Is there anything besides electric vehicles and student loans the Biden administration doesn’t want to make more expensive for the American people?
Is there anything besides electric vehicles and student loans the Biden administration doesn’t want to make more expensive for the American people?
B idenomics isn’t working. While inflation has come down, it’s still stuck at levels not seen in decades. Even worse, the key drivers of inflation are “must have” purchases for the middle class — gasoline, housing, and groceries. Over the past year, the Federal Reserve has raised interest rates and sold balance-sheet assets in order to get headline inflation down. But despite this, food is 4.3 percent more expensive than last year, and housing is 7.3 percent more expensive. Gasoline prices spiked in August. The 30-year mortgage rate remains stubbornly above 7 percent on homes that still have Covid-spike prices, freezing out Generation Z and Baby Millennials from their first home purchases and locking others into starter homes. Even if all the inflation stopped today, prices are much higher than when Joe Biden took office and slammed the accelerator on the spending machine. We are stuck with that reality.
Now, the cost of living may be going higher for some prescription medicines for seniors. Congress last year passed the Orwellian-titled “Inflation Reduction Act.” One provision requires the administration to name ten Medicare drugs that would be subject to government “negotiation” on price, something it did this month. If a company does not accept the price control imposed on the drug, it will be forced to charge a 95 percent excise tax on the sale of that medicine (on everyone who buys it, not just seniors). That is not a typo. The alternative to a government price control (which is likely to result in drug scarcity and a lot less breakthrough drug research) is for the drug companies to sell their medicines with a 95 percent excise tax on top of the sales price. If you think prescription medicines are expensive now, wait until the government gets done negotiating for you.
This is only going to get worse as time goes on. The statute mandates that the government subject no fewer than 60 medicines for seniors to this 95 percent drug tax. The only way we get out of paying it is if the drug manufacturers agree to essentially give their product to the government for nearly free. This Hobson’s choice means that fixed-income seniors are facing a future either of doubled drug prices (thanks to the 95 percent tax) or the drugs not being around at all (thanks to the price control and the inevitable scarcity that price controls always bring). In either scenario, there’s no money left for research on future cures. Those shots to the gut everyone wants these days in order to lose weight? They come courtesy of research financed by sales of earlier medicines.
Is this a real tax? The IRS sure thinks so. Over the August recess when no one was paying attention, the agency released a notice of proposed rulemaking to implement this 95 percent tax. The IRS fully intends to use the 87,000 new IRS agents hired by the same law to collect this excise tax at your local CVS or Walgreens, or on Amazon. The IRS even helpfully permits the companies collecting the tax to include the 95 percent levy as a separate line item on the receipt, so that consumers will know exactly whom to blame when they wonder why their blood-pressure medication has doubled in price since last month.
Surely, the Democrats and the media will retort, no company will choose the route of the 95 percent tax. They will instead choose to subject their products to “negotiation,” which is to say a price imposed by an unelected government bureaucrat. First, those objectors don’t know what is going to happen. A company may very well decide that a 95 percent excise tax is a better road than becoming a free-sample factory for Medicare. Second, what kind of negotiation is it when a 95 percent confiscation of sales is the alternative to a bid? That isn’t a real negotiation, with asks and counter-asks and arbiters; it’s a shakedown, and it’s one that leaves seniors (and us) at drugstores holding the bag if anything goes wrong.
Add it all up — higher prices at the grocery store, higher prices at the gas pump, higher prices at the car dealership, higher prices for mortgages and rent, and now monstrously higher taxes on prescription medicines. Is there anything besides electric vehicles and student loans the Biden administration doesn’t want to make more expensive for the American people?