US big businesses support President Biden’s price cuts in rare gesture
Corporate America has, in an unusual and rare gesture, cast aside its “profit for business” capitalist outlook and come out in support of President Joe Biden’s campaign against high consumer prices, especially since his powerful pleas to reduce costs in his State of the Union address.
Washington: Corporate America has, in an unusual and rare gesture, cast aside its “profit for business” capitalist outlook and come out in support of President Joe Biden’s campaign against high consumer prices, especially since his powerful pleas to reduce costs in his State of the Union address.
Just weeks after Biden used the State of the Union address to call for crackdowns on insulin prices – which he had reduced to $35 a dose in his inflation reduction act last year – and “junk fees”, Corporate America, a handful to start with, has started heeding to his appeal to ease the consumer pain, media reports said.
Voluntary steps are being taken by them to lower patients’ medical bills and make it easier for families to fly together, media outlet Politico reported.
Corporate support is expected to hand over to Biden an unexpected surprise of wins before he announces his re-election bid for 2024, which would largely hinge on his deft handling of the economy, threatening to go into recession with the series of Fed’s interest hikes to contain inflation and contain elevated consumer prices.
The White House strategists have pushed for a momentum for a much broader economic agenda tailored to deliver what Biden often terms “that little bit of breathing room for the cash strapped families”.
“The President has made clear for over a year now that top priority is bringing down costs for folks,” said Bharat Ramamurti, deputy director of the National Economic Council and one of the officials spear-heading the junk fee initiative. “The fact he’s willing to sharply call out certain behaviour and highlight it is encouraging these corporations – at least some of them – to come along with us,” he was quoted by the media as saying.
Corporates have made changes that can best be described as modest, resulting more from corporate calculations than due to any political pressures.
Drugmaker Eli Lilly plans to reduce insulin prices at $35 a month for privately insured patients, a step in line with what Democrats imposed on Medicare as part of last year’s Inflation Reduction Act. But the discounts will only apply to its older products, and the changes are unlikely to affect the company’s bottom line, reports said.
Falling in line were three major airlines – United, American and Frontier – who are eliminating extra fees often charged to parents to sit alongside their children on flights, a practice Biden slammed last month as akin to treating kids “like a piece of luggage”.
However, the airlines are retaining the slew of other seat and baggage charges that make up the industry norm.
The corporate moves, however modest, have sparked off celebrations in the West Wing, where the President’s aides believe pressure will now ramp up on competitors to follow suit, providing Biden with a tangible achievement ahead of 2024.
Democrats have been targeting high pharma prices of products as surveys revealed drug affordability was the biggest worry for voters on both sides of the aisle. White House economic aides, who are scrambling Biden’s “junk fee” agenda, have zeroed in on surprise fees that not only affect broader economic competition but are simply the most likely to drive Americans crazy, reports said.
“I do a lot of polling, and it’s rare to see policies that have this much universal consensus,” said Danielle Deiseroth, the interim Executive Director at Data for Progress. The progressive think tank published a survey post the State of the Union address pegging voter support for banning such fees – like those tied to concert ticket purchases, hotel stays and seating families together on airplanes – at nearly 80 per cent. “Saving people money transcends party lines,” she said.
Biden is for a comprehensive legislation to lock in those price restrictions across the board. The White House has vowed to renew its pursuit of a universal insulin price cap, after Republican opposition forced it out of the IRA. Biden then pitched his vision for a “Junk Fee Prevention Act” during the State of the Union address. White House aides are impressing on Democratic lawmakers to turn the idea into actual legislation.
Will the proposal gain much traction is the question as a Republican-controlled House staunchly opposes the administration’s economic agenda. That prompted Biden officials to wrest concessions out of individual corporations using a combination of public pressure and lighter-touch coaxing behind the scenes, Politico reported.
The White House initiated this approach during its first responder approach to Covid-19. Sweeping new regulations like requiring employers to give workers paid time off to get vaccinated, while simultaneously encouraging companies in private to get out ahead by instituting their own similar policies – and showering praise on them when they did was part of the White House strategy with corporations.
“If we could find a company that was willing to take the first step, then that was always an opening to bring other companies along,” said Zach Butterworth, who until recently served as the White House’s liaison to the business community. The goal was to create a pervasive sense within the private sector that “if you weren’t taking these steps, you were outside the mainstream”.
The White House strategy has met with varying degrees of success; for every industry-wide pact it secured on initiatives, such as discounted broadband internet access, it faced resistance from others like lowering gas prices, where oil companies effectively rejected Biden’s threats to rein in what he criticised as “war profiteering”.
The airlines became family-friendly after the Department of Transportation told them it planned to publish a table showing which carriers charged parents extra to sit with their young kids. Eli Lilly is slashing insulin prices even as a sustained scrutiny is on over the drug’s cost as policy makers want drug delivery at more affordable prices to the population.
Despite the companies’ profit motives, Biden has gone out of the way to applaud them, hoping it will convince competitors to do the same, drop prices, in addition to getting that vital public relations boost.
“The thing we can always withhold is that praise,” a senior White House official said. “Part of the benefit for the company is they get a pat on the head from the government.” Response has been very lukewarm within corporate board rooms. Though others may follow suit, analysts said, it’s far from signalling a sea change in industry behaviour.
Umer Raffat, an analyst who covers the drug industry for investment bank Evercore ISI, provided a blunt assessment of Eli Lilly’s price cuts: “Not a needle mover for them.”
“What this is really about is trying to impose price caps – and that didn’t work very well in the early 1970s, it’s not going to work very well today,” said Neil Bradley, chief policy officer at the US Chamber of Commerce. “This isn’t a junk fee agenda; this is a government price control agenda that’s trying to be rebranded.”
Democratic legislators feel that even if the financial effects are restricted, the moves create an outsized political opportunity for Biden – and showcase his administration’s small yet visible improvements to Americans’ financial situation.
“There are very few pieces of legislation that will move through Congress over the next two years,” Deiseroth said. “So for the Biden administration to be able to point to these victories and say, we called for this and it’s happening, it’s almost an achievement by proxy.”