57 Votes in the Senate: Enough For Private Equity, Not Enough For Diabetics
A majority voted for it ― 57 senators ― but it wasn’t enough under the Senate’s 60-vote rule for passage.
Yet just a few hours later, the Senate successfully protected subsidiaries of private equity companies from a new 15% corporate minimum tax rate included in the legislation.
It received the exact same number of votes as the insulin cap amendment, but this time, the Senate rules required only a simple majority to pass it.
The difference in fate between the two votes, both of which received support from identically-sized majorities, shows how the Senate’s arcane and frequently arbitrary rules often add to an already malapportioned legislative body’s bias towards powerful interests. Diabetics looking for help to afford lifesaving medication need a supermajority, while a simple majority is just fine for private equity managers looking to protect their fruitful investments.
Most Democrats, up to a somewhat reluctant President Joe Biden, have been prepared to scrap or severely weaken the filibuster rule, the extra-constitutional provision requiring 60 votes to end debate in the Senate that has come to function as a supermajority requirement for the vast majority of legislation. But Sens. Joe Manchin (D-W. Va.) and Kyrsten Sinema (D-Ariz.) have blocked any attempted reforms.
The combined effect of Senate rules is to create additional chokepoints for interest groups to exploit. It’s not a coincidence that every major piece of economic legislation passed through the Senate during Biden’s administration had the backing of the U.S. Chamber of Commerce, which represents America’s largest and most powerful businesses, until Sunday’s passage of the so-called Inflation Reduction Act.
The bill raises taxes on investors and large corporations, and spends the cash reducing the deficit and investing in clean energy and healthcare subsidies, while also giving Medicare the power to negotiate lower prices for prescription drugs. The House is expected to pass the legislation and send it to Biden later this week.
Passing the bill on a party-line vote in the 50-50 Senate meant Democrats were relying on what’s called budget reconciliation. But reconciliation requires every provision of the bill to have a direct and substantial impact on the federal budget, making it useless for many social policies and any economic ones without a direct impact on federal taxation or spending.
The provision to cap insulin prices would have limited co-pays for insulin at $35 a month for people on private health insurance plans. But the Senate’s parliamentarian, an unelected official only accountable to members of the upper chamber, ruled it fell outside of what’s allowed under reconciliation.
That meant the GOP could challenge it, and Democrats would need to round up 10 Republicans to keep it in the bill. Seven Republicans, all representing states with large swatches of rural poverty in their states, joined Democrats: Susan Collins of Maine, Lisa Murkowski and Dan Sullivan of Alaska, John Kennedy and Bill Cassidy of Louisiana, Josh Hawley of Missouri and Cindy Hyde-Smith of Mississippi. But it wasn’t enough.
Insulin prices have spiked in recent years, and Americans pay as much as 10 times more than what the drug costs in other economically developed countries. Four-fifths of diabetics who take insulin say the cost of the drug causes them financial hardship.
“This won’t just save money, it will save lives,” Sen. Patty Murray (D-Wash.) said on the floor before the vote. “This should not be a hard vote to cast.”
The legislation still limits insulin co-pays to $35 a month for people who use Medicare, and Democrats have promised a stand-alone vote on legislation sponsored by Sens. Susan Collins (R-Me.) and Jeanne Shaheen (D-N.H.) to keep costs low. But unless three additional Republicans are willing to back the legislation, it will fail under the Senate’s 60-vote threshold.
Two of the world’s largest drug companies, Eli Lily and Novo Nordisk, have been some of the biggest beneficiaries of rising insulin costs. Since the beginning of Democrat control of Congress in 2021, the two companies have spent massive sums lobbying against cost controls: Eli Lilly has spent $11.4 million, according to federal lobbying records, while Novo Nordisk has spent $5.8 million.
The private equity amendment, on the other hand, was backed by a powerful industry with a powerful ally in Sinema, who had already forced Democrats to strip out an effort to tighten a loophole abused by the industry. The Arizona freshman feared the minimum tax would hit small- and medium-sized businesses with private equity backing, with a spokesman saying her goal was to “target tax avoidance, make the tax code more efficient, and support Arizona’s economic growth and competitiveness.”
Other Democrats said Sinema’s concerns were nonsensical: Unless the businesses had more than $1 billion in revenue, they would be untouched.
“I don’t know very many small businesses at home that have a profit of a billion dollars a year,” Sen. Ron Wyden (D-Ore.), who chairs the Senate Finance Committee, told reporters on Saturday night. “This is a very small number of businesses.”
Still, with Sinema’s support and the amendment’s passage assured, six other Democrats facing potentially tough reelection battles in coming years – Mark Kelly of Arizona, Raphael Warnock and Jon Ossoff of Georgia, Jacky Rosen and Catherine Cortez Masto of Nevada and Maggie Hassan of New Hampshire ― voted for it, hoping to avoid the industry’s wrath in the future.
While Sunday’s dueling votes provided a clear example, the powerful have long abused Senate rules. When senators were still chosen by state legislatures in the 1800s, wealthy men often bribed local officials to gain entrance to the chamber, a practice that culminated in Montana in 1899, when two mining magnates each spent $1 million on bribes hoping to win a Senate election. In the first half of the 20th century, southern senators filibustered every single attempt at civil rights legislation.
In more recent years, decisions by Democrats and Republicans to eliminate the filibuster for judicial and executive branch nominations has meant Senate Republican Leader Mitch McConnell could enact much of his agenda ― passing tax cuts and appointing judges ― with a simple majority, while more complicated Democratic goals on issues from gun control to healthcare to voting rights still require 60-vote pledges.
As recently as December 2021, the Senate listened to cries of panic from business leaders and passed a one-time exception to the filibuster to raise the debt limit with fewer than 60 votes.
The Senate is already far from a paragon of democracy: It grants states with small populations wildly disproportionate power over American politics, giving the typical rural American 37% more power than the average voter when it comes to determining control of the Senate. Small states are also far less racially diverse than bigger ones, meaning the typical Black voter has 17% less influence over who controls the Senate than an average voter, and a typical Hispanic voter has 33% less influence.
The filibuster exacerbates the bias towards smaller states: The six senators who represent California, New York and Texas represent the same number of people as the 62 senators who represent the union’s 31 smallest states, more than enough to sustain a filibuster.
Senate rules also weaken the federal government’s hands when it comes to combating state and local governments who abuse their powers: While GOP-controlled states passed a wave of voting rights restrictions this year, Democratic plans to pass legislation overriding them at the federal level were stymied by Manchin and Sinema’s insistence on protecting the filibuster.
Jonathan Nicholson contributed reporting.