Early this morning, the House of Representatives passed the Republican reconciliation package (H.R. 1) with a vote of 215-214-1. Every Democrat in the House voted no.
The 2 Republicans who voted against the bill, Congressman Thomas Massie (KY-4) and Congressman Warren Davidson (OH-8), opposed the legislation as they wanted to see further federal funding cuts. They held out hoping for full dismantlement.
This bill includes the largest cuts to healthcare in American history. This loss of funding – nearly one trillion dollars – will eliminate healthcare coverage for at least 13.7 million Americans and make it harder for people to access vital medical services. In Medicaid alone, funding is cut by more than $730 billion, which will leave 7.6 million people uninsured. The Virgin Islands presently has 21,000 Medicaid enrollees presently, many of whom will be impacted through loss of service or disenrollment.
Medicare funding was cut by more than $500 billion and vital programs, including the Social Services Block Grant – which provides more than $4.2 million to the Virgin Islands – are eliminated until 2034. With 20,000 Medicare enrollees in the U.S. Virgin Islands, services are sure to be impacted. Federal funding for the Virgin Islands’ Meals on Wheels Program and the Low-Income Home Energy Assistance Program (LIHEAP) has also been eliminated until 2034.
Republicans’ reconciliation bill will make everyday life more expensive for Americans and removes programs which gave opportunities and support for a better life. It is estimated that more than 4 million students will see a reduction, or elimination, of their Pell Grants. The requirements for ‘full-time’ students are increased from 12 to 15 credits, which will decrease the maximum award for any student taking 12 credits by $1,479. In addition, students that are enrolled less than half-time will no longer receive Pell aid.
This bill harms efforts to lower energy costs, increase clean energy manufacturing and jobs, and eliminate economic assistance for communities on the frontline of the climate crisis. Unobligated funds will be rescinded from Inflation Reduction Act programs, including Environmental Justice Block Grants, State-Based Home Energy Efficiency Contractor Training Grants, and the Greenhouse Gas Reduction Fund. One of these programs already in place in the Virgin Islands is the Solar for All Program, which provided $62.5 million for homes and businesses.
Republicans voted to cut $35 billion in funding for the Supplemental Nutrition Assistance Program (SNAP), which includes children, working families, seniors, veterans, and people with disabilities. This includes a $1 million cut to the Summer Electronic Benefits Transfer (EBT program), which gives food assistance to children when they cannot rely on school lunches. This will impact the more than 15,000 Virgin Islands residents who rely upon SNAP for access to nutritious food for their wellbeing. The $35 billion cut includes a $1 billion decrease in funding for the Nutrition Assistance Program in Puerto Rico despite tremendous efforts and advocacy from their lobbyists, led by Republican Governor, Jenniffer Gonzalez-Colon and Congressman Pablo Hernandez.
The reconciliation bill does not provide the increased rum cover over rate. Rum cover over is the rebate of federal excise taxes on distilled spirits produced in or imported into the rest of the United States from the Virgin Islands and Puerto Rico. Despite Congresswoman Plaskett’s success in securing a Republican lead for the rum cover over legislation (H.R. 1378), Congressman Ron Estes (KS-4), and the support of 24 of her colleagues – 16 Republicans and 8 Democrats – the extension for Puerto Rico and the Virgin Islands was not included in the bill.
It is unfortunate that at the last minute while trying to find additional funds, the Republicans attempted to remove duty drawback – an export-promotion program that American alcohol and tobacco companies rely upon for a refund of duties paid at the time of import when similar goods are exported. That program saves the alcohol industry alone approximately $30 billion. Because of that concern, the full push of the rum industry was not present for rum cover over as the industry prioritized its efforts on safeguarding duty drawback which represented direct dollars to their industry. It’s also important to recognize that many discretionary provisions that made it into the bill were included to secure the necessary votes to advance the legislation – which ultimately was not the case with the provision for an increased rum cover over rate.
During an 18-hour markup in the Ways and Means Committee for the tax provisions of the reconciliation bill, Congresswoman Plaskett offered an amendment to increase the rate of the rum cover offer, to publicly demonstrate the bipartisan support for this provision. Both Democrats and Republicans emphasized the importance of the increased rum cover over rate. The Ways and Means Chairman, Jason Smith, publicly stated that he would work to advance this, and the Committee is expected to craft a bipartisan tax bill this summer. “I will continue to work with my colleagues, Democrats and Republicans, to secure the increased rum cover over rate of $13.25, both retroactively and with an extension, for the Virgin Islands and Puerto Rico.”
While Congresswoman Plaskett cannot support the bill in its entirety, Plaskett’s legislation, the Restore Economic Vitality and Investment in the Virgin Islands (REVIVE VI) Act is included in the Republicans’ bill – one of only four Democrat Ways and Means provisions. REVIVE VI fixes an unintentional consequence of the Global Intangible Low Tax Income (GILTI) regime which, as a practical matter, inadvertently overrode the U.S. Virgin Islands’ economic development program that was previously authorized by Congress. This provision restores the Virgin Islands’ right to have an economic development program which will benefit our economy and workforce.
The U.S. Senate is anticipated to draft an entirely different bill that proposes fewer cuts to critical programs. Then, the Senate bill and House bill will likely be negotiated on a version that can be passed in both chambers of Congress and then be signed by the President.
Congresswoman Plaskett shared, “This bill is a wholesale betrayal of the working class and the future of America. The nonpartisan Congressional Budget Office found that the bottom 10%–working- and middle-class Americans will be 4% poorer in household wealth under this bill, with most of the benefits going to the top 10% of Americans. Not only does the bill make the largest healthcare cut in our nation’s history, it also makes the largest cuts to food assistance, energy projects and Pell grants. All to give additional money to the wealthiest Americans – an average of $278,000 per year, $762 per day, to the top 0.1% of Americans. This bill is cruel, shameful, unfair and unamerican.”
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