Manchin and Schumer Announce Reconciliation Deal

Sen. Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY) announced Wednesday that they had reached an agreement to revive a slimmed down version of the ‘Build Back Better Act’ that Manchin had rejected in December 2021. Perhaps most surprisingly, the revived deal includes climate change expenditures and tax increases that Manchin had claimed he had ruled out earlier this month following months of negotiations between him and Schumer. Any revised deal had been expected only to include an extension of Obamacare health care plan subsidies and a drug pricing negotiation package aimed at reducing the cost of prescription drugs.

The deal now includes a minimum tax rate on corporations of 15% of their book profit, preventing them from using depreciation expenses to reduce their tax rate below 15%. It also eliminates the carried interest loophole.

Perhaps the most controversial part of the bill is the $80 billion given to the IRS over the next 10 years, the bulk of which will be used for increased audits in an attempt to raise revenue for the federal government. Proponents of the plan, such as Sen. Ron Wyden (D-OR), claim the increased audits will catch high income tax cheats and will pay for themself. Opponents, including most Republicans, claims the IRS will target ordinary taxpayers to raise the revenue, especially the self-employed. The bill’s language does not currently limit the IRS’s increased enforcement budget to only audits on high income/high net worth individuals or corporations.

This plan will need the support of all 50 Democratic senators to pass the Senate. Moderate Democrat Kyrsten Sinema of Arizona has not yet announced her position.

 

Democrats Attempt Last Push for Build Back Better Revival

Democrats are working to pass a slimmed down version of the Build Back Better bill that failed to pass last year, with Senate Majority Leader Chuck Schumer (D-NY) negotiating with Sen. Joe Manchin (D-WV), whose opposition sunk the bill last time, to agree to a smaller package focused on tax increases, deficit reduction, and climate spending, among other proposals.

Manchin and Schumer are reportedly close to a deal to allow the federal government to negotiate drug prices and limit price increases to the inflation rate. Such a proposal will need to be approved by the Senate parliamentarian to include in the reconciliation bill, which will allow Democrats to pass the bill by a simple majority and without any Republican support.

Any package will need the support of all Democrats in the Senate, including moderate Sen. Kyrsten Sinema of Arizona, who has signaled her opposition in the past to raising certain taxes.

Senate Minority Leader (R-KY) sent a tweet Thursday saying that Republicans will not help move forward a bill aimed at competing with China so long as Democrats are pursuing the reconciliation package.

 

Shutdown Ends, For Now

The longest federal government shutdown in history ended last Friday, with no permanent concluding agreement reached. Under the temporary agreement, funding for federal government agencies was restored until February 15, after which government funding will expire unless a new agreement occurs.

The shutdown began on December 22, after President Donald Trump and congressional Democrats, led by House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, failed to come to a agree on funding for a wall along the US-Mexican border. Trump wanted at least $5.7 billion in funding for building a barrier and increased border surveillance, while Democrats criticized such measures, with Pelosi going as far as to call a wall an “immorality.”

During the shutdown, Trump and Pelosi tussled over other areas of government, including Trump’s refusal to authorize a trip by Pelosi to the Middle East and Pelosi refusing to allow Trump to give the State of the Union speech in the House chamber.

Trump agreed to end the shutdown last week, without receiving any promise for funding, but also saying that he will attempt the same fight again next month. If Congress does not allocate funding for a border wall, Trump has threatened, he will declare a national emergency to divert funding to begin some of the construction. Trump cites the number of people crossing illegally and crime committed by those in the country illegally as justifying such a decision. Democrats have criticized Trump for this threat, as have some Republicans, saying that such as move creates a bad precedent for future administrations.

No End in Sight for Federal Government Shutdown

The government shutdown resulting from disagreement over the funding of a border wall continues into 2019 with no end in sight.

The shutdown began on December 22 after President Trump and Democrats failed to find agreement on funding the president’s signature campaign promise, a border wall across much, if not all, the US-Mexican border. Trump had asked Senate Minority Leader Chuck Schumer (D-NY) and incoming House Speaker Nancy Pelosi (D-CA) for $5 billion in funding for such a wall, which they have refused to support. With Trump in opposition to any spending bill that funds the government without wall funding, Republicans have been unwilling to support any spending bill without it. While Republicans hold the House until January 3, 2019, Senate Democrats have blocked measures that include wall funding as such bills need 60 votes to pass. Republicans hold a 51-49 majority in the Senate. While Republicans will gain net two seats in the coming Congress in the Senate, there will be still enough Democrats to block funding. In addition, the incoming Democratic majority in the House will also not be supportive of Trump’s requested funding.

Shutdowns lead to the suspension of numerous federal government services and the furloughing of government employees. The effects of this shutdown have been mitigated by two spending bills passed right before the main government funding resolutions expired. This money is expected to run out for many agencies, such as the Smithsonian, at the beginning of 2019.

Services deemed essential, such as those related to the military, continue to be funded.