Manchin undercuts Biden, leaving his agenda in limbo

Sen. Joe Manchin (W.Va.) stunned fellow Democrats on Sunday by announcing he would not vote for President Biden’s ambitious climate and social spending bill, which his allies saw as the crowning legislative achievement of the president’s first term.

Biden’s plans to address global warming and wealth inequality will now have to be substantially reworked if they are to become law, with many of his policy proposals potentially shelved in order to get Manchin’s vote.

Manchin’s warning Sunday that the Build Back Better bill would fuel inflation and risk American energy independence means that Democrats may have to narrow their focus to only a few priorities, such as the expanded child tax credit, and dramatically pare back spending and incentives for green energy.

White House chief of staff Ron Klain on Sunday retweeted a statement by New Democrat Coalition Chair Suzan DelBene (Wash.) calling for negotiators to prioritize fewer reforms and enact them for more years.

“We believe that adopting such an approach could open a potential path forward with this legislation,” she said.

Senate Majority Leader Charles Schumer (D-N.Y.) informed colleagues in a letter Monday morning that he will keep scheduling votes on Build Back Better until some version of the bill passes the Senate.

“We simply cannot give up. We must and we will keep fighting to deliver for working families,” he wrote.

“We are going to vote on a revised version of the House-passed Build Back Better Act — and we will keep voting on it until we get something done,” he pledged.

One of Manchin’s chief criticisms of the bill is that it masked its likely real impact on the deficit by sunsetting popular programs after only one or a few years in anticipation that Congress would bow to political pressure and extend them in the future.

Manchin on Sunday cited an analysis from the Congressional Budget Office that renewing all the proposals of the bill would cost more than $4.5 trillion over 10 years and said his Democratic colleagues “continue to camouflage the real cost of the intent behind this bill.”

White House press secretary Jen Psaki on Sunday left no doubt that White House officials viewed Manchin’s definitive statement that he will vote against Build Back Better as a betrayal and vowed to change his mind.

“Just as Senator Manchin reversed his position on Build Back Better this morning, we will continue to press him to see if he will reverse his position yet again, to honor his prior commitments and be true to his word,” Psaki said in a statement.

Psaki also hinted that White House officials and Democratic allies in Congress, who have handled Manchin with kid gloves all throughout the negotiation, will be stepping up political pressure on him in the weeks ahead.

“Sen. Manchin will have to explain to those families paying $1,000 a month for insulin why they need to keep paying that, instead of $35 for that vital medicine. He will have to explain to the nearly 2 million women who would get the affordable day care they need to return to work why he opposes a plan to get them the help they need,” Psaki said.

House Appropriations Committee Chairwoman Rosa DeLauro (D-Conn.) took a direct shot at Manchin, warning Sunday that failure to pass Biden’s social spending agenda “hurts more than 346,000 children in West Virginia benefiting from the Child Tax Credit, and goes against the more than 70 percent of West Virginia voters who support paid family and medical leave for all workers.”

Senate Budget Committee Chairman Bernie Sanders (I-Vt.) on Sunday called for the bill to come to the floor anyway, so Manchin could “vote ‘no’ in front of the whole world.

“I think he’s gonna have a lot of explaining to do to the people of West Virginia,” Sanders told CNN’s Jake Tapper on “State of the Union.”

Only a few days earlier, Senate Democrats had expressed confidence that Biden and Schumer would be able to work out a deal with Manchin over the next few weeks.

Schumer in his “Dear Colleague” letter Monday acknowledged “deep discontent and frustration” over the failure to pass Build Back Better this year “because Sen. Manchin could not come to an agreement with the president.”

Schumer on Friday said he had “a good discussion” with Biden and Speaker Nancy Pelosi (D-Calif.) about finalizing the bill and that Senate Democrats were working to “send it to the president’s desk as soon as possible.”

Saving Biden’s agenda will be difficult as Manchin and fellow centrist Sen. Kyrsten Sinema (D-Ariz.) are putting Democrats in a squeeze with their clashing demands.

Manchin said last week that he wanted the enhanced child tax credit — which is set to expire at the end of the month — to be extended for 10 years if it was to be included in the Build Back Better Act. To meet his demands, senators would have to either cut other programs from their package or find new ways of paying for the additional expense.

That’s made more difficult by Sinema, who opposes raising the corporate tax rate or raising other taxes on the wealthy to bring in more money for the bill.

Frustrated Senate Democrats say they’re being boxed in by Manchin’s insistence on the multiyear expanded child tax credit and a top-line cost of $1.75 trillion, and Sinema’s insistence on not raising corporate and individual tax rates.

One Democratic senator who requested anonymity to discuss the internal caucus debate said Manchin and Sinema have put the party in a politically awkward position with their demands.

“Going into this very tough election year, I thought the whole plan was we’re going to reverse the Trump tax cuts for the richest people and we’re going to pass the child tax credit enhancement to be able to say to people, ‘This is the biggest tax cut that you’ve gotten in a generation and we’ve paid for it by reversing the Trump tax cuts,’” said the lawmaker, who spoke with The Hill before Manchin’s Sunday bombshell.

A 10-year extension of the expanded child tax credit would cost $1.5 trillion by itself, putting at risk other priorities, such as $550 billion in new funding to address the climate crisis, as well as funding to subsidize the cost of child care and to provide long-term home health care for the elderly and disabled.

Progressives have made many concessions to Manchin and Sinema, such as dropping the $150 billion Clean Electricity Performance Program, setting aside a national paid family leave program and shelving proposed increases in corporate, individual and capital gains tax rates.

But on Sunday, Manchin said it still wasn’t enough to get his vote.

“I cannot vote to continue with this piece of legislation. I just can’t. I tried everything humanly possible. I can’t get there,” he told “Fox News Sunday” host Bret Baier. “This is no, on this legislation.”

Democrats chopped down the size of the Build Back Better Act from an initial spending target of $3.5 trillion — the number set in the budget resolution — to the $2 trillion bill that passed the House last month because Manchin insisted that he didn’t want to spend much more than $1.5 trillion.

Another reason Democrats settled for a smaller bill is because Sinema took a stand against raising the top individual income and corporate tax rates. That demand took Democrats by surprise and put them in a tough spot of having to scrounge for more revenue just to cover the cost of their slimmed-down climate and infrastructure bill.

“Not being able to raise the top individual rate and the corporate tax rate has turned this into a Rubik’s Cube,” said Jim Kessler, a former aide to Senate Majority Leader Charles Schumer (D-N.Y.) who now serves as the executive vice president for policy at Third Way, a think tank.

“Those rates should have gone up in this bill but they’re not and it’s made fitting all the pieces much more difficult,” he added.

The White House and House Democrats eventually opted for a surcharge of 5 percent on individual income above $10 million and an additional 3 percent on income above $25 million. The House also adopted a net investment income tax on high-income individuals and a limitation on deducting business losses for noncorporate taxpayers.

But the revenue raisers in the House-passed Build Back Better Act totaled only $1.5 trillion, according to the Joint Committee on Taxation. That’s how much it would cost to cover Manchin’s demand to include a 10-year extension of the expanded child tax credit, which provides $3,000 per child and $3,600 per child under 6 for families who earn up to a certain income limit.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) says he has other ways to raise substantial revenue, such as a proposal to reap more than $500 billion over 10 years from taxing the unrealized capital gains of billionaires, but that idea has received little public discussion since Wyden unveiled it in October.

Wyden on Sunday pledged to keep working toward a deal.

“Democrats have made key promises to families who need more support. Failure is not an option,” he said.

Updated at 8:27 a.m.