What Happened to the Cancer Moonshot?

In his final State of the Union address in January 2016, then-President Barack Obama asked then-Vice President Joe Biden to lead the Cancer Moonshot initiative, a new national effort to accelerate research in cancer treatment.  Over the past five years, however, attention on the Cancer Moonshot has seemingly waned to the point that it barely pops up in the national discourse on health policy.  Is the Cancer Moonshot still around, and if so, what has it even accomplished?

Background

The Cancer Moonshot is far from being the federal government’s first push to deliver new cancer treatments.  The National Cancer Institute (NCI) was first established in 1937 to support cancer research.  Incorporated within the National Institutes of Health (NIH) in 1944, NCI remains the oldest center and has the largest budget among the other 27 centers and institutes of NIH. Decades later, President Richard Nixon signed the National Cancer Act of 1971 into law, which provided NCI with more autonomy within NIH and authorized $1.6 billion in funding for NCI over three years.  Additionally, the Orphan Drug Act of 1983 spurred many pharmaceutical companies to invest in drugs to treat rare diseases like cancer. 

Beyond NCI,  the federal government has done little to invest large sums of money focusing on research into the prevention and treatment of cancer, which  has limited the progress in the war against cancer.  The overall death rate from cancer has only declined 5% since 1950, and new cancer drugs produced between 2003 and 2013 has only boosted overall survival by 3.4 months.  Given the technical and scientific difficultly of developing cancer treatments, a more concerted effort rather than a piecemeal approach may be necessary to deliver progress. 

How the Moonshot Got Started

Shaped by his oldest son’s death from brain cancer in 2015, Biden declared after the 2016 State of the Union that the goal of the Cancer Moonshot was to double the rate of progress towards a cure for cancer. Shortly thereafter, Biden convened a Cancer Moonshot Task Force that established a BlueRibbon Panel charged with outlining research priorities to help the new initiative meet its goals.  Comprised of clinicians, scientists, cancer patients, and advocates, the panel issued a report in October 2016 that established seven working groups to identify research opportunities and offer recommendations on how the Cancer Moonshot can support those opportunities.  Since then, Congress authorized the Cancer Moonshot through enactment of the 21st Century Cures Act in December 2016, which set up the initiative within NCI and provided $1.8 billion funding over seven years.  For FY 2021, the Cancer Moonshot was appropriated $195 million.

Progress So Far

The Cancer Moonshot initiative uses its funding to invest in research that aligns with the initiative’s key priorities, such as generation of human tumor atlases, expanded use of early detection strategies, and establishing a network for direct patient engagement.  According to a midpoint progress update issued in January 2021, the initiative has so far funded over 240 research projects and more than 70 cancer science programs.  The Cancer Moonshot cites over a dozen projects on its website that have yielded progress, including:

  • The Immuno-Oncology Translational Network, whose research has led to insights into ovarian cancers responses to immunotherapy and the use of immunotherapy in certain types of head and neck cancers.
  • The My Pediatric and Adult Rare Tumor Network, which has developed a pipeline for biospecimen collection/analysis rare cancers and established several new specialized rare tumor clinics around the country.
  • The Fusion Oncoproteins in Childhood Cancers Consortium, whose researchers have developed several novel cancer models to study rare cancers and have made significant advances in understanding how each fusion affects the protein’s function and localization in the cell.

Room for Improvement

However, some scientists say Cancer Moonshot has the potential to deliver on greater progress.  To achieve this, a group of scientists proposed early this year in Lancent Oncology, a “Cancer Moonshot 2.0” that can meaningfully improve outcomes for cancer patients with a “scaled up, redoubled, and accelerated” approach.  Among the research areas suggested by the group include:

  • New database formats to capture biological data.
  • Non-invasive liquid biopsy approaches that can be used to screen high-risk individuals to identify precancers and early cancers.
  • Machine learning innovations that link the molecular structure of cancer pathways to more specific and effective drugs.
  • New drug delivery systems that target specific cancer vulnerabilities, such as bispecific antibodies and nanotechnologies.

While the Cancer Moonshot is still alive and kicking, the initiative may not be subject to as much attention when it was first conceived in 2016, likely due to less-than-stellar advancements and the domination of other issues in the public health discourse.  As difficult as cancer research may be, a redoubling of efforts and additional funding could pave the way for new treatments that exemplify the term “moonshot.”

What Happened, What You Missed: August 16-20

Biden Administration Preparing to Make Booster Shots Available in September

On August 18, President Joe Biden announced his administration is preparing to offer a third dose of the Pfizer and Moderna mRNA vaccines by the week of September 20.  The administration wants the additional doses to function as a “booster shot” after new data has indicated that the efficacy of the Pfizer and Moderna vaccines decreases over time.  The administration also anticipates offering booster shots to individuals who received the single-dose Johnson & Johnson vaccine but is awaiting further information before making a final decision.  Before the administration can officially begin distribution of additional doses, the Food and Drug Administration and the CDC’s vaccine advisory committee must review and authorize booster shots.  The Biden administration’s decision has drawn criticism from health experts who say there isn’t sufficient data to justify booster shots, especially as most of the world’s population remains unvaccinated.

HHS to Mandate Vaccinations for Certain Long-Term Care Workers

President Biden also announced on August 18 that he is directing the Department of Health and Human Services (HHS) to require long-term care facilities to have their employees vaccinated in order to continue to receive funding from Medicare and Medicaid.  The announcement comes as vaccination rates for long-term care workers has lagged nationally, leaving elderly residents vulnerable to the virus.  According to data from the Centers for Medicare and Medicaid Services, just over 60% of nursing home staff is vaccinated, compared to nearly 83% of nursing home residents.  There have been mixed reactions from the nursing home industry regarding Biden’s announcement.  Both LeadingAge and the America Health Care Association (AHCA) have said the administration should require all health care workers to be vaccinated instead of singling out nursing homes, although LeadingAge does support requiring vaccination as a condition of employment for nursing home workers.  Additionally, AHCA has warned vaccination requirements could prompt some long-term care workers to flee to other industries.

KFF: Spending per Person for MA Enrollees Grew Higher, Faster Than Traditional Medicare

A report issued August 17 by the Kaiser Family Foundation (KFF) found the federal government spent $321 more per person for Medicare Advantage (MA) beneficiaries compared to those enrolled in traditional Medicare in 2019, resulting in an additional $7 billion in annual spending.  The report also found that spending per MA enrollee is growing faster compared to traditional Medicare, which could cause overall MA spending to double by 2029.  According to the report, several features of the MA payment system are contributing to rising costs, including how benchmarks for plan payments are set and the risk adjustment process.  The report’s release comes as the Biden administration looks to increase the solvency of the Medicare trust fund by reforming payments to privately managed plans like MA.

Pelosi Urges Moderate Democrats to Back $3.5 Trillion Budget Resolution

Speaker Nancy Pelosi (D-CA) sent a Dear Colleague letter to all House Democrats on August 17 urging the caucus to support passage of the $3.5 trillion Fiscal Year (FY) 2022 budget resolution when the House returns from recess on August 23.  Pelosi’s letter was a direct response to nine moderate House Democrats who in an August 13 letter threatened to block the FY 2022 budget resolution unless the $1 trillion bipartisan infrastructure bill is passed first.  In her Dear Colleague letter, the Speaker expressed that any delay in passing either measure could threaten a “once-in-a-generation opportunity” to enact policies that will help working families.

ICYMI: Washington Monument Closed after Lightning Strike

The Washington Monument remains closed after it was struck by lightning at 12:30 a.m. on August 15.  According to the National Park Service, the lightning strike damaged the monument’s electronic access system that operates the door and the elevators.  Work crews are waiting on parts before repairs can resume, and it remains unclear when the parts will arrive.  According to The Washington Post, lightning hits the Washington Monument several times a year, and last Sunday’s strike marks the second lightning hit in 2021. 

After 10 Years, How Is the CMS Innovation Center Doing?

The Center for Medicare and Medicaid Innovation (CMMI), also known as the CMS Innovation Center, just celebrated its tenth birthday last year.  Tasked to address growing concerns about rising costs, quality of care, and inefficient spending, CMMI is a powerful tool for innovation in the US health care system.  After a decade, is CMMI delivering on its promise to innovate health care, or does the young agency still have much to accomplish?

All About CMMI

Created upon enactment of the Affordable Care Act (ACA) in 2010, CMMI is statutorily mandated to design, implement, and test new health care payment and delivery models for Medicare and Medicaid.  Managed by the Centers for Medicare and Medicaid Services (CMS), CMMI has launched over 40 new payment models since its inception, including accountable care organizations, medical homes models, and bundled payment models.  CMMI separately awards grants to state agencies, researchers, and other organizations for projects to design and implement new payment models with the same goals of improving care and lowering costs, and some of CMMI’s work includes multi-payer alignment models that impact patients with commercial insurance. 

2020 Report to Congress

Released on August 4, the 2020 Report to Congress provides an in-depth look at the performance of CMMI models and serves as a key indicator of how the center is doing in its effort to address rising costs and boost quality.  While the report focuses on CMMI’s activities from October 1, 2018, to September 30, 2020, it also highlights some actions taken from September 30 to December 31, 2020. 

In the 2020 Report, CMS estimated that over 27.8 million Medicare and Medicaid beneficiaries plus enrollees in commercial insurance plans have received care from over 500,000 health care providers or plans participating in alternative payment models under CMMI.  The 2020 Report analyzed a total of 38 active models within CMMI, including 11 new models announced since the 2018 Report and 27 active models that were launched prior to October 2018.

Summary of Findings

Unfortunately, only a handful of CMMI models met either goal of reducing costs or improving quality.   Furthermore, only the five following models delivered “statistically significant savings” to the Medicare Trust Fund according to the report:

Additionally, a few models led to improvements in quality but did not yield any noteworthy savings, including the Comprehensive End-Stage Renal Disease (ESRD) Care (CEC) Model and the Comprehensive Care for Joint Replacement (CJR) Model.

Saving money and raising quality aren’t the only metrics for a model’s success.  For CMS to consider permanently expanding a model for the federal health care entitlement programs, models must meet several additional criteria, including assurance from the CMS Office of the Actuary that a model’s expansion would not deny or limit coverage or provision of benefits under Medicare, Medicaid, and CHIP.   According to the report, only three models met the criteria:

How Can CMMI Improve?

While the 2020 Report to Congress does not explicitly offer recommendations on how to improve model performance, it does identify four issues that contributed to lower-than-expected model performance:

  • Selection bias created by voluntary models.
  • Benchmark inaccuracy.
  • Quality measure misalignment.
  • The need for greater data transparency.

These four issues identified in the report suggest a few ways CMMI models could produce better quality and provide for lower costs, mainly through mandatory model participation and more data transparency.  The idea of making more payment models mandatory is not a new idea.  In a July 2021 interview with Health Affairs, CMMI Director Liz Fowler explained that a shift towards mandatory models, which had already begun during the previous administration, will continue under the Biden administration and are likely to play a greater role in CMMI’s future.

The fact that CMMI models are underperforming is not lost on CMS leadership.  In a recent Health Affairs blog post, a few top agency officials including CMS Administrator Chiquita Brooks-LaSure and Fowler acknowledged only a handful of models have incurred savings and met the requirements to be expanded.  In addition to recounting a few recommendations from outside experts, such as MedPAC’s endorsement for streamlining and harmonizing models, Brooks-LaSure and Fowler offered several takeaways to inform how model performance could be improved.

  • CMMI needs to reevaluate how it designs financial incentives in order to boost meaningful provider participation.
  • Challenges in setting financial benchmarks have undermined models’ effectiveness, underscoring a need to ensure models are not resulting in overpayment and explore ways to improve or replace the current risk adjustment methodology. 
  • Since providers find it hard to accept downside risk if they lack the tools to change care delivery, CMMI should help ensure providers have options for managing risk, such as support in transforming care, waivers, and data. 

Despite dozens of underperforming models, CMS recognizes that the Innovation Center has room for improvement, and the agency’s leaders are keen on delivering a strategy that works.  Hopefully, through streamlining current models, implementing more mandatory models, boosting participation in voluntary models, improving financial incentives, and ensuring model participants have the tools they need to succeed, CMMI models could hopefully be in a better position to  both reduce costs and improve quality in time for the center’s 20th anniversary.

What Happened, What You Missed: August 9-13

FDA Authorizes Third Vaccine Dose for Immunocompromised Patients

On August 12, the Food and Drug Administration (FDA) amended the emergency use authorizations (EUAs) for the Pfizer and Moderna COVID-19 vaccines to allow immunocompromised people to get a third dose.  The Centers for Medicare and Medicaid Services (CMS) subsequently announced that Medicare beneficiaries would be able to receive the additional vaccine dose at no extra cost.  FDA’s announcement comes after a number of doctors said the two-dose regiment does not generate a sufficient level of protection in most people with compromised immune systems.  The Centers for Disease Control and Prevention (CDC) estimates that 2.7% of US adults are immunocompromised, including people undergoing cancer treatment and organ transplant recipients.  On August 13, CDC’s Advisory Committee on Immunization Practices will meet to discuss whether a third COVID-19 vaccine dose is needed for certain groups.

Biden Calls on Congress to Allow Medicare to Negotiate Drug Prices

President Biden publicly urged Congress on August 12 to enact legislation to allow Medicare to negotiate on drug prices as a key component of his vision for reducing the high cost of prescription drugs.  Other reforms Biden called for include establishing a cap on out-of-pocket drug costs for Medicare beneficiaries, building on efforts to help states and Tribes to import lower-cost drugs from Canada, and accelerating the development and uptake of generic and biosimilar drugs.  Immediately following Biden’s remarks, PhRMA President and CEO Stephen Ubl issued a statement saying the president’s proposals would undermine access to life-saving drugs and shift drug costs to patients. 

Chamber of Commerce Files Lawsuit over Insurer Price Transparency Rule

On August 10, the US Chamber of Commerce filed a lawsuit in the US District Court Eastern District of Texas to challenge a rule finalized by the previous administration in October 2020 that requires insurers to post pricing information in a machine-readable format online.  In the suit, the Chamber contends that the rule violates the Administrative Procedures Act and that the administration lacks statutory authority to require prices to be listed in a machine-readable format.  According to the Chamber, the price transparency rule has the potential to reduce competition and boost prices consumers pay by requiring insurers to post information that’s otherwise considered confidential.  On August 12, the Pharmaceutical Care Management Association filed a similar lawsuit in the US District Court of the District of Columbia challenging the price transparency rule.

Senate Approves Bipartisan Infrastructure Bill, Kicks Off FY22 Budget Resolution Process

On August 10, the Senate voted 69-30 to approve a bipartisan $1 trillion infrastructure bill, moving forward a major component of President Biden’s agenda.  Passage of the infrastructure bill cleared the way for the Senate to adopt by a 50-49 vote its $3.5 trillion Fiscal Year (FY) 2022 budget resolution that contains key Democratic priorities around childcare, paid leave, climate change, and education.  The House is expected to return early from recess to approve the FY 2022 budget resolution during the week of August 23, which would unlock the budget reconciliation progress and allow the Senate to pass a final bill that only requires 50 votes.  The process to pass the larger measure could take months, however, and Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have started to say  they will not support $3.5 trillion in spending

AAP Calls for FDA to Accelerate EUA of COVID Vaccine for Kids under 12

In an August 5 letter, the American Academy of Pediatrics (AAP) urged the FDA to authorize the emergency use of COVID-19 vaccines for children under age 12 “as soon as possible” due to a rise in pediatric COVID-19 cases sparked by the Delta variant.  According to AAP, FDA should use the clinical trial data it already has collected on the Pfizer and Moderna vaccines to move forward on expanding the emergency use of the vaccine instead of waiting for six months of follow-up data due to “changes in the risk-benefit analysis” posed by the Delta variant.  AAP also noted that cases of myocarditis in adolescents and young adults are “extremely rare” and do not necessitate the collection of additional data to expand the EUA.  

ICYMI: Congressional Staff Express Interest in Telework, Flexible Arrangements

Even though a number of congressional staffers have returned to in-person work in Washington, some staffers are calling for their bosses to consider making telework or hybrid work arrangements permanent.  According to some proponents, more telework opportunities could provide relief to employees with childcare responsibilities, help with employee retention, or provide opportunities to staff who can’t physically be in the Washington, DC area. 

Meet Matt Gontarchick, Terp and Multirole Advocate

Matt Gontarchick has worn many hats at Chamber Hill Strategies, whether it’s planning fly-ins, managing business development for PolicyCrush, meeting with congressional staff, covering hearings, writing memos, and supporting the firm’s principals.  Here, Matt tells us about the differences between working from home and working in the office, and how the pandemic may shape advocacy going forward.

What do you think fly-ins are going to look like when the US Capitol Complex is reopened to the public?

It’s anyone’s guess.  A lot of people are pointing towards a hybrid model that incorporates both in-person and virtual meetings, but there are still a lot of questions about how that would work logistically.  There are clear benefits to both – people still have a desire to connect in-person, and virtual meetings offer an opportunity for people to participate in advocacy that otherwise couldn’t due to travel or difficulty getting time off from work.  How you feel about virtual or in-person fly-ins also seems to depend on your role in an organization.  I attended a webinar recently on the future of fly-ins, and one panelist said her organization loved being able to do a virtual fly-in because it saved them $100,000, as flights and hotel rooms in DC aren’t cheap, of course.  On the other hand, the panelist said the participants couldn’t wait to go back to doing an in-person fly-in because they wanted to go back to their usual experience of meeting together and networking in Washington.  There are a lot of competing interests, but no simple solution.  I think going forward, fly-ins will have both an in-person and virtual components, but on separate days.  The in-person component can be more targeted to include advocates who are key constituents or experts on a particular topic, whereas virtual meetings would provide a platform for those who don’t necessarily need to be in Washington to communicate their message.

How has your sales experience helped you?

Relationship management carries over to so many areas.  It’s important to understand what the person you’re meeting with cares about with and how to build a rapport with them.  When I’m meeting with congressional staff, for instance, I always try to understand how the issue fits with their boss’s district or state.  And being able to build rapport with staff as a peer in DC helps.  Sales has also helped beef up my negotiation skills, which are important outside of work, too.  Last summer, my car was involved in a hit-and-run while it was parked, and I needed to replace the rear taillight.  Thanks to the negotiation skills I picked up from working with PolicyCrush, I was able to negotiate down the price of both the taillight and the installation at the dealership. 

How have you adapted to working in a pandemic? 

It’s been difficult, because admittedly, I’m not a fan of working from home.  I think part of the reason for that is I need physical separation between home and work.  I live in a studio apartment, so the physical separation aspect is hard to achieve – waking up everyday right next to your desk, looking at your apartment, and knowing that you’re going to be there for the rest of the day is kind of depressing.  And since I do a lot of writing, I really value having a space where I can focus on my work with minimal distractions, and my cubicle does a great job of that.  Fortunately, as conditions have changed, I’ve been heading into the office more and more, and it feels great to go back to my normal routine of walking to the Metro and going for a run around the National Mall after work.  I need variety, and global pandemics aren’t conducive to that. 

What’s the best advice you’ve received?

“Life rewards action.”  I’m somewhat embarrassed to share this because it’s a Dr. Phil quote, and I have mixed feelings about him.  However, I like it because it’s simple – it says you need to take initiative to make something happen.  I think too many people expect success to fall in their lap or are disappointed if they don’t reach their goals after a few attempts.  For example, some people might give up on searching for their dream job after just a few applications.  If you want something, you have to put in the work. 

What else should we know about you?

I’m a proud University of Maryland alumnus, and I’m pretty involved with my local alumni network.  At least when global pandemics aren’t going on, we plan and host different events like game watches, fundraising events, and speaker series.  I also volunteer as a contributor for a blog that deals with smart growth, housing affordability, and transit issues in the Washington, DC area, and I keep up with it because it helps my writing skills.  Outside of that, I’m an avid runner, and I enjoy exploring cities or just walking around different neighborhoods.  Also, I’m a huge TV nerd, so I’m always keeping up with new shows, reading about “prestige television,” or doing a rewatch of a classic like The Wire.

How Restricting Could Determine Control of the House

With each new decade comes a new Census, and with every new Census comes a redrawing of the map of congressional districts for the House of Representatives.   Known as redistricting, the stakes of this process couldn’t be higher, with Democrats clinging to a narrow majority in the House and the electorate bitterly divided among voters of either party.  However, thanks to the pandemic and controversies from the redistricting process 10 years ago, the process to determine congressional district boundaries ahead of the 2022 midterm elections will look more complicated than usual.

How States Determine Congressional Districts

The lines for congressional districts are redrawn at the state-level every 10 years.  Notably, each congressional district is required to be as equal to the population in all other congressional districts in a state as practicable.  Using new census data, states typically determine district boundaries through one of three ways:

  1. State legislature.  The state legislature has ultimate authority to draft and implement maps for congressional districts.  While some states may have advisory commissions who assist with the redrawing process, state legislatures are not bound to follow the commissions’ recommendations.
  2. Commission.  An independent commission is tasked with drawing the boundaries of congressional districts.  Some commissions bar individuals that hold elective office from serving on them, while others may include elected officials.
  3. Hybrid.  Both a state legislature and a commission share redistricting authority.

Below is a map that shows each state’s redistricting process as of 2020.  Notably, states with only one member serving in the House of Representatives do not participate in the redistricting process.

States are tasked every decade with redrawing their congressional districts based on new census data.  With Democrats holding a five-seat majority in the House, how congressional maps are re-drawn could have a huge impact on which seats change hands and what party assumes the majority in the next Congress.  This blog post provides an overview of what the redistricting process will look like and what it means for the 2022 midterm elections in the House.

Since most states have their respective legislatures draw congressional boundaries, some state lawmakers feel an incentive to engage in partisan gerrymandering, which is when districts are drawn in a way that benefits their own party.  Related to this is racial gerrymandering, which refers to when districts are drawn to reduce the electoral power of one racial group in favor of another.  Notably, racial gerrymandering is prohibited under the Voting Rights Act of 1965.  While the Supreme Court ruled 5-4 in June 2019 that federal courts cannot weigh in on partisan gerrymandering cases, several lawsuits on the state level have been successful in changing maps.  In 2019, a three-judge panel in North Carolina threw out the Tar Heel state’s new congressional map for unconstitutional partisan gerrymandering, prompting a redrawing of the map that gave Democrats an edge.  One year earlier, Pennsylvania’s Supreme Court declared the commonwealth’s 2011 congressional districting map to be in violation of the Pennsylvania Constitution, leading the way to a new map that also left Republicans disadvantaged. 

Delayed Census Data, Delayed Maps

Normally, the US Census Bureau releases its apportionment data in December of the year it is collected, with more in-depth demographic data that states use to determine district boundaries released throughout February and March of the following year.   However, COVID-19 delayed the Census Bureau’s ability to gather and process data, and therefore the apportionment data wasn’t posted until April 26, 2021, and the more in-depth data states use to draw district boundaries won’t be available until August 12.  The apportionment data refers to the number of seats in the House of Representatives allotted for a state based on the state’s population, while the more in-depth data includes demographic information such as age, sex, and race as well as geographic boundaries like jurisdictional limits, school districts, property lines, roads, and other features that states will use to redraw maps.

Due to the delay in receiving census data, states are facing tight deadlines on drawing their 2022 congressional maps.  Currently, 12 states are required either constitutionally or statutorily to have their 2022 congressional district boundaries enacted before the end of 2021.  As a result, many states are expected to hold special legislative sessions this fall to focus on redistricting.  Other states are using non-census data to draw new district boundaries.  For example, the state legislatures of Illinois and Oklahoma are both using data from the American Community Survey (ACS) to come up with new maps.  However, some dispute that ACS data can serve as a stand-in for census data, and the Illinois Republican Party has already filed a lawsuit to challenge the forthcoming new map.  By summer 2022, at least half of states are expected to have their new congressional districts finalized.

What to Watch for in 2022

Apportionment data released in April saw a dozen states either gain or lose House seats based on changes in total population.  Below is an overview of the states that will see changes in their delegation, with the current number of seats in the 117th Congress noted in parentheses.

  • States that will lose one seat: California (53), Illinois (18), Michigan (14), New York (27), Ohio (16), Pennsylvania (18), West Virginia (3).
  • States that will gain one seat: Colorado (7), Montana (1), North Carolina (1), Oregon (5).
  • States that will gain two seats: Florida (27), Texas (36).

Going into the 2022 redistricting process, Republicans have the upper hand.  A major reason for this is Democrats currently have a slim five-seat majority in the House, which means Republicans only have to flip a few seats to retake the majority.  Heading into 2022, two factors give the GOP an advantage when it comes to winning new seats.

  • Apportionment data.  Many of the states that are set to lose one seat are Democratic-leaning, while Republican-leaning Florida and Texas gain two seats apiece.  A minor shift in seats away from blue states toward red states could be especially impactful in the House.
  • Control of state legislatures.  The Republican Party holds a supermajority in the legislatures of 30 state governments, meaning party members control both the upper chamber and the lower chamber of a state’s legislative branch.  In contrast, Democrats hold a supermajority in 18 states, while control is split between the parties in two states’ legislature.  This translates to Republicans having direct control over the boundaries of 187 districts, while Democrats only control 75.  Out of the remaining districts, independent commissions will decide 96, both parties will decide 71, and six seats represent at-large districts.  By holding supermajorities in most state legislatures, the GOP is better positioned to engage in gerrymandering and redraw congressional lines in their favor.  Notably, the Republican Party controls the state legislatures of Texas and Florida, both of which will be gaining two seats for 2022. 

However, Democrats have a few tricks up their sleeve to counter Republicans’ advantage in redrawing the congressional map.

  • Lawsuits. Litigation brought about changes in the congressional maps in Pennsylvania and North Carolina in recent years, and new legal challenges could open the door for more changes as redistricting for 2022 heats up.  The National Democratic Redistricting Committee, an advocacy organization founded by former US Attorney General Eric Holder, filed lawsuits in Louisiana, Minnesota, and Pennsylvania in April 2021, immediately following the release of the apportionment data.  As a worst-case-scenario for Republicans, some lawsuits could potentially overturn newly drawn maps, meaning some 2022 congressional races could be decided using the 2020 map.  It should be noted that Democrats are not the only party with a redistricting advocacy group, as the National Republican Redistricting Trust has pledged to challenge any maps that it sees as unfairly skewing to the left. 
  • Democratic supermajorities.  State legislatures with Democratic supermajorities may attempt to redraw their lines through gerrymandering to squeeze out Republican members of the state’s congressional delegation, potentially providing a cushion for Democrats in anticipation of any 2022 losses in the House.  States to watch include Illinois and Maryland, where Democratic state lawmakers may redraw lines to make reelection a tough prospect for Reps. Rodney Davis (R-IL) and Andy Harris (R-MD).

Redistricting has massive ramification for US politics and this year is no exception.  Between delayed census data, tight redistricting deadlines, strong Republican advantages, and the specter of Democratic lawsuits, intense fights over the 2022 congressional map could be on the horizon. 

What Happened, What You Missed: August 2-6

Moderna Becomes Second Vaccine Maker to Recommend Third Dose

On August 5, Moderna said a third dose of its COVID-19 vaccine will likely be necessary as a “booster shot” this winter as immunity gradually declines.  The company is currently testing three candidates that could be used as a third dose to boost immunity against rising COVID-19 variants such as Delta.  Moderna also announced that its vaccine is 93% effective six months after the second dose, even against the Delta variant.  Moderna’s calls for a third dose came one week after Pfizer released data that showed a third dose of its vaccine increased antibody levels against the Delta variant.   Amid growing interest in a third vaccine dose, the World Health Organization notably called for wealthy nations to hold off on distribution of third doses to their populations and instead focus on distribution to low-income countries where vaccination rates remain low.

HHS Inspector General to Review FDA’s Accelerated Approval Process

On August 4, the Department of Health and Human Services Office of the Inspector General (OIG) announced it will review the accelerated approval pathway used by the Food and Drug Administration (FDA) to review drugs that treat serious conditions and fill an unmet medical need.  The review was sparked by FDA’s use of the accelerated approval process for Alzheimer’s disease drug Aduhelm, which spurred scientific disputes within FDA as well as allegations of an “inappropriately close relationship” between FDA and the pharmaceutical industry.  Acting FDA Commissioner Janet Woodcock asked OIG to review the process used to approve Aduhelm in mid-July, and she has since pledged full cooperation with OIG’s pending investigation.

Vote on Infrastructure Bill Could Come This Weekend

Senate Majority Leader Chuck Schumer (D-NY) is hoping to hold a procedural vote to end the debate on a $550 billion bipartisan infrastructure bill as soon as Saturday after Senators failed to reach an agreement on Thursday night.  The Senate spent most of Thursday waiting for a Congressional Budget Office score that projected the measure will add $265 billion to the federal deficit over 10 years.  The Senate is out of session on Friday, and several Senators will be using their day-long break to attend the funeral of former Sen. Mike Enzi (R-WY).   If the Senate clears the bipartisan infrastructure bill when it reconvenes on Saturday, Senate Democrats will immediately pivot to working on a budget resolution with instructions for reconciliation that include the “human infrastructure” pieces.

Former Michigan Senator Carl Levin Has Died

Carl Levin, Michigan’s longest-serving US Senator, died on July 29 at age 87.  Elected to the Senate in 1979 after practicing law and serving on the Detroit City Council, Levin helped set military priorities as Chairman of the Armed Services Committee and investigated corporate behavior as Chairman of the Permanent Subcommittee on Investigations.  Throughout his six terms in the Senate, the liberal Michigan Democrat was known for his defense of Senate traditions and tenacity in uncovering corruption.  Levin hailed from a political family – his brother, former Rep. Sander Levin (D-MI), chaired the powerful House Ways and Means Committee, and his nephew, Rep. Andy Levin (D-MI), currently represents a district north of Detroit.

CMS Finalizes 2022 Payment Rates for Acute Care Hospitals

A final rule issued by the Centers for Medicare and Medicaid Services (CMS) on August 2 provides for a 2.5% increase in hospital reimbursement rates under Medicare’s Inpatient Prospective Payment System (IPPS) for Fiscal Year (FY) 2022.  The rule also includes a $1.1 billion decease in disproportionate share hospital payments from FY 2021 and adds a Maternal Mortality measure to the hospital quality reporting program.  Furthermore, the final rule contains several provisions related to the COVID-19 public health emergency, namely a new requirement for hospitals to post vaccination rates among employees as well as authorization of additional payments for COVID-19 diagnostics and therapies.  The final rule goes into effect on October 1, 2021. 

ICYMI: DC Area Athletes Rack Up Medals in Tokyo Olympics

So far in the 2020 Summer Olympics in Tokyo, US athletes who hail from the Washington, DC area have been winning big.  Maryland natives Katie Ledecky, Chase Kalisz, and Andrew Wilson have all won gold medals in swimming events, while Maryland triathlete Katie Zaferes has earned the silver and bronze medals in two separate triathlon events.  Additionally, Noah Lyles of Alexandria, Virginia won a bronze medal in the men’s 200-meter race, while Lucas Kozeniesky of Fairfax County Virginia narrowly missed a gold medal in the mixed 10m air rifle event.  Of note, several athletes hailing in the region are still competing in track, soccer, basketball, and wrestling events.

Lay of the Land for 2022 Gubernatorial Races

The 2022 midterms aren’t just about Congress.  36 states will be holding gubernatorial elections, and the consequences will not just determine state-level policies but also inform future political players on the federal level for presidential races..  At the moment, 27 states have Republican governors, while 23 have Democratic governors.

Nearly 40 state governorships are up for grabs over the next two years, and the winners of these races will have a broad impact on not just state-level policies but also the potential to reshape rising political stars on the national stage.  This blog post looks at all the upcoming gubernatorial races for 2021-2022 and provides insight on the likely outcome.

The 2021 Races

One indicator of the 2022 midterms will be three gubernatorial races scheduled in fall 2021.  Both New Jersey and Virginia have held their gubernatorial elections off-year to avoid being overshadowed by federal elections, while California’s election is part of a recall effort.

  • In New Jersey, incumbent Democratic Governor Phil Murphy is seeking a second term.  He will face Republican nominee and current State Assemblyman Jack Ciattarelli. The state gubernatorial election will take place on November 2, 2021.
  • In Virginia, former Governor Terry McAuliffe is seeking a second term in a November 2, 2021, where he will face off against Republican nominee Glenn Youngkin.  Unlike other state governors, Virginia governors are not allowed to serve consecutive terms, which is why the current Democratic Governor Ralph Northam is not seeking reelection.
  • In California, incumbent Democratic Governor Gavin Newsom faces a recall election on September 14, 2021.  46 candidates have been deemed qualified to appear on the ballot, including 9 Democrats and 23 Republicans. 

However, the 2021 gubernatorial races are unlikely to serve as a bellwether for the 2022 midterms.  All three states are solidly Democratic, with Democrats currently serving as governor, attorney general, and secretary of state.  Additionally, the state legislatures of Virginia, New Jersey, and California all have Democratic majorities.

The 2022 Outlook

Of the 36 states in the mix for 2022, 20 governorships are held by Republicans, while 18 are held by Democrats.  Below is a chart of all states with 2022 gubernatorial elections, their likely outcome according to the Cook Political Report, and a comparison with 2020 presidential election results.

StateIncumbentPartyProjection2020 Presidential Margin
AlabamaKay IveyRSolid RTrump (+25.5)
AlaskaMike DunleavyRSolid RTrump (+10.1)
ArizonaDoug Ducey*RToss-upBiden (+0.3)
ArkansasAsa Hutchinson*DSolid RTrump (+27.6)
CaliforniaGavin Newsom†DLikely DBiden (+29.5)
ColoradoJared PolisDSolid DBiden (+13.5)
ConnecticutNed LamontDSolid DBiden (+20)
FloridaRon DeSantisRLean RTrump (+3.4)
GeorgiaBrian KempRLean RBiden (+0.2)
HawaiiDavid Ige*DSolid DBiden (+29.5)
IdahoBrad LittleRSolid RTrump (+30.7)
IllinoisJ.B. PritzkerDSolid DBiden (+16.9)
IowaKim ReynoldsRLikely RTrump (+8.2)
KansasLaura KellyDToss-upTrump (+14.6)
MaineJanet MillsDLikely DBiden (+9.1)
MarylandLarry Hogan*RLean DBiden (+33.2)
MassachusettsCharlie BakerRSolid RBiden (+33.5)
MichiganGretchen WitmerDLean DBiden (+2.4)
MinnesotaTim WalzDLikely DBiden (+7.1)
NebraskaPete Ricketts*RSolid RTrump (+19.1)
NevadaSteve SisolakDLikely DBiden (+2.4)
New HampshireChris SununuRLikely RBiden (+7.4)
New MexicoMichelle Lujan GrishamDSolid DBiden (+10.8)
New YorkAndrew CuomoDSolid DBiden (+23.1)
OhioMike DeWineRLikely RTrump (+8)
OklahomaKevin StittRSolid R Trump (+33.1)
OregonKate BrownDLikely DBiden (+16.1)
PennsylvaniaTom Wolf*DToss-upBiden (+1.2)
Rhode IslandDaniel McKeeDSolid DBiden (+23.1)
South CarolinaHenry McMasterRSolid RTrump (+11.7)
South DakotaKristi NoemRSolid RTrump (+26.2)
TennesseeBill LeeRSolid RTrump (+23.2)
TexasGreg AbbottRLikely RTrump (+5.8)
VermontPhil ScottRSolid RBiden (+35.4)
WisconsinTony EversDLean DBiden (+0.6)
WyomingMark GordonRSolid RTrump (+43.3)

*Not eligible for reelection due to term limits

†Dependent on results of 2021 recall election

Democrats face an uphill battle in the 2022 gubernatorial races.  In 16 of the 19 midterm elections held since World War II, the party of the president lost bids for governorship.  However, 2022 is unlikely to see a lot of turnovers in the governors’ mansions due to the fact that all but six races feature incumbents, who generally face an advantage in retaining their seats.  Nonetheless, conditions could change for all gubernatorial candidates, depending on the popularity of President Joe Biden, the state of the economy, public health, and countless other measures. 

ARPA-H, the Proposed Agency to Transform Biomedical Research

The internet.  GPS.  The computer mouse.  These are some of the technological innovations made possible by the Defense Advanced Research Projects Agency (DARPA), a Defense Department agency tasked with advancing research and development of science and technology programs.  Now, the Biden administration wants to replicate DARPA’s success in biomedical research with a newly proposed entity called Advanced Research Projects Agency for Health (ARPA-H). 

What Is ARPA-H?

The Biden administration’s Fiscal Year (FY) 2022 budget request provided a $6.5 billion investment for APRA-H, which would be directed to drive “transformational innovation” in health research and speed application and implementation of health breakthroughs.  The initial focus of ARPA-H would be cancer, disabilities, and Alzheimer’s disease.  According to a concept paper provided by the White House, examples of projects that could be pursued by ARPA-H include:

  • mRNA vaccines to prevent most cancers.
  • Molecular “zip codes” that target drugs only to specific tissues and cell types, to eliminate serious side effects.
  • Highly accurate, inexpensive, wearable monitors for blood pressure and blood sugar that provide real-time data to patients and providers.
  • Holistic systems that eliminate racial disparities in maternal morbidity and mortality rates and premature births.
  • A process to design, test, and approve a vaccine against any newly emerging human virus in 100 days.

The National Institute of Health (NIH) further explains that ARPA-H will predominantly focus on “time-limited” projects with goals, metrics, and accountability.  It also states that the director of ARPA-H will be selected based on having a “proven innovation and partnership-building track-record,” and ARPA-H program managers will be recruited from industry, academia, or other sectors based on “scientific vision, judgement, and management skills.”

ARPA-H is also included in the Cures 2.0 discussion draft that was released by Reps. Diana DeGette (D-CO) and Fred Upton (R-CO).  However, the discussion draft is still a work in progress, and it contains far fewer details on the proposed agency than those provided by the Biden administration. 

How Would ARPA-H Advance Biomedical Research?

Ideally, ARPA-H would need many of the same authorities used by DARPA to accomplish its mission to delivery breakthroughs in biomedical research.  Key authorities would include:

  • The ability to hire individuals rapidly based on “a unique skill set” outside the typical civil services hiring system and pay those individuals a competitive wage, as well as the ability to recruit experienced program managers from the private sector. 
  • Broad, flexible funding authority that make it possible to mix and match the best ideas with minimal bureaucracy that allow for projects that can be funded for multiple years or don’t necessarily fit into one-year intervals.
  • Exemptions from the traditional review process for biomedical research, which can take up to 18 months or longer, to get from an idea to a scientific review before the actual work begins.

According to a July 26 Federal News Network interview with NIH Director Francis Collins, an ARPA-H with “some new authorities” could make a difference for experimental drugs that show a lot promise during clinical trials but fail to attract investment from pharmaceutical companies due to an experimental products being perceived as too risky or having a limited market share.  In these cases, Collins explained ARPA-H could chose to invest in certain experimental drugs and hand them over to the private sector when necessary.

The Structure of APRA-H

The Biden administration has stipulated that ARPA-H would be a “distinct division” within NIH, with a “unique culture and organization.”  However, some medical experts have argued ARPA-H should be a stand-alone entity within the Department of Health and Human Services (HHS), including a former chair from DARPA’s advisory committee, who suggested NIH’s approach to research and innovation is too time-consuming and bureaucratic.  In response, Collins told The Washington Post in mid-June that putting ARPA-H outside of NIH would be a big mistake because it would lead to “administrative duplications” and preclude the chance for ARPA-H program managers to develop synergy with their colleagues at NIH.  While the Cures 2.0 discussion draft has yet to define ARPA-H’s structure and home, Collins has said that DeGette and Upton are leaning towards having the new agency withing NIH.

Collins also threw cold water on the notion that ARPA-H could create internal jealously within NIH in his Federal News Network interview by countering that many NIH employees are excited about the prospect of a new research agency and that “unfriendly competitiveness” exists in other parts of the government.  It’s worth noting that the administration’s FY 2022 budget request includes a major increase in NIH funding rather than diverting away funds to create a new agency. 

Next Steps

APRA-H only becomes a reality when FY 2022 appropriations bills are signed into law, and the FY 2022 appropriations process has gotten off to a slow start.  The House passed an appropriations minibus for FY 2022 on July 31 that includes $3 billion for ARPA-H, while the Senate only began reviewing its FY 2022 spending proposals on August 2. , Notably, the proposals to create a new biomedical research agency been favorably viewed by members of both parties, meaning ARPA-H is unlikely to be cut from the legislation. However, given lawmakers’ slow progress on appropriations and long list of other items that require their attention in the next 60 days, all FY 2022 spending measures are unlikely to be finalized by the end of the FY 2021 on September 31.  This means NIH may not be able to take the first steps in building up ARPA-H until Congress finalizes the FY 2022 appropriations bills later in the fall or winter.

Once FY 2022 funding is squared away, Collins hopes to hit the ground running.  In his Federal News Network interview, the NIH director said he hopes to recruit 50-100 program managers for the agency’s first year, with results on research projects expected in the following one to two years as ARPA-H continues to “staff up and ramp up.”  Collins also projected to have 50-60 projects going at ARPA-H by the end of FY 2022, assuming all FY 2022 spending bills are enacted by December 2021.

What Happened, What You Missed: July 26-30

New CDC Guidance Say Vaccinated People Should Wear Masks Indoors

On July 27, the Centers for Disease Control and Prevention (CDC) issued updated guidance that advises fully vaccinated people to wear masks in “pubic, indoor settings” in counties with “substantial” or “high” levels of COVID-19 transmission.  The guidance also calls for all students, teachers, and staff at K-12 schools to wear masks, regardless of vaccination status.  CDC says it updated the guidance on masking in response to the high transmissibility of the Delta variant as well as new data that shows vaccinated people who catch COVID-19, but are asymptomatic, can spread the Delta variant just as easily as those who are unvaccinated.  Since the new guidance was released, several jurisdictions including Washington, DC and Chicago have issued new requirements for vaccinated individuals to wear masks when indoors. 

Biden Announces New Vaccinations and Testing Requirements for Federal Workforce

On July 29, President Joe Biden announced new requirements for all civilian federal employees, onsite contractors, and military servicemembers to be vaccinated or otherwise face regular testing, masking, and social distancing requirements.  Biden first hinted at a vaccine mandate for federal workers on Tuesday following the CDC’s announcement on its new masking guidelines for vaccinated people. However before his announcement, on Monday the Department of Veterans Affairs announced it will require its frontline health care workers to be vaccinated within eight weeks. 

Pfizer Says Vaccine Efficacy Wanes after 6 Months, Makes Case for Third Dose

On July 28, Pfizer released a new study that showed the overall effectiveness of its two-dose COVID-19 vaccine declined from 96% to 84% after six months.  Pfizer separately released data on Wednesday that found a third dose of its vaccine increases antibody levels against the Delta variant by nearly five times for people ages 18 to 55 and more than 11 times among people 65 to 85.  However, it remains unclear if higher antibody levels actually lead to better protection, and the CDC has stated that currently approved vaccines provide adequate protection against the Delta variant.  Pfizer also announced that it plans to seek emergency authorization use under the Food and Drug Administration for a third dose sometime in August.

Senators Reach Agreement on $550 Billion Infrastructure Package

On July 27, a bipartisan group of Senators reached agreement on a $550 billion infrastructure bill that would provide $550 billion in new spending for roads, bridges, rail transit, clean water, broadband internet, airports, and environmental clean-up.  The bill would be partially paid for by repurposing COVID-19 relief funds and delaying implementation of the Medicare Part D drug rebate rule.  Next, the Senate is expected to hold a vote on Friday and work through the weekend.  Progress on the bipartisan infrastructure bill means Democrats can now  move on and focus solely on their $3.5 trillion human infrastructure bill that they intend to pass through budget reconciliation. 

Former WY Sen. Mike Enzi Dies after Bicycle Accident

Former Wyoming Republican Senator Mike Enzi died on July 26 at age 77 due to injuries sustained from a bicycle accident just days before.  Enzi served as the Mayor of Gillette, WY and as a State Lawmaker before being elected to the Senate in 1996, where he would go on to serve four terms before retiring in 2020.  Known as one of the more conservative members of his party, Enzi served as Chairman of the Senate Budget Committee and Senate Health, Education, Labor and Pensions Committee.

ICYMI: Athletes from the Nation’s Capital Shine in 2020 Olympics

Aside from being home to our nation’s capital, the Washington, DC area is home to nearly a dozen members of the US Olympic Team who are currently competing in the 2020 Summer Olympics in Tokyo, Japan.  Probably the most well-known is 24-year-old swimmer Katie Ledecky, a Bethesda, MD native who won a gold medal in the 1500-meter freestyle  plus two silver medals in different swimming events.  Ledecky is joined on the 2020 US Olympic Swim Team by two other area natives – Torrie Huske of Arlington, VA and Phoebe Bacon of Chevy Chase, MD.  Other Team USA athletes include several basketball players from the Washington Wizards and Washington Mystics, as well as two members of the women’s soccer team, Washington Spirit. 

What’s the Point of Congressional Caucuses?

The Congressional Bourbon Caucus.  The Congressional Peanut Caucus.  The Congressional Rodeo Caucus.  It seems like there’s a congressional caucus for every type of issue or policy.  What exactly are congressional caucuses, and do they have any impact on the policymaking process?

All About Congressional Caucuses

Officially known as congressional member organizations, congressional caucuses are voluntary associations consisting of Representatives and Senators who share specific policy goals or interests.  These groups run the gamut of more serious and powerful organizations, such as the Congressional Black Caucus and the Republican Study Group, to ones with a more offbeat or narrow focus, such as the Congressional Bowhunting and Archery Caucus, and the Congressional Candy Caucus.  Importantly, these congressional member organizations are not to be confused with party caucuses and conferences, which are the House Democratic Caucus, House Republican Conference, Senate Democratic Caucus and Senate Republican Conference.

Congressional caucuses date back to the early 1800s and have grown in number in recent years.  There are currently 460 caucuses in the 117th Congress, compared to only 100 member organizations in 1993.   Any caucus that includes House members must register with the House Committee on House Administration and follow certain rules, which include the following:

  • Caucuses cannot use franking privileges (free mail privileges), although individual members may use official resources for communication related to a caucus.
  • At least one officer or chair of a congressional member organization must be a House member.
  • Members can use personal funds to support a caucus but are not allowed to accept goods or services from private organizations to support a caucus.

The Senate does not have any separate guidelines or regulations for Senators who participate in caucuses and are just subject to follow the Rules of the Senate and the Senate Code of Official Conduct,

Types of Caucuses

Congressional caucuses can fall into one of three categories depending on their constituency and interests. 

  • Ideological Caucuses.  Caucuses based around an ideology can represent certain ideological views within a particular party.  In America’s two-party system, each party tends to have a wide ideological spectrum or a “big tent,” meaning there is room within a party for members with more specific ideologies to gather.  All ideological caucuses are in the House, and current examples on the Democratic side include the Blue Dog Coalition, the New Democrat Coalition, and the Congressional Progressive Caucus.  Republican examples of ideological caucuses include the Tuesday Group, the Republican Study Committee, and the Freedom Caucus.  One group, the Problem Solvers Caucus, contains House members of both parties that seek bipartisan collaboration on key issues.
  • National Constituency Caucuses.  Some caucuses advocate the interests of specific groups of constituents, such as women, racial or ethnic groups, and veterans.   Examples include the Congressional Black Caucus, the Congressional Hispanic Conference, the Congressional Asian Pacific American Caucus, and the Servicewomen and Women Veterans Caucus.
  • Interest Group Caucuses.  The most common caucuses consist of members with a shared policy or interest.  Examples of these generally bipartisan caucuses include the Congressional Bike Caucus, the Congressional Coal Caucus, the Congressional Dairy Farmer Caucus,  Congressional Fire Services Caucus, and the Congressional Cyber Security Caucus.  A number of interest group caucuses focus on medical issues or diseases, such as the Congressional Cystic Fibrosis Caucus, the Congressional Telehealth Caucus, the Congressional Lupus Caucus, and the Rare Disease Caucus.

Do Caucuses Matter?

On paper, caucuses have no real authority.  Unlike committees, caucuses lack the ability to markup bills or hire their own staff, for instance.  However, they do serve a function by providing a way for like-minded Representatives and Senators with mutual interests and goals to get to know one another.  Through these relationships and associations, caucuses members often work together to develop specific ideas that can become legislation.  During the 115th Congress and 116th Congress, members of the Problems Solvers Caucus periodically released proposals and legislation on important issues where caucus members believed Democrats and Republicans could find common ground.  For example, some of the Problem Solvers Caucus’s ideas eventually became law, including a proposal to repeal the medical device tax. At the moment, the Problem Solvers Caucus has been active during the 117th Congress around the bipartisan infrastructure framework.

Additionally, caucuses formed around diseases and medical issues are particularly active on creating health care legislation.  For instance, Reps. Diana DeGette (D-CO) and Tom Reed (R-NY), who co-chair the Congressional Diabetes Caucus, have introduced legislation to address high insulin prices and expand diabetes prevention programs.  Additionally, members of the Congressional Telehealth Caucus have introduced legislation to ensure some telehealth services temporarily expanded under the COVID-19 public health emergency are made permanent. 

What Is the Debt Ceiling, and Why Does It Matter?

On July 31, the federal government is scheduled to hit the debt ceiling, meaning it will no longer be able to borrow money.  Fights over the debt ceiling have been become increasingly common in recent years, and once again, lawmakers find themselves squabbling over what to do so the federal government is able to pay its bills.  If there’s anything Congress can’t do, it’s to take no action at all, as it would mean disastrous implications for both the US and global economy.

A Brief History of the Debt Ceiling

The debt ceiling, or debt limit, is a cap on the total amount of money the Department of the Treasury can borrow and is set by Congress.  The ceiling applies to nearly all debt accrued by the federal government, including over $21 trillion in debt held by the US public, and $6 trillion in debt the federal government owes itself for programs like Medicare and Social Security. 

It should be noted that debt and deficit have different meanings.  The deficit refers to the difference between revenue the federal government takes in from taxes and other sources across each fiscal year, while the debt refers to deficits accrued across multiple years. 

The debt ceiling wasn’t always around.  Originally, Congress signed off on all debt by authorizing individual bonds through legislation.  However, the cost of financing America’s involvement in World War I led Congress to establish a debt limit though the Second Liberty Act as a way to simplify the borrowing process and allow the Treasury Department to issue as many bonds as needed instead of waiting for Congress to approve every single bond. 

In recent years, rising national debt and an increasingly polarized Congress have made the process of raising the debt ceiling much more contentious.   Parties have occasionally sought policy concessions from one another in exchange for agreeing to raise the debt limit, leading to a few occasions where political brinkmanship has actually caused the federal government to hit the debt limit and trigger debt ceiling crises in 1995-1996, 2011, and 2013, when the government becomes uncomfortably close on defaulting on its debt. 

Enacted in August 2019, the Bipartisan Budget Act of 2019 suspended the debt ceiling to its current level of $28.5 trillion to July 31, 2021.

What Happens If the Debt Ceiling Isn’t Raised?

During a June 23 appearance before a Senate Appropriations subcommittee, Treasury Secretary Janet Yellen said a failure to raise the debt ceiling would have “catastrophic consequences” and could potentially lead to a financial crisis.  Indeed, hitting the debt ceiling would mean the federal government would eventually be unable to make its debt payments after a certain period of time.  This would result in the government defaulting on its debt obligations, something that have never happened in US history.   

With the government unable to pay its debts, millions of daily obligations including Social Security payments, salaries for federal civilian employees and military servicemembers, veterans’ benefits, utility bills, and others would be have to be at least temporarily defaulted.  Next, global financial markets would enter a state of turbulence, as both international and domestic markets rely on the stability of US financial instruments and the economy.  Additionally, interest rates would rise and the demand for Treasury securities would fall as investors begin to reconsider the safety of Treasuries and either pull back or stop investing entirely.  Higher interest rates would in turn have strong reverberations across the economy, impacting credit cards, mortgages, car loans, and other forms of borrowing and investment.

Even if the government doesn’t actually default on its debt obligations, the mere threat of default could result some negative economic consequences.  During the debt ceiling crisis of 2011, Standard & Poor’s downgraded the US credit rating from AAA to AA+ with the rationale that the debt limit fight was a sign of “America’s governance becoming less stable, less effective, and less predictable.”  During the 2013 debt ceiling crisis, credit agency Fitch warned it may cut the US credit rating due to political gridlock, and Chinese rating agency Dagong downgraded the US from A- to A.  In 2014, Fitch did however restore the US credit rating to AAA.

“Extraordinary Measures” to Stave Off Default

If the federal government does hit the debt ceiling on July 31, it won’t immediately default on its debt.  That’s because the Treasury Department can take so-called “extraordinary measures” that were previously deployed during the debt ceiling crises in 2011 and 2013.  Extraordinary measures are accounting maneuvers that allow the federal government to continue to borrow money and pay bills without exceeding the debt ceiling.  These measures usually involve not fully investing federal employees’ Thrift Savings Plan and civil service retirement plan funds in special Treasury securities.  For example, if federal employees have invested $100 billion in the Thrift Savings Fund, the Treasury could opt to issue only $90 billion to the fund, creating $10 billion that could be used to auction more debt to the public and raise more money for the Treasury.  After the debt ceiling is raised or suspended, investments in those funds would resume and lost interest is credited back to the accounts, leaving the savings and pensions plans unaffected.

But extraordinary measures only provide a temporary means for the government to pay its bills after the debt ceiling is reached, and it’s not clear how long the Treasury Department can exercise extraordinary measures after July 31.  According to a July 21 statement from the Treasury Department, the higher spending and revenues associated with the COVID-19 pandemic is driving uncertainty over how long extraordinary measures could allow the government to continue to meet its debt obligations.  For example, a July 21 report from the Congressional Budget Office (CBO) projected that extraordinary measures would probably run out sometime during the first quarter of the next fiscal year, which begins on October 1.  However, in a July 23 letter to Speaker Nancy Pelosi (D-CA), Yellen said there are scenarios where “extraordinary measures could be exhausted” soon after Congress returns from recess in early September.

What Will Congress Do?

As in the lead-up to previous debt crises, lawmakers in both parties generally agree on the need to increase the debt limit but have yet to settle on any specific proposals, such as raising the debt limit in a stand-alone bill or attaching a debt-ceiling increase to an annual spending bill. The most gridlock lies in the evenly split Senate, where Democrats have no path forward on attracting at least 10 Republican votes to overcome a filibuster on a measure to increase the debt ceiling.  In an interview with Punchbowl News on July 20, Senate Majority Leader Mitch McConnell (R-KY) threw cold water on any prospect of GOP support, saying “I can’t imagine there will be a single Republican voting to raise the debt ceiling.”  Just a day later, Sen. Lindsey Graham (R-SC) suggested Senate Republicans may seek policy concessions from Democrats on raising the debt limit when he pointed out that “about half the time the debt ceiling has been increased has been accompanied by something.”  Sen. John Thune (R-SD) later echoed Graham’s comments by expressing support for limits in discretionary spending, similar to approach used to resolved the debt ceiling crisis in 2011.

While Senate Democrats do have the option of bypassing the filibuster and adding a debt limit increase to the budget reconciliation process, doing so is fraught with challenges.  To use the reconciliation process, Democrats would have to add the debt ceiling increase to their $3.5 trillion infrastructure package, which is still under negotiation and would require unanimous support from all members of the Senate Democratic Caucus.  Additionally, the debt ceiling measure would require approval from the Senate parliamentarian, who decides what does and does not qualify for the reconciliation process.  Both the negotiation process and review by the parliamentarian would take up precious time, and the parliamentarian is not expected to rule on what can be included in the reconciliation process until after the Democrats pass their budget resolution next month

Regardless, lawmakers know that something must be done about the debt ceiling.  However, if recent history shows us anything, it’s that the federal government can at times get a little too close to defaulting on its debt, creating tangible consequences like lower credit ratings.  Over the next few weeks, the public will be watching closely as lawmakers attempt to walk a fine line between averting an avoidable economic crisis and addressing the nation’s growing debt.