Wednesday Edition: Freedom Caucus Fury
Plus: Tony Soprano has a message for Biden
Bubba
10 Jul
1. House Freedom Caucus Meltdown
The ultra-conservative House Freedom Caucus, known for being a thorn in the side of GOP leadership, now faces infighting over Donald Trump. (USA Today)
The latest: The Freedom Caucus lost two of its roughly three dozen members this week.
Rep. Warren Davidson of Ohio was removed from the group on Monday for endorsing a Trump-backed GOP primary candidate over Freedom Caucus chair Bob Good.
Rep. Troy Nehls of Texas announced later the same day he was resigning from the caucus in protest.
What Nehls, a staunch Trump supporter, told USA Today:
I don’t think this is the direction our organization should take. I want to grow our numbers. I don’t want to shrink our numbers.
The trend: Nehls and Davidson join a growing list of ex-Freedom Caucusers.
Rep. Marjorie Taylor Greene of Georgia was expelled last summer after disputes with members over her support for then-House Speaker Kevin McCarthy, R-Calif.
Colorado Rep. Ken Buck was kicked out for “non-attendance” just before his resignation in March and after he criticized the GOP’s impeachment inquiry into President Biden.
The schism: HFC members are among the few Republicans to attack Trump from the right.
While Trump’s immigration policies are typically criticized as too extreme, Rep Chip Roy has accused Trump of being soft on the border.
Last month, Davidson accused Trump of “endorsing moderates in most races if there’s a conservative in the race.”
“We can’t send the swamp any people that are just going to keep funding the status quo,” Davidson told Punchbowl News.
The House Freedom Caucus was instrumental in the ouster of former Speaker McCarthy, who was viewed as an establishment Republican but was also closely allied with Trump.
Punchbowl News founder Jake Sherman’s take:
Bubba’s Two Cents
When Trump arrived on the scene in the run-up to 2016, he positioned himself as a fiercely anti-establishment outsider ready to tear it all down. But as “MAGA” gained in power and influence within the GOP, Trump became a good deal more pragmatic — he’s softened his social conservative positions and shown he’s willing to work with Republican moderates.
The Freedom Caucus might function more effectively if it was willing to be a little flexible on ideology. On the other hand, that kind of goes against the group’s whole reason for being.
Pharmaceutical middlemen are playing a major role in driving up prescription drug costs, according to a new FTC report. (WSJ)
What are pharmacy benefit managers? With the ultimate goal being lower costs, employers and government health programs hire benefit managers to negotiate drug prices with manufacturers, pay pharmacies, set drug prices and decide which drugs are available to patients.
The scale of the problem: The three biggest pharmacy benefit managers (CVS Caremark, Express Scripts, and OptumRx) manage 79% of prescription drug claims for about 270 million people.
A 2024 RAND study found that the cost of medications in the U.S. is about three times higher than in other advanced countries.
In 2019, the pharmaceutical industry spent $83 billion on research and development, about 10 times more than it spent yearly in the 1980s, after adjusting for inflation.
4 in 10 Americans report delaying their prescriptions, leaving them unfilled or switching to a cheaper alternative because of cost, according to a 2023 GoodRx survey.
Wall Street Journal reporter Liz Whyte:
The FTC, in a report released Tuesday, detailed a number of actions that it said large pharmacy-benefit managers use to boost their profits and increase the spending of the health plans and employers that hired them to control costs. The actions can also lead to higher outlays for patients at the pharmacy counter, the agency said.
Bubba’s Two Cents
The drug pricing war is a complex issue that pits pharmaceutical companies, insurance companies and middlemen against each other. For a quick and dirty breakdown of the battle between insurers and drug manufacturers, check out this video I produced for Axios a few years ago, featuring a couple very smart colleagues, Sam Baker and Bob Herman.
3. The Economics of Immigration
How we should look at the economic benefits from the huge influx of migrants into the country over the past few years? (Federal Reserve Bank of Dallas)
A recent Congressional Budget Office report: “The immigration surge is projected to increase the nation’s nominal GDP by a total of $8.9 trillion” over a decade.
Per the CBO, the surge would also boost federal tax revenues by $1.2 trillion, while lowering deficits by $900 billion.
Immigration has boosted payroll job growth by 70,000 jobs/month in 2022 and 100,000 jobs/month in 2023.
CBO projections show that by 2040, U.S. population growth will rely entirely on immigration due to low birth rates and an aging workforce.
Zoom out: While voters are extremely concerned about the number of migrants entering the country, many employers are calling for more immigration, citing the 8.5 million unfilled jobs in the country.
Donald Trump recently signaled his openness toward increasing legal immigration levels.
In FY 2024, only 25% of 780,000 H-1B visa registrations were approved.
Meanwhile, the cap for H-2B visas (for seasonal, nonagricultural workers) was reached in less than two weeks.
The other side: Populists like Sen. J.D. Vance, R-Ohio, have warned against viewing immigration solely through an economic lens.
What Vance told The New York Times last month:
What is not good is you replace the McDonald’s worker from Middletown, Ohio, who makes $17 an hour with an immigrant who makes $15 an hour. And that is, I think, the main thrust of elite liberalism, whether people acknowledge it or not. … I actually really agree with the classic libertarian critique of the regulatory regime. “But we can’t run our business unless we have some of these immigrants coming over, because we can’t find people who are going to do the job.” My response is that there are people who would do those jobs if the incentives were there.
Bubba’s Two Cents
It feels like Vance handwaves away the labor force challenges that would arise without robust immigration. But he and other populists have clearly struck a chord by emphasizing the cultural impacts of immigration, not just the economic ones. As we’ve seen with the rise of populist and nationalist movements in country after country, elected leaders ignore voter concerns about immigration at their own peril.
4. Elevators and Red Tape
In a new essay for The New York Times, Stephen Smith, founder of the Center for Building in North America, looks at how elevators give us a glimpse into the housing affordability crisis. (NYT)
Smith:
Elevators in North America have become over-engineered, bespoke, handcrafted and expensive pieces of equipment that are unaffordable in all the places where they are most needed. Special interests here have run wild with an outdated, inefficient, overregulated system. Accessibility rules miss the forest for the trees.
Our broken immigration system cannot supply the labor that the construction industry desperately needs. Regulators distrust global best practices and our construction rules are so heavily oriented toward single-family housing that we’ve forgotten the basics of how a city should work.
An eye-popping stat: A four-stop elevator in New York City costs $158,000, while in Switzerland it costs $36,000.
The U.S. has around one million elevators, the same as Italy and Spain, but has a significantly larger population.
Zoom out: The same inefficiencies in building elevators apply to the housing construction industry.
Some examples:
Americans can't use modern heat pumps due to regulatory barriers, relying instead on outdated models with no market abroad.
U.S. plumbing codes require extensive ventilation piping, considered unnecessary in much of the world.
Condos in California have become almost impossible to build thanks to an “overly litigious legal climate.”
Related: Blue cities’ restrictive housing approval policies are sending home prices soaring and squeezing supply.
The lines below represent “Units permitted per year” in (top to bottom) Austin (blue), Houston (orange), San Francisco (green), and Manhattan (red).
Financial Times chief data reporter John Burn Murdoch:
Homes in Texan cities are cheap and their populations soaring because the state has made urban development easy. California, New York and London are overheating and squeezing out young families because their planning systems place artificial constraints on supply, making urban development extremely difficult.
Wall Street Journal reporter Will Parker:
In California, affordable housing developers typically abide by a host of requirements when they take public subsidies, such as tougher energy-efficiency standards and higher wages for construction workers. They often need to build amenities such as offices for social workers and transit-boosting features such as bike storage.
5. The Take of the Week
The official X/Twitter account for HBO’s “The Sopranos” has weighed in on the Biden mental fitness debate.
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