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Lobbyists try to sway legislators on inflation act

Health care provisions draw influencers’ strongest efforts by YEGANEH TORBATI AND JEFF STEIN The Washington Post | August 6, 2022 at 3:56 a.m.
Sen. Kyrsten Sinema, D-Ariz., walks to the Senate floor for a vote on Aug. 4. Lobbyists and advocates from Arizona and other states are contacting Sinema and other lawmakers as the Senate prepares to consider a sweeping climate, health-care and tax bill. MUST CREDIT: Washington Post photo by Jabin Botsford.

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

The measure, dubbed the Inflation Reduction Act, would provide the largest investment in U.S. history for clean energy and other efforts to combat climate change. It also aims to lower 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 budget to go after tax cheats.

The sudden revival of the legislation last week launched a flurry of efforts by groups for and against it, and they are using ads and personal outreach to try to sway Democrats to their side before the Senate votes.

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 the main pharmaceutical lobby PhRMA and its allies spent at least $18.6 million on television and digital ads since July 1, including $1 million in spending on new television ads just since the Democrats' deal was announced July 27. That $1 million figure does not include ads that were already running when the deal was announced.

"Clearly the pace of spending picked up in the last month or so," said David Mitchell, president of Patients for Affordable Drugs Now. "They have spent a boatload of money to try and stop this reform."

Some of the pharmaceutical lobby ads tracked by Mitchell's group include one running in July and August that argues that Medicare "price-setting" -- the government negotiating with manufacturers over drug prices, as the bill allows -- would interfere with senior citizens' ability to get the medication they need.

The ad was put out by the Partnership to Fight Chronic Disease, a nonprofit group that has run other ads opposing Medicare negotiation. A spokeswoman, Jennifer Burke, said current proposals "will ultimately create an even greater burden for our already ailing health care system."

A PhRMA spokeswoman declined an interview request.

On the other side of that policy, an array of groups that see it as a way to lower health care costs for Americans are supporting the measure, including AARP, which launched a new ad buy on Thursday in Arizona, Nevada and Georgia set to run through Monday and totaling around $700,000. The group also has a $3 million ad buy running in the Washington, D.C., area and on national cable, urging senators to stand up to Big Pharma.

AARP members across the country are contacting their legislators to urge them to support the package, and the group is scheduling meetings with senators and their staff to make the case, said Bill Sweeney, the group's senior vice president of government affairs.

The bill also provides hundreds of billions of dollars in investments meant to fight climate change and lower emissions of planet-warming greenhouse gases, and it outlines requirements for tax credits worth up to $7,500 for the purchase of electric vehicles.

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

The Zero Emission Transportation Association, which issued a statement last week urging passage of the bill, is asking senators to consider extending the deadlines by a year or more to make it easier for companies to comply, said Joe Britton, the association's executive director.

In a Tuesday news conference, Sen. Joe Manchin, D-W.Va., signaled that he was not open to flexibility on the provision.

"Tell them to get aggressive and make sure we're extracting in North America, we're processing in North America and we quit relying on China," he said.

The bill also places price limits of between $55,000 and $80,000 on the electric vehicles for which the tax credit can be used.

Meanwhile, some business and GOP groups are focused on derailing key tax measures in the bill, targeting moderate Democrat Sen. Kyrsten Sinema of Arizona with their outreach. Sinema announced Thursday that she would vote for the bill, after Democrats agreed to some changes in the tax provisions.

The U.S. Chamber of Commerce, for instance, took out a full-page ad in Arizona newspapers blasting the initial tax provisions.

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 to strategize about how to stop the bill. The Committee to Unleash Prosperity, which is focused on Arizona, is running advertisements questioning spending items such as retrofitting Postal Service trucks, said Stephen Moore, a former Trump adviser who sits on the group's board.

Moore said GOP donors are "fired up" about the bill and determined in particular to oppose increasing the IRS budget.

But one K Street lobbyist, speaking on the condition of anonymity to discuss sensitive talks, said the opposition among industry groups was muted in part because they had just last year been bracing for multitrillion-dollar tax hikes -- rather than the diminished measures that have emerged.

Small businesses successfully stripped higher taxes on pass-through entities, while bigger firms succeeded in keeping the corporate rate at 21%.

Democrats had pushed to raise the corporate tax rate to 28% -- which would have hit far more firms than their ultimate plan to impose a minimum tax that will only fall on corporations now paying below 15%.

The head of one conservative organization, citing conversations with large donors, agreed.

"My impression anecdotally is there is not going to be a big push against this from the business community, and there are a few pieces that are arguably good for business," the person said, speaking on the condition of anonymity to discuss private talks.

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

Doug Holtz-Eakin, former director of the Congressional Budget Office, said Republicans are prepared to attack "everything" in the bill if it passes. If the GOP retakes Congress in this fall's midterm elections, they may make a push to kill the 95% excise tax on the pharmaceutical industry, believing that will force the rest of Democrats' attempt to overhaul drug prices to collapse.

"Once that goes, the whole thing falls apart," Holtz-Eakin said.

Information for this article was contributed by Tony Romm of The Washington Post.

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