Citizen Cartwright

Sky won't fall: Senate passes, Biden to sign debt limit bill

The Senate vote Thursday night was 63-36 on the bipartisan legislation suspending the debt limit and imposing new spending caps, sending it to President Biden for his signature and ending the possibility of a government default.

 

As in the House, Democrats provided the most votes for passage, with 44 of them and two independents joining 17 Republicans in support; 31 Republicans, four Democrats and one independent voted no.

 

Biden is to address the nation at 7 p.m. Eastern time Friday.

 

The Senate vote came after an afternoon of closed-door talks to resolve a last-minute flareup over Pentagon funding among Republicans who said the debt-limit package severely underfunded the military. Senate leaders resolved the dispute with a formal statement that the debt-limit agreement “does nothing to limit the Senate’s ability to appropriate emergency supplemental funds to ensure our military capabilities.”

 

Biden had refused for months to engage with House Speaker Kevin McCarthy but finally did so after the California Republican managed in April to pass a GOP fiscal plan, spurring negotiations with the White House that produced the compromise.

 

McCarthy defied expectations and even earned grudging respect from White House officials while defusing the debt limit time bomb he planted by insisting on concessions in return for raising the nation’s borrowing limit, says an analysis by long-time New York Times reporter Carl Hulse.

 

The bar was low for McCarthy, known more for politicking and fundraising than for policymaking, after he struggled to win his post in the first place as House Republicans took control in January, the Times says.

 

In the end, he delivered an agreement that met his goal of cutting spending from current levels. But he managed to do so only with significant help from Democrats, who rescued him on a key procedural vote and then provided the support needed for passage. McCarthy exceeded his goal of winning the support of the majority of his members with 149 backing it, but more Democrats — 165 of them — voted for the bill than members of his own party, an outcome that will fuel GOP criticism that he cut a deal that sold out his own people, the Times says.

 

That's not the way powerful speakers of the past have typically accomplished their goals, says the Times.

 

But McCarthy "has been uncommonly willing to endure political pain and even humiliation — a trait that was on ample display during his 15-round fight for the speakership in January — while focusing on extracting a few marquee concessions from Mr. Biden that could allow him to claim victory and avert a default he plainly wanted to avoid, even if many of his members did not,” says the Times.

 

His allies gave him credit for taking on the White House and Senate Democrats and emerging with a positive result when most Democrats were expecting him to fail. White House officials and congressional Democrats had privately predicted that McCarthy would be unable to corral his extraordinarily fractious troops, and would therefore have no leverage in fiscal talks, allowing them to force through an increase in the debt ceiling with few, if any, concessions to Republicans, according to the Times.

 

McCarthy’s achievement still may come at a cost, the Times says. Far-right conservative Republicans remain outraged at the agreement he struck with Biden, saying it fell woefully short of what he promised and what Republicans committed to as they pursued the majority last year.

Debt limit bill passes House, goes to Senate

The House voted on Wednesday night to pass a painstakingly negotiated bill to suspend the debt ceiling, limit federal spending and avert a U.S. government default, securing a major win for the GOP and the White House, says The Washington Post.

The bipartisan vote was 314-117, with 71 Republicans and 46 Democrats voting no.

 

Senate Majority Leader Chuck Schumer, D-N.Y., says lawmakers may need to be in Washington through the weekend to get the legislation passed before Monday, when the Treasury Department says the United States will no longer be able to pay all its bills.

 

Nobody got everything they wanted, the Post says. Of course, that’s fundamental to compromise in a democracy. 

 

Many liberal Democrats opposed the bill, objecting to curbs on government spending and new work requirements for some recipients of federal food stamps and family welfare benefits. And far-right Republicans slammed the agreement for not securing more aggressive spending cuts. 

 

The agreement would keep nondefense spending roughly flat in the 2024 fiscal year and increase it by 1 percent the following year. It would suspend the debt limit until January 2025 — past the next presidential election.

The bill got the support of “a majority of the majority” in the final House vote, satisfying an informal GOP guideline against passing legislation mostly on the strength of Democratic support.

 

Here are details of what’s in the bill, from The Associated Press.

Reining in pharmacy benefit managers (who?)

The Federal Trade Commission sued on May 16 to block the merger of drugmakers Amgen and Horizon Therapeutics, saying it would enable Amgen to leverage the monopoly power of two top Horizon drugs, reports KFF (formerly KHN).

In its suit, the FTC said if it allowed Amgen’s $27.8 billion purchase to go through, Amgen could pressure the companies that manage access to prescription drugs — pharmacy benefit managers, or PBMs — to boost the two extremely expensive Horizon products in a way that would inhibit competition.

The FTC also announced an expansion of a yearlong investigation of PBMs, saying it was looking at two giant drug-purchasing companies, Ascent Health Services and Zinc Health Services. Critics say the PBMs set up these companies to conceal profits.

The week before, the Senate Health Committee approved on May 11 bipartisan legislation sponsored by Chairman Bernie Sanders, D-Vt., and Sen. Bill Cassidy, R-La., a physician and the panel’s top Republican. The legislation (S 1339) is intended to increase transparency of PBMs, among other things.

Background
In a separate article titled "PBMs, the brokers who control drug prices, finally get Washington’s attention,” KFF discusses the role and relevance of PBMs (there’s a helpful four-minute video).

"Drug manufacturers claim that exorbitant PBM demands for rebates force them to set high list prices to earn a profit,” says KFF. "Independent pharmacists say PBMs are driving them out of business. Physicians blame them for unpredictable, clinically invalid prescribing decisions. And patients complain that PBMs’ choices drain their pocketbooks.”

"With PBMs driving prices, competition has had the opposite effect from what economic theory predicted Medicare patients would spend out-of-pocket on drugs, one large study showed. Over a five-year period, patients were paying 50 percent more for branded drugs that had competitors than for those that didn’t."

"All this makes the PBMs ripe targets for politicians of both parties," KFF says. "Yet the complexity and obscurity of their role in the drug marketplace have skeptics wondering whether legislation advancing in the House and Senate will actually help patients or lower prices at the pharmacy counter.”

The role of PBMs certainly IS complex and obscure. If you’re interested in diving deeper, I refer you to the KFF articles and to this Vox article.

China loans pushing poorest countries 'to brink of collapse'

A dozen of the developing countries most indebted to China are eating into their tax revenue and draining their foreign currency reserves to repay loans to the world's biggest government lender, says The Associated Press.

 

The countries in AP’s analysis — Angola, Congo, Ecuador, Ethiopia, Kenya, Laos, Mongolia, Mozambique, Pakistan, Sri Lanka, Uganda and Zambia — have as much as 50 percent of their foreign loans from China and most are devoting more than a third of their government revenue to paying off their foreign debt.

 

Harvard economist Ken Rogoff says, “China has moved in and left this geopolitical instability that could have long-lasting effects.”

And behind the scenes is China’s reluctance to forgive debt and its "extreme secrecy" about how much money it's lent and on what terms, which has kept other major lenders from stepping in to help, says AP. On top of that is the recent discovery that borrowers have been forced to put cash in hidden escrow accounts that put China at the front of the line of creditors to be paid.

 

The Chinese Ministry of Foreign Affairs, in a statement to AP, disputes the notion that China is an unforgiving lender and echoes previous statements putting the blame on the Federal Reserve’s increase in interest rates. It says that if it's to accede to IMF and World Bank demands to forgive a portion of its loans, so should those multilateral lenders, which it views as U.S. proxies. 

Drug shortages

Thousands of patients are facing delays in getting treatments for cancer and other life-threatening diseases as drug shortages in the United States approach record levels, says The New York Times.

There are 238 items on the drug shortages list of the American Society of Health-System Pharmacists. 

 

“This is, in my opinion, a public health emergency,” says Dr. Amanda Fader, a professor at the Johns Hopkins School of Medicine and a president-elect of the Society of Gynecologic Oncology, “because of the breadth of the individuals it affects and the number of chemotherapy agents that are in shortage right now.”

White House officials and members of Congress are grappling with an opaque and sometimes interrupted supply chain and quality and financial issues that are leading to manufacturing shutdowns, the Times says. They’re examining the underlying causes of the faltering generic drug market, which accounts for about 90 percent of domestic prescriptions.

 

Some shortages, like those of weight-loss drugs, are the result of high demand, while others have been attributed to overprescribing, including for antibiotics, or a lack of investment in potential alternatives.

The Biden administration has assembled a team to find long-term solutions for shoring up the pharmaceutical supply chain as the United States remains heavily reliant on medicines and drug ingredients from India and China. 

 

Officials have been debating possible measures including tax incentives for generic drugmakers and greater transparency around generic drug quality. The current incentives favor drugmakers with the lowest prices, which includes those that might cut corners — leading to disruptive plant shutdowns if the FDA requires a fix. 

 

The FDA, which employs a team of about 10 people who do the day-to-day work of mitigating and reporting drug shortages, has said it's seeking authority from Congress to get additional information about the drug manufacturing and supply chain.

 

Four Senate bills with bipartisan sponsorship could help get generic drugs to market more quickly by addressing tactics or loopholes causing delays, the Times says.

The ‘greatest wealth transfer in history’ is underway in U.S.

"Of the $84 trillion projected to be passed down from older Americans to millennial and Gen X heirs through 2045, $16 trillion will be transferred within the next decade,” says The New York Times.

 

And heirs increasingly don’t need to wait for the passing of elders to directly benefit from family money, a result of the popularity of “giving while living” — including property purchases and repeated tax-free cash transfers of estate money.

 

A key reason there are such large soon-to-be-inherited amounts is the uneven way baby boomers benefited from price growth in the housing and financial markets, the Times says.

The average price of a U.S. house has risen about 500 percent since 1983, when most baby boomers were in their 20s and 30s, prime years for household formation. 

 

And as U.S. corporations have grown into global behemoths, people deeply invested in the stock market have found even bigger returns: The stock market, as measured by the benchmark S&P 500 index, is up by more than 2,800 percent since the beginning of 1983, around the time index funds took off as a mainstream investment for corporate employees and many other middle class professionals. (The figures don't include dividends and aren't adjusted for inflation, which they have far outstripped; consumer prices have risen about 200 percent over those 40 years, the Times says.)

The boomers who benefited the most from decades of price growth in real estate and financial assets were, in general, already rich, white or both — attributable, in part, to years of housing discrimination and a lack of access to financial tools and advice for people of color, the Times says.

 

The scale of the wealth transfer is made possible in part by the U.S. tax code. Individuals can transfer up to $12.9 million to heirs, during their lifetimes or at death, without federal estate tax. Married couples can transfer $26 million.

 

"As the wealth transfer proceeds, scholars, theorists and market analysts think that in addition to shaping individual outcomes, it will draw inequality further into the focus of policy debates,” says the Times.

 

Joseph Brusuelas, the chief economist at RSM, a consulting firm, thinks changes will come when white collar workers left out of the wealth transfers feel the effects. “Large companies will back” a bigger welfare state, he says, “because they’ll want the government to subsidize it” rather than taking on the cost of providing more benefits themselves.

 

“It’ll have nothing to do with social justice, nothing to do with right or wrong, and everything to do with the bottom line,” Brusuelas says.

 

The Biden administration is trying to address this with its proposal to largely offset spending on social programs with revenue from a minimum 25 percent annual wealth tax on households with a net worth of $100 million or more, the Times says.

We need to regulate AI, says FTC chair

The growth of technology companies two decades ago is a cautionary tale for how we should think about the expansion of generative artificial intelligence, says Federal Trade Commission Chair Lina Khan in a New York Times opinion essay.

 

At the onset of the Web 2.0 era in the mid-2000s, innovative companies like Facebook and Google revolutionized communications and delivered popular services to a fast-growing user base, she says.

 

"Those innovative services, however, came at a steep cost. What we initially conceived of as free services were monetized through extensive surveillance of the people and businesses that used them,” she says. "The result has been an online economy where access to increasingly essential services is conditioned on the widespread hoarding and sale of our personal data.”

 

"Coupled with aggressive strategies to acquire or lock out companies that threatened their position, these tactics solidified the dominance of a handful of companies. What began as a revolutionary set of technologies ended up concentrating enormous private power over key services and locking in business models that come at extraordinary cost to our privacy and security,” she says.

 

The trajectory of the Web 2.0 era was shaped by a broad range of policy choices, and we now face another moment of choice, Khan says. As AI use becomes more widespread, officials have a responsibility to ensure that history doesn’t repeat itself.

 

“We already can see several risks,” Khan says. "The expanding adoption of AI risks further locking in the market dominance of large incumbent technology firms. A handful of powerful businesses control the necessary raw materials that start-ups and other companies rely on to develop and deploy AI tools. This includes cloud services and computing power, as well as vast stores of data.”

 

"Dominant firms could use their control over these key inputs to exclude or discriminate against downstream rivals, picking winners and losers in ways that further entrench their dominance. Meanwhile, the AI tools that firms use to set prices for everything from laundry detergent to bowling lane reservations can facilitate collusive behavior that unfairly inflates prices — as well as forms of precisely targeted price discrimination.”

 

"And generative AI risks turbocharging fraud. It may not be ready to replace professional writers, but it can already do a vastly better job of crafting a seemingly authentic message than your average con artist — equipping scammers to generate content quickly and cheaply," Khan says. 

 

"Chatbots are already being used to generate spear-phishing emails designed to scam people, fake websites and fake consumer reviews —bots are even being instructed to use words or phrases targeted at specific groups and communities. Scammers, for example, can draft highly targeted spear-phishing emails based on individual users’ social media posts. Alongside tools that create deep fake videos and voice clones, these technologies can be used to facilitate fraud and extortion on a massive scale.”

 

"AI tools are being trained on huge troves of data in ways that are largely unchecked. Because they may be fed information riddled with errors and bias, these technologies risk automating discrimination — unfairly locking out people from jobs, housing or key services. These tools can also be trained on private emails, chats and sensitive data, ultimately exposing personal details and violating user privacy. Existing laws prohibiting discrimination will apply, as will existing authorities proscribing exploitative collection or use of personal data.”

 

We can continue to be the home of world-leading technology without accepting race-to-the-bottom business models and monopolistic control that locks out higher quality products or the next big idea — if we make the right policy choices, Khan says.

‘Godfather of AI’ Geoffrey Hinton on the technology’s risks

He’s quit his job at Google, where he's worked for more than a decade "and became one of the most respected voices in the field," so he can freely speak about the risks of what’s been his life’s work, says The New York Times.

 

In 2012, Hinton and two of his graduate students at the University of Toronto created technology that became the intellectual foundation for the AI systems that the tech industry’s biggest companies believe is a key to their future, the Times says.

 

A separate Times article on the dangers of AI elaborates on the short-term risk of disinformation, the medium-term risk of job loss, and the long-term risk of loss of control.

 

Until last year, Hinton says, Google acted as a “proper steward” for the technology, careful not to release something that might cause harm. But now that Microsoft has augmented its Bing search engine with a chatbot — challenging Google’s core business — Google is rushing to deploy the same kind of technology. The tech giants are in a competition that might be impossible to stop, Hinton says.

 

Hinton is worried that future versions of the technology pose a threat to humanity because they often learn unexpected behavior from the vast amounts of data they analyze. This becomes an issue, he says, as individuals and companies allow AI systems not only to generate their own computer code but to actually run that code on their own. And he fears a day when truly autonomous weapons — killer robots — become reality.

 

“The idea that this stuff could actually get smarter than people — a few people believed that,” he says. “But most people thought it was way off. And I thought it was way off. I thought it was 30 to 50 years or even longer away. Obviously, I no longer think that.”

 

Hinton believes that the race between Google and Microsoft and others will escalate into a global race that won't stop without some sort of global regulation.

But that may be impossible, he says. Unlike with nuclear weapons, he says, there's no way of knowing whether companies or countries are working on the technology in secret. The best hope is for the world’s leading scientists to collaborate on ways to control the technology. “I don’t think they should scale this up more until they have understood whether they can control it,” he says.

 

Here is more from MIT Technology Review.

'Why America isn’t that awful'

That’s the subheadline of this week’s edition of Australia’s “good news” newsletter Future Crunch.

 

Ha, ha, ha. To quote a friend of mine from India, that subhed “cracks me down.”

 

It reminds me of the Dutch fiancé of another friend. When I asked her if she and her husband might at some point live in the United States, she said, “Oh, no, you can’t raise children there!”

 

Future Crunch's item on us says: "Yes, everything in America is awful, except for the fact that inequality is falling; unemployment is at its lowest since WW2 (and so is racial disparity in hiring); it's still the world’s richest, most productive and most innovative economy; poverty and uninsured rates are at their lowest levels in history; Millennials are back on track, and GenZ are blowing past other generations in saving for retirement.”

 

Enjoy your weekend, my fellow Americans, in our livable unlivable conditions!

House passes debt limit bill

The vote was 217-215 on Republicans’ bill to raise the debt ceiling while cutting spending and unraveling major elements of President Biden’s domestic agenda.

 

GOP lawmakers conceded that their legislation was headed nowhere, says The New York Times. Biden has threatened to veto it, and the measure is dead on arrival in the Democratic-led Senate. 

 

Without action by Congress to raise the debt limit, which is projected to be reached as soon as this summer, the U.S. government faces a potentially catastrophic default.

 

House Republicans regarded the vote as a crucial step to strengthen their negotiating position against Biden amid questions about whether Speaker McCarthy would be able to unite his conference to pass any fiscal outline at all.

 

McCarthy repeatedly had told his colleagues to ignore the substance of the measure, which would never become law, and instead focus on the symbolic victory of passing any legislation to show Biden they were serious about their demand for spending cuts, the Times says.

 

In supporting the bill, dozens of Republicans were casting their first-ever votes for a debt limit increase, says Roll Call.

In the end, just four Republicans voted against the bill: Tennessee's Tim Burchett, Florida's Matt Gaetz, Colorado's Ken Buck and Arizona's Andy Biggs. They said the bill wouldn’t reduce the deficit enough.

 

At the White House before the vote, Biden repeated that he wouldn’t negotiate over lifting the debt limit.