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.

 

Manchin Reportedly Working to Revive Spending Package

Sen. Joe Manchin (D-WV) has given signals that he may be willing to negotiate on a slimmed down version of the previous Build Back Better bill, which he effectively killed in December 2021 after he announced his opposition to it on Fox News Sunday. This bill would likely focus on controlling drug prices, energy policy, and tax increases.

Any legislation he puts forth will still need the support of the 49 other Democratic senators (barring any GOP defections), including fellow moderate Kyrsten Sinema from Arizona. Sinema has been in the past been hesitant to support some of the tax increases proposed last year.

Biden’s Domestic Agenda Makes Progress While His Approval Lags

Several pieces of President Joe Biden’s domestic agenda moved forward in Congress this month. As part of an agreement with House progressives, more moderate members of the House Democratic caucus promised to vote for Biden’s larger social spending package if progressives backed the infrastructure bill. Both sides adhered to the agreement, and the House passed the House after it was passed by the Senate earlier this year. Biden has since signed the bill into law. The House also passed the social spending package, now titled the ‘Build Back Better Act,’ where it now faces an uncertain future in the Senate.

While Democratic leadership has been aiming to pass the package by Christmas, Sen. Joe Manchin (D-WV), who has frequently criticized the bill’s cost and scope, refused Monday to commit to voting on the bill by the end of the year.

Democrats hope that the passage of both bills will increase Biden’s approval ratings, which have declined over the past several months. Biden experienced no boost after the passage of the infrastructure bill earlier this month, and while some recent polls have shown some slight improvement to his net approval rating, he remains underwater in the RealClearPolitics and 538 polling aggregates.

This comes as Republicans have grown increasingly bullish on their chances to take over Congress after the 2022 midterm elections. Recent polling has shown the GOP with a lead over Democrats in the generic congressional ballot polls, an indicator of how a party will perform overall in the general election nationwide.

 

Democrats Struggle to Pass Biden’s Agenda

Democratic leaders in Congress must thread the needle between the ideologic ends of their party as they attempt to pass two massive spending bills, one geared towards upgrading and adding to the nation’s physical infrastructure and one aiming to increase the social safety net and expand other social programs. The cost of the first is estimated to be around $1.2 trillion; the second around $3.5 trillion. President Joe Biden has made both plans centerpieces for his agenda.

The $3.5 trillion plan can be passed under Senate reconciliation rules, in which a simple majority is needed to pass the plan. This would allow it to pass without any Republican votes. However, it faces an uncertain future in the House if moderate House Democrats oppose it. Their opposition, in turn, could lead progressives to oppose the infrastructure bill. Not passing either bill would hand President Biden a major political defeat in his first year in office.

Progressive Democrats have vowed to vote against the infrastructure plan, which enjoys some bipartisan support, if the social spending plan is not passed to their liking. Meanwhile some moderates in the Senate have balked at the large price tag of the $3.5 trillion plan, which Democrat leaders claim is fully paid for by tax increases primarily on wealthy households and from increased IRS audits. Sens. Joe Manchin (D-WV) and Kirsten Sinema (D-AZ) have both said that they will not support $3.5 trillion in new spending.

Adding to these challenges is the need to raise the federal debt ceiling to prevent default on the government’s financial obligations. The House and Senate did reach an agreement to avoid a government shutdown, which Biden signed into law on Thursday.

 

After Coronavirus Stimulus Bill, Democrats Eye Larger Plans

The American Rescue Plan, President Joe Biden’s $1.9 trillion coronavirus stimulus bill, passed Congress on a party line vote this month, delivering $1,400 checks to most Americans, extending unemployment benefits, and allocating billions for various spending plans. While the plan only passed narrowly, many Democrats in Congress hope their small majorities in Congress will be enough to pass more ambitious plans, including a $3 trillion infrastructure plan, direct tax hikes on upper-income Americans, and gun control bills.

Democrats hope to pay for many of their plans through direct tax increases on those making $400,000 or more per year, as well as through increased enforcement of tax laws though increased audits.

On gun control, a longtime Democratic priority, Sen. Chris Murphy (D-CT) claims that the Senate can pass a bipartisan bill to expand background checks, something echoed by Sen. Pat Toomey (R-PA). However, such a bill may be seen as too weak by more liberal Democrats, and will almost certainly draw strong opposition from most Republicans, casting doubt on Murphy’s and Toomey’s claims.

Some Democrats are calling for the elimination of the filibuster, the parliamentary rule which prohibits the Senate from advancing most legislation without 60 votes. President Biden has not called for the complete elimination of the filibuster, but has signaled openness to “reform,” remaining unclear on what changes to it he would support. Sen. Joe Manchin (D-WV), considered the swing vote in the Senate, has said he would not support elimination the filibuster, but, like Biden, has signaled that he could be open to certain changes that would allow legislation to pass more easily.

 

House Passes Stimulus Bill, Faces Uncertainty over Minimum Wage

The House of Representatives passed President Biden’s $1.9 trillion stimulus package on Saturday. The bill includes measures related to increased funding for COVID testing, school funding, stimulus checks, and assistance for  rent and food. In addition, it extends unemployment benefits and provides money to states to fund their liabilities.

The bill also contains language to raise the minimum wage to $15 an hour over the next several years. However, this clause will have to be removed if the Senate wishes to pass the bill under reconciliation, which would allow the bill to become law with only 51 votes, rather than the 60 votes needed to end debate and pass the bill. The Senate parliamentarian ruled this past week that the minimum wage increase could not be included in a reconciliation bill because it did not directly affect government revenues and expenses. Proponents of the minimum wage increase, such as Sen. Bernie Sanders (I-VT), argued that the minimum wage increase would increase government revenue through more taxes because of the increased wages paid and is thus eligible.

Republicans in the Senate have signaled opposition to the minimum wage increase, saying it will increase unemployment as employers would lay of workers for whom they could no longer afford their wages. Some moderate Democratic senators have also signaled opposition, such as Joe Manchin of West Virginia, who has said that the $15 minimum is too high for his state’s employers to pay for many of their workers.

President Biden has seemed to concede that the minimum wage clause will not be included in the reconciliation bill, promising to take it up as a stand alone bill in the future.