax.
“It’s a tax penalty that raises no federal revenue,” D’Angelo said. “I.E. has no budget effect, and it appears designed solely for the purpose and intent of altering behavior: forcing drug makers to the table. So I’d argue it’s not budgetary.”
If MacDonough can be convinced that it’s “merely incidental to the policy motive of forcing manufacturers to the table,” then she could strike it. (Democrats say they are confident the policy will survive any challenges.)
2. The repeal of the Trump administration’s drug rebate rule. “Questions are raised about whether it’s appropriate to come in and in a single sentence, repeal a 300-page regulation, whole cloth,” D’Angelo said. “That’s a huge policy element to it, despite the huge budgetary effect.”
3. Forcing rebates on drug makers that raise prices faster than inflation. “It has sweeping effects with huge costs that are huge policy changes,” he said.
In this GOP Byrd Bath dream scenario, each domino would bring the bill closer to collapse. Each of these three policies has savings of about $100 million. “If you can knock out one of those or even a portion of those, you dramatically reduce the savings that are projected under this bill,” D’Angelo said. “And I think it complicates the deal that the majority appears to have struck.” (Sen. Joe Manchin (D-W.Va.) has insisted on $300 billion in deficit reduction.)
Ueland added: “If enough of these are knocked out or modified, then suddenly you’re skirting the edge of not reducing the deficit.”
The timing: MacDonough’s rulings on the prescription drug provisions of the bill could come as early as today, per Burgess and Marianne.