Democrats Face Safety Net and Climate Consensus Deadline

10/16

WASHINGTON—Democrats still tussling over how to scale back their ambitions to expand the country’s safety net and overhaul its climate-change policy face dwindling time to reach an agreement as both the House and Senate return to Washington this week.

One major element related to climate change—a $150 billion program aimed at pushing utilities to draw more power from clean-energy sources—could be cut from the bill, according to people familiar with the negotiations, as it has drawn objections from the centrist Democrat Sen. Joe Manchin of West Virginia.

Mired in internal policy disagreements, Democrats early this month passed a short-term extension of highway funding until the end of October, setting up a new deadline for much of President Biden’s legislative agenda. While passing Democrats’ marquee package—a broad expansion of healthcare, education and climate programs, among other things—won’t be feasible by month’s end, the timing has renewed pressure on Democrats to reach a rough consensus regarding its parameters.

Liberal Democrats have linked passage of a roughly $1 trillion infrastructure package that has already cleared the Senate to the social-policy and climate package still under discussion in both chambers and at the White House.

The painful process of whittling down a package that Democratic leaders had initially pegged at roughly $3.5 trillion to a sum that centrist Democrats can support has stretched on as lawmakers debate which programs could be dropped, pared back or shortened in duration.

“I’m convinced we’re going to get it done,” Mr. Biden said during a speech at Capitol Child Development Center in Hartford, Conn., on Friday. “We’re not going to get $3.5 trillion. We’ll get less than that, but we’re going to get it. And we’re going to come back and get the rest.”

The proposed benefits for families with children, including subsidized child care, an extension of an expanded child tax credit and universal prekindergarten for 3- and 4-year-old children, are tangled up in the broader fight within Congress. In his remarks Friday, Mr. Biden also expressed doubts about whether the final package would include all of the funding he wanted for community colleges.

Mr. Biden and White House officials will continue to hold calls and meetings this week in support of his legislative agenda, the White House said.

Democrats plan to advance the social-policy package through a process that allows them to skirt GOP opposition in the Senate and pass it with a simple majority, rather than the 60 votes most bills need. In the evenly divided Senate, that has given the centrist Sens. Manchin and Kyrsten Sinema of Arizona leverage to insist on less spending and other policy changes.

Mr. Manchin’s objections to a central plank of the package’s climate plan remains a major point of contention. Last month he said he would insist on preserving fossil-fuel subsidies and avoiding penalties for coal, gas and oil. Crucially, he has opposed a centerpiece of the package’s climate measures, the clean-electricity performance program. As drafted in the House, it would provide grants to utilities that increase the amount of clean electricity they generate by at least 4% a year, while penalizing utilities that don’t meet that standard.

Concerns from Ms. Sinema, Sen. Robert Menendez (D., N.J.) and a handful of centrist House Democrats have complicated one of the package’s most-popular provisions: allowing Medicare to negotiate directly with pharmaceutical companies to lower the cost of prescription drugs.

The push is central to the package overall because it raises hundreds of billions of dollars for the federal government that lawmakers hope to tap to pay for other healthcare programs. Paring it back could force Democrats to scale down some of their other plans to broaden Medicaid coverage, extend beefed-up Affordable Care Act subsidies and expand Medicare benefits to include dental, hearing and vision.

One sticking point in the drug-pricing talks has been a provision of a Democratic House proposal calling for an excise tax of up to 95% on certain eligible drugs when federal negotiators and drugmakers can’t agree on the price.



© Brendan Smialowski/Agence France-Presse/Getty Images


“We’ve been trying to discourage any talk about that,” said Rep. Scott Peters (D., Calif.), who has introduced legislation with other House Democrats that would allow much narrower Medicare negotiations with drugmakers. He said centrist Democrats are also pushing back on efforts to permit negotiations on drugs during the period known as “exclusivity,” when drugmakers are protected from generic-drug competition.

“We’ve shown there’s ways to generate savings while you still preserve incentives for new cures,” Mr. Peters said.

Mr. Peters estimated that the government could still generate close to $400 billion in revenue over 10 years with a stripped-down proposal that would have drug companies pay to the federal government profits going back to 2016 on drugs whose prices outstripped inflation, repeal a Trump-era rule regarding drug rebates, cap out-of-pocket costs for seniors, and allow for Medicare negotiations on a smaller pool of drugs. A broader proposal from House Democratic leaders was projected to save roughly $700 billion.

“We’re still making that fight,” House Speaker Nancy Pelosi (D., Calif.) said of the effort to allow Medicare to negotiate drug prices at a KQED live event last week. “We’ll get something of that, but it won’t be the complete package that many of us have been fighting for [for] a long time.”

Ms. Sinema hasn’t publicly detailed her concerns, but lawmakers and aides said she has raised objections to the broader Medicare negotiations. A spokeswoman for Ms. Sinema said she was reviewing various proposals regarding the issue.

A White House official said the administration is in close touch with Ms. Sinema and feels the conversations are productive.

More broadly, Democrats are feuding over how to squeeze their priorities into a smaller price tag. Mr. Manchin has said the bill shouldn’t spend more than $1.5 trillion, even if its cost is offset by other revenue, while Mr. Biden has told House Democrats the package might spend around $2 trillion.

Rep. Pramila Jayapal (D., Wash.), who leads a nearly 100-person caucus of liberal House members, said the majority of her group would rather shorten the duration of programs to lower costs, rather than cutting some programs.

“If we need to cut some of them back to fewer years, we would be willing to do that,” she said. “Why is that? Because we are not going to put child care against climate change, we’re not going to pit housing against paid leave, we’re not going to pit seniors against young people.”

Rep. Conor Lamb (D., Pa.), a centrist, said creating short-term programs risks cutting off support for low-income Americans.

“I’m interested in things that can last and that people will trust and they’ll believe are there for them,” he said.

Write to Kristina Peterson at kristina.peterson@ws j.com and Andrew Duehren at andrew.duehren@wsj.c om