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Spending deal to repeal certain ‘Obamacare’ taxes, lift tobacco-buying age to 21
By: MarketWatch | December 16, 2019

Retired coal miners also look like winners as Washington moves toward a deal on a government spending bill

Retired coal miners and longtime opponents of Obama-era taxes on high-cost health plans are eyeing big wins as top congressional leaders and the Trump White House close in on a deal on a government-wide spending bill that’s also carrying lots of overdue Washington business.

The bill would also increase the age nationwide for purchasing tobacco products from 18 to 21.

The legislation would forestall a government shutdown this weekend and give President Donald Trump steady funding for his U.S.-Mexico border fence. The year-end package is anchored by a $1.4 trillion spending measure that caps a difficult, months-long battle over spending priorities.

The roster of add-ons grew over the weekend to include permanent repeal of a tax on high-cost “Cadillac” health insurance benefits and finance health care and pension benefits for 92,000 retired union coal miners threatened by the insolvency of their pension fund. A tax on medical devices IHI, +0.72% and health insurance plans would also be repealed permanently.

The deficit tab for the package grew as well — almost $400 billion alone over 10 years to repeal the three so-called “Obamacare” taxes alone — with a companion package to extend several business-friendly tax breaks still under negotiation. The Obama-era taxes have previously been suspended on a piecemeal basis.

The late-stage negotiations involved House Speaker Nancy Pelosi, D-Calif., Treasury Secretary Steven Mnuchin, and other top leaders on Capitol Hill. The package is expected to be unveiled at midday Monday for a House vote on Tuesday and the Senate is expected to vote by Thursday or Friday. The developments were described by Democratic and GOP aides who asked for anonymity because the measure was not yet public.

The legislation is laced with provisions reflecting divided power in Washington.

The sweeping legislation, likely to be broken up into two packages for political purposes, is part of a major final burst of legislation that’s passing Congress this week despite bitter divisions and Wednesday’s likely impeachment of Trump. Thursday promises a vote on a major rewrite of the North American Free Trade Agreement.

The core of the bill is formed by the 12 annual agency appropriations bills passed by Congress each year. It fills in the details of a bipartisan framework from July that delivered about $100 billion in agency spending increases over the coming two years instead of automatic spending cuts that would have sharply slashed both the Pentagon and domestic agencies.

The increase in the tobacco purchasing age to 21 does not appear to address broader issues of regulating so-called vaping products, but details of the measure are likely to be released early Monday afternoon, aides said.

Other add-ons include a variety of provisions sought by business and labor interests and their lobbyists in Washington.

For business, there’s a seven-year extension of the charter of the Export-Import Bank, which helps finance transactions benefiting U.S. exporters, as well as a renewal of the government’s terrorism risk insurance program. The financially-troubled government flood insurance program would be extended through September.

Labor won repeal of the so-called Cadillac tax, a 40% tax on high-cost employer health plans, which was originally intended to curb rapidly growing health care spending. But it disproportionately affected high-end plans won under union contracts, and Democratic labor allies had previously succeeded in temporary repeals.

Democrats controlling the House would win increased funding for early childhood education and a variety of other domestic programs. They also won higher Medicaid funding for the cash-poor government of Puerto Rico, which is struggling to recover the hurricane devastation and a resulting economic downturn.

The outcome in the latest chapter in the longstanding battle over Trump’s border wall awards Trump with $1.4 billion for new barriers — equal to last year’s appropriation — while preserving Trump’s ability to use his budget powers to tap other accounts for several times that amount. That’s a blow for liberal opponents of the wall but an acceptable trade-off for pragmatic-minded Democrats who wanted increases for domestic programs and to avert the threat of simply funding the government on autopilot.

Because dozens of Democrats might vote against the border wall, Pelosi is pairing money for the Department of Homeland Security with the almost $700 billion Pentagon budget, which is guaranteed to win GOP votes to offset Democratic defections.

The coal KOL, +1.94% miner’s pension provision, opposed by House GOP conservatives like Minority Leader Kevin McCarthy, R-Calif., had the backing of Trump and powerful Senate Majority Leader Mitch McConnell of Kentucky and Trump. Sen. Joe Manchin, D-W.Va., was a dogged force behind the scenes.

“Something had to be done and we finally got Mitch McConnell to sign onto the bill,” Manchin said. “But we could not move McCarthy. Then finally we just had to move forward and they did it.”

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