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Bill to end government shutdown delays medical device tax for two years

January 22, 2018

The bill that President Donald Trump signed Monday night to reopen the federal government contained $31 billion in tax cuts, including a two-year delay in implementing a tax on medical devices. The provision was applauded by the life sciences and biotech industries.

This delay is a continuation of the previous two-year suspension of the device tax in 2016 and 2017 and will be retroactive to January 1, 2018, when the tax was briefly reinstated.

Indiana-based health care giant Cook Medical praised the measure. "The suspension of the device tax has helped us to continue investing in our company to ensure that we remain ready to serve the needs of patients and clinicians as health care continues to evolve," the company said in a written statement.

Cook Medical, which has 7,000 employees, said it would continue to urge lawmakers to permanently repeal the tax.

"We appreciate the acts of Congress to benefit patients and employees,” said Steve Ferguson, chairman of Cook Medical parent Cook Group, in a written statement. “Since the tax was implemented in 2013, U.S. medical device companies both large and small have faced uncertainty for the future related to innovation for patients ... Repealing this tax is crucial for patients who rely on medical devices and look to our industry to continue researching and developing projects that will innovate new therapies for those who need it most.”

The 2.3 percent medical device tax, was originally included in the Affordable Care Act to help pay for the law’s health insurance subsidies. The first payments under the tax would have been due by Jan. 29. It was expected to bring in about $3.7 billion during the next two years.

Indiana is home to 155 medical device makers, ranging from small metal shops to multibillion-dollar manufacturers, with about 17,000 employees. The sector has a combined annual payroll of $1.5 billion, according to the Indiana Medical Device Manufacturing Council.

 

Democrats relent on bill

The short-term funding measure signed by Trump ended a 69-hour display of partisan dysfunction after Democrats relented in return for Republican assurances that the Senate will soon take up the plight of young immigrant "dreamers" and other contentious issues.

Democrats provided enough votes to pass the stopgap spending measure keeping the government open until Feb. 8.

The measure includes a six-year reauthorization of the children's health insurance program, which provides coverage for millions of young people in families with modest incomes.

The vote set the stage for hundreds of thousands of federal workers to return on Tuesday, cutting short what could have become a messy and costly impasse. The House approved the measure shortly thereafter, and President Trump later signed it behind closed doors at the White House.

But by relenting, the Democrats prompted a backlash from immigration activists and liberal base supporters who wanted them to fight longer and harder for legislation to protect from deportation the 700,000 or so younger immigrants who were brought to the country as children and now are here illegally.

Democrats climbed onboard after two days of negotiations that ended with new assurances from Senate Majority Leader Mitch McConnell that the Senate would consider immigration proposals in the coming weeks. But there were deep divides in the Democratic caucus over strategy, as red-state lawmakers fighting for their survival broke with progressives looking to satisfy liberals' and immigrants' demands.

In return, McConnell agreed to resume negotiations over the future of the dreamers, border security, military spending and other budget debates. If those talks don't yield a deal in the next three weeks, the Republican promised to allow the Senate to debate an immigration proposal — even if it's one crafted by a bipartisan group and does not have the backing of the leadership and the White House, lawmakers said. McConnell had previously said he would bring a deal to a vote only if President Donald Trump supported it.

Sixty votes were needed to end the Democrats' filibuster, and the party's senators provided 33 of the 81 the measure got. Eighteen senators, including members of both parties, were opposed. Hours later the Senate passed the final bill by the same 81-18 vote, sending it to the House, which quickly voted its approval and sent the measure on to President Donald Trump.

White House press secretary Sarah Sanders predicted that operations would return to normal by Tuesday morning.

The plan is far from what many activists and Democrats hoped when they decided to use the budget deadline as leverage. It doesn't tie the immigration vote to another piece of legislation, a tactic often used to build momentum. It also doesn't address support for an immigration plan in the House, where opposition to extending the protections for the dreamers is far stronger.

The short-term spending measure means both sides may wind up in a shutdown stalemate again in three weeks.

Senate Democratic leader Chuck Schumer lent his backing to the agreement during a speech on the chamber's floor. "Now there is a real pathway to get a bill on the floor and through the Senate," he said of legislation to halt any deportation efforts aimed at the younger immigrants.

The White House downplayed McConnell's commitment, and said Democrats caved under pressure. "They blinked," principal deputy press secretary Raj Shah told CNN. In a statement, Trump said he's open to immigration deal only if it is "good for our country."

Immigration activists and other groups harshly criticized the deal reached by the Democratic leadership.

Cristina Jimenez, executive director of United We Dream, said the members of the group are "outraged." She added that senators who voted Monday in favor of the deal "are not resisting Trump, they are enablers."

Other groups such as the American Civil Liberties Union expressed disappointment and shared similar criticism.

A block of liberal Democrats — some of them 2020 presidential hopefuls — stuck to their opposition. Sens. Elizabeth Warren of Massachusetts, Dianne Feinstein of California, Kirsten Gillibrand of New York and Cory Booker of New Jersey voted no, as did Independent Bernie Sanders of Vermont.

Feinstein said she wasn't persuaded by McConnell's assurances and did not know how a proposal to protect the more than 700,000 younger immigrants would fare in the House.

Democratic Sen. Jon Tester of Montana voted no on the procedural motion to re-open the government — the only no vote among 10 incumbent Democrats facing re-election this year in states won by Trump in 2016. Tester said in a statement that the 17-day budget did not include any funding for community health centers that are important to his rural state, nor did the deal include additional resources for border security.

The votes came as most government offices cut back drastically or even closed on Monday, as the major effects of the shutdown were first being felt with the beginning of the workweek.

Republicans have appeared increasingly confident that Democrats would bear the brunt of criticism for the shutdown. The White House and GOP leaders said they would not negotiate with Democrats on immigration until the government was reopened, and White House officials boasted that Trump didn't reach out to any Democratic lawmakers during the shutdown.

In fact, Trump, who regularly disrupted negotiations in recent weeks, had been a relatively subdued player in the weekend debate. On Monday, he accused Democrats of prioritizing services and security for noncitizens over U.S. citizens. "Not good," his first tweet said. In a second tweet, he said, "Democrats have shut down our government in the interests of their far left base. They don't want to do it but are powerless!"

Trump's first tweet appeared to undercut comments by his legislative affairs director, Marc Short, who told CNN that the immigrants in question are law-abiding and "productive to our society." Short said the administration wants to "find a pathway for them" to stay in the U.S.

Although the Democrats initially dug in on a demand for an immigration deal, they had shifted to blaming the shutdown on the incompetence of Republicans and Trump. The Democrats seemed sensitive to being seen by voters as willing to tie up government operations to protect immigrants in the U.S. illegally.

In an impassioned closed-door meeting, Schumer told his members that McConnell's pledge was the best deal they were going to get.

On the Senate floor, No. 2 Senate GOP leader John Cornyn of Texas said that for shutting down the government, the Democrats "got nothing." He added that even though McConnell promised to take up the immigration bill by February, "he was going to do that anyway."

While lawmakers feuded, signs of the shutdown were evident at national parks and in some federal agencies. Social Security and most other safety-net programs were unaffected by the lapse in federal spending authority. Critical government functions continued, with uniformed service members, health inspectors and law enforcement officers set to work without pay.

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