President Biden outlined a bold agenda in his first joint session of Congress, all within the traditions of a State of the Union Address, but attention will remain on the “infrastructure” package – which remains the most likely to pass.
Beyond infrastructure, healthcare, immigration reform, a pivot to confront autocracies in China and Russia, police reform, gun reform, and foreign affairs dominated the key provisions of the speech.
Biden made direct appeals to Republicans for bipartisan solutions and frequently ad-libbed that seemed to soften some of the rhetoric in his speech – which we view as a signal of his willingness for compromise. However, the political reality is that few currently view bipartisan solutions as likely.
Infrastructure/American Families Plan. The strategy mirrors what we saw during the debate on the American Rescue Plan – the administration is open to input/compromise, but expects Congress to act to deliver “once in a generation” infrastructure investment.
Tax changes. Biden emphasized a minimum corporate tax targeting around 50 of the highest earning companies, reforms to the international tax code, and stepping up IRS enforcement to capture lost revenue.
Healthcare priorities. Biden addressed his already-stated priorities: administering covid vaccinations, maximizing health insurance coverage, heightening investments in health innovation, and lowering drug prices.
Medical innovation. Biden’s emphasis on funding research, as well as talking about great advancements on the horizon in biotechnology could lead some, in our view wrongly, to interpret his statements as an incremental positive for pharmaceuticals.
Health insurance. Pelosi sent a message to her caucus to get behind ACA subsidy changes and not push for too much like a public option or lowering the Medicare age.
Drug pricing. For those who hoped the debate was over for industry, the seriousness of Biden’s comments may come as an unwelcome development.
China/Russia challenges. We generally see the U.S. national security strategy as transitioning from combating legacy threats to preparing for confrontation with adversary nation-states.
Immigration reform. The political reality is that most, if not all, of the action on immigration is likely to come through executive order.
Republican response. Sen. Tim Scott outlined areas of potential compromise on “traditional” infrastructure – which may be an opportunity for the reauthorization of the Surface Transportation Act.
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