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At least one member of Congress wants to take away your credit card rewards points. Let me explain. Earlier this week, Sen. Roger Marshall (R-Kan.) filed his Credit Card Competition Act (CCCA) as an amendment to S. 1582, the GENIUS Act, currently being considered on the Senate Floor. The CCCA would severely harm the ability of many to access credit and popular rewards programs. Its champions, Sens. Marshall and Dick Durbin (D-Ill.), claim that the credit card marketplace is uncompetitive. However, this is not backed by any facts. There are more than 5,000 credit card issuers marketing directly to consumers. The senators’ claims of anti-competitiveness are patently false. Passing the CCCA would heavily restrict or prohibit credit card companies from offering rewards programs. A 2024 study by the Electronic Payments Coalition revealed that low, middle, and high-income households earn and redeem credit card rewards. The study also highlighted that the increase in rewards card offerings has made low-income households equally likely to hold a rewards card as higher-income households. Rewards programs have proven to be a meaningful tool of economic relief for credit card users, which can be particularly valuable in times of economic uncertainty. The study also showed that credit card users use cash back rewards and miles to offset any big-ticket expenses or emergency expenses, such as gifts or surprise bills. As consumers currently face economic turbulences removing credit card rewards programs would remove a safety net for the millions of users that have saved up an estimated $38 billion in rewards currencies last year.
It’s The Spending
Moody’s is just the latest credit rating agency to sound the alarm on America’s $36 trillion spending problem. Listening to politicians and pundits, no one would ever think the U.S. has a massive spending addiction that is catapulting the country toward a fiscal crisis. Too many seem to think that raising taxes is the key to reducing deficits, lowering inequality, improving healthcare, or really anything else. Democrats have branded Republican efforts to keep taxes from going up on more than 60 percent of tax filers “the most fiscally irresponsible [move] in America’s history” and slammed “harsh cuts to programs Americans depend on the most.”
There’s simply no evidence that America’s tax rates are bleeding Washington, D.C. dry. Compiled by the Federal Reserve Bank of St. Louis, the evidence going back nearly a century is available for all to see. In the seven (full) years since the 2017 Tax Cuts and Jobs Act (TCJA), the federal government’s revenue collections have totaled about 16.7 percent of national wealth—measured through Gross Domestic Product (GDP). For context, the twenty years before the 2017 tax cuts saw average revenues at just under 17 percent of GDP. That was when U.S. corporate tax rates were the highest in the world, and small businesses often had their “pass-through” income taxed at high (individual) marginal rates. Yet, for all the high costs and low growth caused by these sky-high rates, the change in revenue after the tax cuts is barely a blip on the radar. Interestingly, the federal government is collecting more money in the post-2017 tax cut era than it did in the 1951–1963 period, when top individual tax rates hovered between 91 percent and 92 percent. Not surprisingly, “the existence of the 91 percent bracket did not necessarily lead to significantly higher revenue collections from the top 1 percent [because] the existence of a 91 percent bracket led to significant tax avoidance and lower reported income.” And, current tax revenues as a proportion of national wealth are right on par with the eight-decade post-World War II average of 16.8 percent. That is true despite (mostly) higher taxes throughout that era than exist today. There’s just not much evidence that high taxes can keep revenues high or deficits at bay.
On the other hand, overspending reliably drives debts and deficits. Since fiscal year (FY) 2015, federal outlays have increased by an astounding 83 percent. Net federal spending is now more than 23 percent of GDP, compared to the post-WWII average of 19.4 percent. And, according to the Congressional Budget Office, the situation will only get worse. Even assuming robust revenue growth, the federal deficit will approach $3 trillion by 2035 unless spending is brought under control. The good news is there are plenty of steps policymakers can take to wipe away the red ink. Gargantuan spending items such as the Department of Defense (DoD), Medicare, and Medicaid offer some of the largest savings’ opportunities. For example, Medicaid currently spends about $9,000 per year (or $750 per month) per beneficiary. And, even that large sum doesn’t account for more than $100 billion in annual program overhead costs. If Medicaid dollars were given directly to beneficiaries to spend on mid-tier private health insurance plans (which typically cost $500 per month), taxpayers could save at least $200 billion per year. And, Medicaid recipients would have private insurance, which is typically far better than Medicaid.
There is plenty that lawmakers can do to reduce the debt and deficit. But, unless they focus on overspending, they won’t make a dent in dollars or cents. Washington, D.C. must rethink how it spends taxpayers’ hard-earned money.
Most favored nation is a destructive price control
Earlier this month, President Donald Trump signed an executive order directing the administration to implement a “Most Favored Nation” policy for certain prescription drugs. MFN is a drug payment model that implements heavy handed price controls that will align U.S. drug prices with the lowest price offered in foreign countries, meaning the U.S. will pay the lowest price for pharmaceuticals when compared to other countries. This sounds great at face value, but will ultimately destroy the biopharmaceutical market, will harm patients, hinder future research and development, and result in fewer new life saving cures. Trump failed to institute a similar MFN policy in November 2020, aimed at reducing Medicare spending. There is strong opposition to MFN in Congress, and for good reason. The rule, published by the Centers for Medicare and Medicaid Services, would have applied to Medicare Part B drugs and set an international pricing benchmark. The rule said that the U.S. price for high-cost drugs would be based on the lowest price paid by comparable countries. It faced immediate legal challenges in the District of Maryland (Association of Community Cancer Centers v. Azar), Northern District of California (Biotechnology Innovation Organization v. Azar), and Southern District of New York (Regeneron Pharmaceuticals v. U.S. Department of Health and Human Services). The proposal violated the Administrative Procedure Act’s requirement for public participation in rulemaking. The Biden administration withdrew the rule in January 2021.
MFN is nothing more than a destructive price control that will distort the market and result in fewer new drugs being developed. The goal of lowering drug prices is noble, but instituting price controls that will align U.S. prices with foreign countries will backfire and end up harming patients. CMS agrees that a MFN policy will create unneeded complications for patients, “If MFN participants choose not to provide MFN Model drugs or prescribe alternative therapies instead, beneficiaries may experience access to care impacts by having to find alternative care providers locally, having to travel to seek care from an excluded provider, receiving an alternative therapy that may have lower efficacy or greater risks, or postponing or forgoing treatment. There is significant uncertainty with these potential effects of the MFN Model.” MFN completely undermines U.S. biopharmaceutical leadership on a global scale by destroying research and innovation, especially for patients living with rare and chronic diseases. This model would follow some of the worst policy blunders of the Biden administration. Price controls established under the Inflation Reduction Act’s Medicare drug price ‘negotiations,’ have already slashed investment in small-molecule drug development alone by 70%.
MFN is, in essence, a tax on an industry that supports more than 5 million jobs. The biopharmaceutical industry should be focused on developing record-breaking lifesaving drugs, not navigating a patchwork of foreign price control regimes. Any increase in Medicaid rebates is simply a mandatory transfer of funds from private corporations to the government. Manufacturers already face Medicaid rebates of more than 100% of the cost of the drug for some medicines.
Congress and the administration should focus efforts on reforming Medicaid and Medicare by reducing waste, fraud, and abuse within the system and improper payments to help push back the impending insolvency.
BLOGS:
Monday: Congress Should Restore Full Interest Deductibility in the Tax Code
Tuesday: Postal Service Doesn’t Trust Americans with their Mailboxes
Wednesday: Most Favored Nation is a Destructive Price Control
Thursday: The House of Representatives Advances H.R. 1, the One Big Beautiful Bill Act
Media:
May 15, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) interviewed me for their story on the Mayor's plan to cut property tax rates.
May 15, 2025: The Well News ran TPA's op-ed, “Mandating 'Preventive Services' Not What the Doctor Ordered”
May 15, 2025: Fox 8 WVUE (New Orleans, La.) mentioned TPA in their story, “Bill that could lead to higher short-term rental taxes in New Orleans advances in the legislature.”
May 16, 2025: Townhall ran TPA's op-ed, “Congress Should Restore Full Interest Deductibility in the Tax Code.”
May 16, 2025: Issues & Insights ran TPA's op-ed, “GAO Confirms Again: Federal Broadband Programs Waste Taxpayers' Money.”
May 16, 2025: The Baltimore Sun (Baltimore, Md.) mentioned TPA's in their story, “Baltimore stop sign camera initiative faces cost concerns, taxpayers' frustration.”
May 18, 2025: Vaping Post ran TPA's op-ed, “From Harm Reduction to Harm Reversal? The UK's Disposable Vape Ban Leaves Users Adrift.”
May 18, 2025: The Washington Examiner (Washington, D.C.) ran TPA's op-ed, “Most favored nation is a destructive price control.”
May 18, 2025: Blaze Media ran TPA's op-ed, “How Republicans can shut down this overbearing agency once and for all.”
May 18, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) mentioned TPA in their story, "Baltimore officials slammed for $30k Vegas trip amid massive city deficit."
May 20, 2025: Townhall ran TPA's op-ed, “It's the Spending, Stupid.”
May 20, 2025: Business World mentioned TPA in their story, “After 20 Years Of Its Tobacco Treaty, The WHO Has Little To Celebrate."
May 20, 2025: State News Service mentioned TPA in their story, “LAHOOD, DAINES INTRODUCE THE JOBS FOR SUCCESS ACT."
May 20, 2025: Business World mentioned TPA in their story, “After 20 Years Of Its Tobacco Treaty, The WHO Has Little To Celebrate."
May 20, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) mentioned TPA in their story, “Maryland's new $67B budget includes more than $1 bill in new taxes and fees."
May 20, 2025: WCNC NBC (Charlotte, NC) interviewed David McGarry for their story on the alleged settlement with Charlotte-Mecklenburg Police Department Chief.
May 21, 2025: DC Journal ran TPA's op-ed, “Medicaid Reform Doesn't Go Far Enough”
May 21, 2025: WJLA.com (Arlington, Va.) mentioned TPA in their story, “Maryland's newly passed budget includes more than $1 bil in new taxes and fees."
May 21, 2025: RealClearMarkets ran TPA's op-ed, “Online Age Verification: The 'Show Your Papers' of Digital Age."
May 22, 2025: WBFF Fox45 Baltimore (Baltimore, Md.) interviewed me for their story about Baltimore City politicians going to Las Vegas for a convention.
May 22, 2025: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the reconciliation bill passed by the House.
May 22, 2025: The Baltimore Sun ran TPA' op-ed, "USPS Law Enforcement Needs to Focus on Mail Crime."
Have a great weekend!
Best,
David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 500
Washington, D.C. xxxxxx
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