Manchin and Sanders Brawl Over Dem Agenda

By Yuval Rosenberg

Good Monday evening. Congress
is back from recess and Democrats face what could be a critical
week as they try to pass both a bipartisan infrastructure bill and
a broader package of social and climate programs. They have just 13
days and counting until their October 31 deadline for the House to
vote on the infrastructure bill and at least reach some consensus
on the larger economic plan. Right now, it looks like the latter
will be a challenge, meaning that it’s still a question whether the
former will happen. Here’s what you need to know.

Manchin and Sanders Brawl Over Spending Bill

Trick or treat? As they push to pass their economic agenda,
Democrats still don’t know which their Halloween deadline will turn
out to be.

As a reminder, Democratic leaders publicly set the end-of-month
deadline after they were forced to delay a promised House vote on
the Senate-passed bipartisan infrastructure bill late last month.
Party leaders had hoped to buy some time for clashing centrists and
progressives to come together on the details of their
multi-trillion-dollar Build Back Better plan.

The Halloween deadline has some added importance, too, since a
30-day extension of funding for surface transportation programs is
also set to expire. Democrats are also eyeing the deadline with a
tight Virginia governor’s race in mind, hoping to deliver a lift to
Democrat Terry McAuliffe’s campaign. “If McAuliffe loses, it could
put a chill on Democrats’ agenda and prompt hand-wringing over
whether the party failed to boost him enough in a difficult race
against Republican Glenn Youngkin,” Politico’s Heather Caygle and
Burgess Everett
wrote over the weekend.

To meet their deadline, Democrats need to make some significant
progress. Yet their numerous differences over the size and scope of
the bill to bolster the social safety net, combat climate change
and raise taxes on the wealthy and corporations have been difficult
to bridge. Instead, the mounting frustrations erupted in recent
days into something of an open feud between Sens. Bernie Sanders
(I-VT), the Senate Budget Committee chair pushing for an expansive
package, and Joe Manchin (D-WV), the centrist holdout who has
sought to limit the size of the plan and objects to key
details.

Sanders on Friday night published an
op-ed in the Charleston Gazette-Mail in Manchin’s
home state, making the case that the full $3.5 trillion package —
which he says is already a compromise from his initial vision of a
$6 trillion bill — would help working families and pressing for
Manchin’s support. “This reconciliation bill is being opposed by
every Republican in Congress as well as the drug companies, the
insurance companies, the fossil fuel industry and the billionaire
class,” Sanders wrote. “They want to maintain the status quo in
which the very rich get richer while ordinary Americans continue to
struggle to make ends meet.”

Manchin blasted back in a
statement Friday night: "This isn't the first time an
out-of-stater has tried to tell West Virginians what is best for
them despite having no relationship to our state," he said. He
added that 52 senators — he, Kyrsten Sinema (D-AZ) and 50
Republicans — have “grave concerns” about the Democratic package.
"Congress should proceed with caution on any additional spending
and I will not vote for a reckless expansion of government
programs. No op-ed from a self-declared Independent socialist is
going to change that."

So where do things really stand?


Politico reports: “A series of calls Sunday with
sources we trust to give us an honest read on the state of play
turned up some genuine optimism they can get it done. At least
perhaps an outline of an agreement.”

On the other hand,
Punchbowl News reports there’s no chance that the
reconciliation package will be done by the end of the month:

“It’s not even clear that an agreement is possible on a
topline number by that date. There’s daily staff-level discussions
between House and Senate leadership aides and committee staffers,
along with White House officials, but no one seems willing to make
the tough political decisions required in order to reduce a $3.5
trillion reconciliation package to the $1.5 trillion to $2 trillion
level that Manchin, Sinema and other moderates will accept. … At
this point, while the message publicly is that there’s ‘progress’
in the discussions, it doesn’t appear to match what’s happening
behind the scenes.”

What Manchin wants: The West Virginia
senator has reportedly been exerting his influence to shape the
reconciliation package. Coral Davenport of The New York Times

reported late Friday that White House staffers
were revising President Biden’s climate agenda after Manchin made
clear that he opposes a program that would push utilities to
replace coal- and gas-fired power plants with wind, solar and
nuclear energy. One expert on climate policy told the Times that
the $150 billion clean electricity program “is absolutely the most
important climate policy in the package,” but Davenport reported
that it would likely be dropped from the Democratic plan.


Axios followed that report with one on Sunday
saying that Manchin has demanded that the expanded child tax credit
that Democrats hope to extend for four years must include a work
requirement and an income cap of about $60,000. “While Manchin’s
demands would dramatically weaken one of President Biden’s
signature programs to help working families, they also would reduce
the package’s overall costs,” Axios’s Hans Nichols wrote.

Nichols added that “Manchin is open to Biden's $450 billion plan
to subsidize day care and offer free universal preschool” but noted
that Manchin wants tighter income caps for the day care subsidies.
The senator reportedly is also less interested in a paid family
leave plan that would cost up to $450 billion or a $400 billion
elder-care program.

The outlook: Democrats may have trouble
meeting their Halloween deadline, which would then force them to
again decide whether to vote on the bipartisan infrastructure bill
—
as centrists want — or try to buy some more time.
But there are other critical deadlines looming, including December
3, when government funding is set to run out, and lawmakers will
still have to deal with the debt ceiling again.

“The party will once again be staring down a government shutdown
and a possible debt ceiling default,” Politico’s Playbook notes.
“Good luck dealing with those things plus a pair of
trillion-dollar-plus bills — in the span of a few weeks.”

On top of that, Biden is set to be in Glasgow, Scotland at the
end of the month for the UN climate summit, potentially making it a
bit more complicated for him to close any deal with lawmakers.

5 Questions That Will Determine the Fate of
Biden’s Agenda

What will it take for Democrats to enact their plan to invest
trillions of dollars over 10 years in a wide variety of social
programs, ranging from universal preschool and free community
college to expanded Medicare services and tax cuts for electric
vehicles? In a note to clients Monday, Goldman Sachs economist Alec
Phillips says the Democratic effort hinges on five key issues, all
of which need to be resolved before their proposals can become law.
Here’s a summary of Phillips’s analysis:

1) How much deficit spending? The budget resolution
passed last summer that unlocked the current Democratic effort
authorized deficit spending of as much as $1.7 trillion over 10
years, but resistance from conservative lawmakers to the size and
scope of President Joe Biden’s Build Back Better agenda makes it
likely that the final number will be much smaller. The ultimate
deficit tally could be a bit squishy, though, with lots of wiggle
room provided by estimates of the projected revenues associated
with the legislation.

“This is more of a subjective test than it might seem,” Phillips
writes, noting that dynamic scoring of the bill could produce a
variety of more or less generous estimates that could be used to
reduce its cost, at least on paper.

2) What’s the top line? Democrats have spoken about their
$3.5 trillion plan, but the total cost could be measured in a
variety of ways, given the potential savings and revenue flows that
could offset the spending.

For its part, the White House has been saying the plan will have
no cost, once all the offsets are accounted for. “The cost of the
Build Back Better Agenda is $0,” the White House
tweeted Sunday. “The President's plan won't add to our
national deficit and no one making under $400,000 per year will see
their taxes go up a single penny. It's fully paid for by ensuring
big corporations and the very wealthy pay their fair share.”

But that claim is unlikely to satisfy centrist and conservative
Democrats, who might object to overly generous revenue estimates.
This could be a crucial issue given Sen. Joe Manchin’s (D-WV)
warning that he won’t support spending above $1.5 trillion – a
number Democrats could hit with some mixture of program cuts and
offsetting revenues.

One thing lawmakers will have to figure out is which programs to
trim or eliminate, and which revenues can be cited as offsets that
reduce the total cost. And, crucially, how much of the spending is
Manchin willing to ignore, as long as it’s offset?

3) How much in tax hikes? The Biden plan includes a
number of tax increases, focused on corporations and high-income
households. But some Democratic lawmakers have made it clear that
they won’t support aggressive tax hikes. Manchin says he’ll support
an increase in the corporate tax rate only to 25%, less than the
26.5% in the House proposal, while Sen. Kyrsten Sinema (D-AZ) has
reportedly told administration officials she won’t support any
increases in tax rates.

Phillips assumes many of the proposed tax increases will make it
into the final bill, but revenues will likely fall short of current
projections as lawmakers trim their size and scope. If Sinema
maintains her opposition to increased tax rates, Democrats would
have to find nearly $1 trillion in revenues elsewhere, in policy
areas such as corporate cross-border taxes, the treatment of
pass-throughs and estate taxes.

There are many options for finding new revenue, but, as always,
the devil will be in the details.

4) What about non-tax revenues? Democrats plan to reduce
federal spending by giving the government the power to negotiate
lower drug prices – a move they say would provide $700 billion in
savings over 10 years. Although the plan is widely popular with the
public, some Democratic lawmakers have indicated they don’t support
the proposal. House Speaker Nancy Pelosi (D-CA) appears to have
accepted the fact that the proposal will not be enacted in full.
“We’ll get something of that, but it won’t be the complete package
that many of us have been fighting for a long time,” she said.

Phillips says it will be difficult for Democrats to replace
those lost savings.

5) How big can Democrats go? Given pressures to reduce
the overall size of their spending plans, Democrats may look to
eliminate entire programs from their bill. As Pelosi put it last
week, they may have to do “fewer things well.”

Alternatively, they could aim to do enact key programs, but for
a shorter period of time, sunsetting them in a few years to reduce
the total cost. Phillips says that it’s likely that many of the
programs included in the Democratic bill will be temporary.

The bottom line: Democrats appear to be headed for a
compromise bill in which many of their proposed programs expire in
just a few years. In Phillips’ analysis, Democrats could end up
with a reconciliation bill worth about $2 trillion over 10 years.
Adding in the bipartisan infrastructure bill and a competitiveness
bill that contains some elements of Biden’s American Jobs Plan, and
the total for Democrats’ social and economic agenda over the next
decade comes to roughly $2.8 trillion.

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