Francis Chung/E&E News/Politico via AP Images
Sen. Joe Manchin (D-WV) makes a telephone call outside the U.S. Capitol, February 17, 2022.
It is with great regret that I have to once again discuss Joe Manchin’s thoughts on the Biden agenda. I have lost count at how many different iterations of what was once called the Build Back Better Act Manchin has formulated, but last week a new one emerged, a bare-bones version where half of whatever revenues were raised in the legislation would be set aside for deficit reduction.
There have been so many mutually contradictory offers and objections from Manchin that it’s admittedly hard to muster up the energy to take this latest one seriously. Remember that Manchin signed a document last July with a host of red lines for a party-line package accomplished through budget reconciliation. Substantially all of those red lines were honored in the Democrats’ version of Build Back Better. Then Manchin said the real problem was budgetary gimmicks that hid the true cost of the programs in the bill. At the same time, Manchin led the way on passing a bipartisan infrastructure law that is pretty much only funded through budget gimmicks.
Then Manchin offered a $1.8 trillion package privately to the White House, but got mad when some administration officials blamed him for the impasse, and withdrew the offer. Then he said the biggest issue was that Senate Democrats didn’t go through the committee process to mark up the bill, although that’s not part of his demands now. Then he said the problem was encouraging unionization at electric-vehicle companies, or a provision that would end offshore drilling.
The whole sorry song and dance tends to suggest that Manchin has been dishonestly advancing one pretext after another for a year to cover for his unwillingness to move forward on the Biden agenda.
Now we have yet another set of conditions, which are as tantalizing as they are frustrating. I think the bulk of the party has been ground down enough that they’re fine with Manchin literally writing the bill to his liking and putting a sad end to the will-he-or-won’t-he charade. But the same obstacles that have prevented progress thus far remain present in this latest offer.
Here’s what Manchin is claiming he wants, as of last Wednesday. He wants to start by building a revenue package out of tax reform and savings from cheaper prescription drugs. Progressive Caucus leader Pramila Jayapal (D-WA) seems comfortable with that approach.
The problem, of course, is that taxes and prescription drugs happen to be the two areas where Kyrsten Sinema (D-AZ), who has been the quieter block on a Build Back Better deal all along, has been resistant to anything far-reaching. Last October, Sinema reached agreement with the White House on a prescription drug deal, but it was so weak that it was left out of the White House framework agreement because its inclusion would anger most of the House Democrats who had been working on the issue.
The Sinema/White House deal significantly narrowed what drugs Medicare could negotiate on price with drug companies. Only hospital-administered drugs that have run out of patent protection would be eligible. Under the deal, out-of-pocket caps would be instituted for seniors with Medicare drug benefits, and clawbacks would be instituted for companies that raised prices above the rate of inflation. Estimates of the Sinema deal were at about $200 billion in savings over ten years, compared to more than twice that for the consensus House reform.
Presuming that Manchin doesn’t simply change his mind and throw this out after seeing new inflation numbers, would this shrunken deal be worth pursuing?
Manchin would add to that tax reform, but Sinema has rejected any increase in rates for individuals or businesses. The White House actually came up with $2 trillion in offsets that honored that red line, including a surcharge on multimillionaires, a corporate minimum tax of 15 percent, and investments in the IRS to collect more of what is owed. But it’s not clear that all of the White House provisions would be amenable enough to get 50 votes. For what it’s worth, Sinema’s spokesperson told Politico that there are “enough tax reform options” to pay for whatever Manchin wants to do.
So at the absolute most, you have $2.2 trillion in potential revenue. I’d be shocked if the package would include all of that, given that the original Build Back Better process topped out at $1.8 trillion. So let’s be optimistic and use that as the marker.
Half of that $1.8 trillion would have to go to deficit reduction, leaving $900 billion for new programs, all of which would have to be permanent and paid for over the long term. And there’s a strong bias on Manchin’s part for the only new programs to be on climate and energy. “The revenue producing would be taxes and drugs. The spending is going to be climate,” Manchin told reporters.
The most recent Biden framework had $555 billion for clean-energy tax credits and investments. But Manchin wants an “all of the above” approach to energy—he’s the one spearheading the effort to ban Russian energy imports on the idea that we can make up for that with domestic oil and gas. Not only would the current compromise tax credits for nuclear and even hydrogen energy need to be sustained; negotiators would probably have to throw in fossil fuel subsidies or supports or some other enticements to make the deal. The current clean-energy subsidies would reduce emissions by between 13 and 22 percent, according to one analysis. But additional compromises on dirty energy would reduce that effectiveness.
All the other spending in Build Back Better would have to fit into the small space leftover. There are almost no programs that would fit into that space if their ten-year cost would have to be realized in full in the bill. Maybe universal pre-K, a Manchin favorite, could be squeezed in at around $300 billion. Maybe extending Obamacare subsidies that expire at the end of this year could get through, though not for a full ten years.
But that assumes a $1.8 trillion bill where the dirty-energy credits or investments aren’t all that expansive. I suspect the more likely scenario is a bill with nothing more than energy on the spending side, with everything else raised in revenue going to deficit reduction.
Presuming that Manchin doesn’t simply change his mind and throw this out after seeing new inflation numbers, would this shrunken deal be worth pursuing? Jayapal told The Washington Post she would be open to it. You can understand her perspective for two reasons.
One, it’s the only deal available; the alternative is doing nothing. And two, the stakes for the climate and the future of the planet continue to rise. With oil prices spiking, a new IPCC report showing even more disastrous consequences from a warming planet, and the Supreme Court about to rewrite the Clean Air Act to prevent it from being used to regulate carbon in the atmosphere, there is increasing urgency to get the clean-energy tax credits in place before Republicans who have no interest in the matter regain one or both chambers of Congress.
Essentially there’s been a forced prioritization at the barrel of Joe Manchin’s gun. Climate policies, tax reform, and lowering drug prices is a decent if incomplete agenda, and the Manchin framework would offer it. But the climate bill starts to look more like an all-of-the-above energy bill, and if the drug price reform is weak and easily gamed, and if the tax policies aren’t very well targeted, and if the deficit reduction continues to put fiscal policy on the path of a drag on growth, all Democrats will have a lot to think about.
Trimming your sails can sometimes be part of the ugly compromise of legislating. If it turns into slashing the sails and deliberately sailing the ship into the briny deep for unclear at best reasons, one wonders exactly what the upside benefit is.
