As we reported earlier, word broke this afternoon that Sen. Joe Manchin (D-WV) had reached a deal with Senate Majority Leader Chuck Schumer on a climate, health, and tax package deal, despite Manchin’s known aversion to spending more because of inflation.
While this deal is far scaled down from the Build Back Better effort that Joe Biden had put forth, it’s still a big chunk of spending and I’m not sure how Manchin justifies it in his mind. It sounds like he’s buffaloing himself. “The Inflation Reduction Act of 2022 will address record inflation by paying down our national debt, lowering energy costs and lowering healthcare costs,” he claimed.
The Hill
In the next 10 years, it would invest $369 million in climate-related programs and $300 billion in deficit reduction. The legislation would include it to reduce prescription drug costs and prolong expired subsidies for health care.
“After many months of negotiations, we have finalized legislative text that will invest approximately $300 billion in deficit reduction and $369.75 billion in energy security and climate change programs over the next ten years,” Schumer and Manchin announced in a joint statement. “The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations.” [….]
According to the negotiators, it would generate $739 billion of new revenue from various proposals. These include $313 billion via a 15% corporate minimum tax; $288 billion to enable Medicare to negotiate lower prices for drugs; $124 billion to strengthen IRS enforcement of tax laws and $14 billion to close the carry interest loophole to money managers.
Let’s remember “invest” equals “spend” — the very thing he said we shouldn’t be doing because of the high inflation.
We’re already at the highest inflation in more than 40 years, and this news comes right on top of the Federal Reserve deciding to hike interest rates by 75 basis points. We will soon hear the news that we are currently in recession. This is due to two consecutive quarters with negative GDP.
So, apart from calling the bill “The Inflation Reduction Act,” it sounds a lot like Manchin may have just caved big time.
Biden celebrates this already
However, this is not a final deal.
Sen. Kyrsten Sinema (D-AZ) is not yet on board with this, and the deal raises issues that she’s had a problem with in the past. It’s a little astonishing that they didn’t get her on board before acting like this was a done deal.
Manchin’s statement mentioned carried interest as one of the red flags. If that’s in there, you could lose Sinema (though would be a near-certain career ender for her as a D). Manchin is also known to dump on SALT which may indicate that the House members are a problem.
— Benjy Sarlin (@BenjySarlin) July 27, 2022
While they might be able to get the House members on board, Sinema was concerned by some of the ideas being presented here.
This Schumer/Manchin agreement has an interesting twist: it limits carried interest up to $14 billion
The last year was @SenatorSinemaShe made it clear to Democratic leaders that she does not want to touch the carried interest.
Sinema’s office, for now, is NOT commenting.https://t.co/5NSMhhEhrv
— Sahil Kapur (@sahilkapur) July 27, 2022
Sinema doesn’t seem to be onboard with the elimination of the carried interest loophole. https://t.co/Lze69n1CdX
— Alex Sammon (@alex_sammon) July 27, 2022
They may be hoping with the announcement, with Manchin all in, now the pressure will be on her and any other potential stragglers to get in line and that she’ll fall in line.
But so far, she’s not talking yet, which may mean there’s still some hope that she wouldn’t cave as well.
Kyrsten Sinema spokeswoman said that the senator is still unsure if she will support the Schumer/Manchin climate, tax, and other provisions.
“Senator Sinema must review the text. We don’t have comment at this time.”
— Laura Litvan (@LauraLitvan) July 27, 2022
According to her office, she must review the text in order to make any comments.
The Republicans are disturbed too because they just voted in the chip and science bill. If they had known that this reconciliation bill was on the horizon, they might have blocked it. Senator John Cornyn (Republican from Texas) stated that this bill would cause great harm to the United States.
“Senate Democrats can change the name of Build Back Broke as many times as they want, it won’t be any less devastating to American families and small businesses,” Cornyn said. “Raising taxes on job creators, crushing energy producers with new regulations, and stifling innovators looking for new cures will only make this recession worse, not better.”
So, we’ll have to wait and see what the color of the smoke is out of the Sinema chimney. But let’s hope it’s black–because this would be a killer when we’re already on the brink of a recession.
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