Manchin throws wrench into budget, infrastructure talks

West Virginia Democrat offers ceiling for reconciliation package, but progressives remain unmoved

West Virginia Sen. Joe Manchin III says he won’t support a reconciliation package larger than $1.5 trillion.   (Tom Williams/CQ Roll Call)
West Virginia Sen. Joe Manchin III says he won’t support a reconciliation package larger than $1.5 trillion. (Tom Williams/CQ Roll Call)
Posted September 30, 2021 at 7:19pm

West Virginia Sen. Joe Manchin III’s much delayed public offer Thursday to cut his fellow Democrats’ sweeping tax and spending package by more than half irritated his colleagues and raised new questions about the path to passing a bill all Democrats could support.

But more urgently, Manchin’s $1.5 trillion ceiling for the package — which Democrats plan to pass through the partisan budget reconciliation process that makes his vote necessary — has hamstrung negotiations needed to unlock progressive support for a separate bipartisan infrastructure bill.

That Senate-passed infrastructure measure, which Manchin helped write, is supposed to come up for a vote in the House on Thursday. But progressives plan to vote against it without assurances that Manchin and fellow centrist Sen. Kyrsten Sinema, D-Ariz., will support the party’s effort to pass the more comprehensive reconciliation bill. Democrats want to include in that package a host of safety net program expansions and initiatives to combat climate change — and various tax increases on wealthier households and corporations to pay for it all.

After months of confusion over what the two senators would support, Manchin confirmed Thursday that he won’t support a package larger than $1.5 trillion. He said he based that on the amount of tax increases he thought Congress could pass to reverse aspects of the 2017 GOP tax law without returning to levels that would put the United States at a global disadvantage.

“I believe in my heart that’s what we can do and what the needs we have right now [are] and what we can afford to do without basically changing our whole society to an entitlement mentality,” Manchin said.

Manchin’s $1.5 trillion price tag, which he said he communicated privately to Senate Majority Leader Charles E. Schumer two months ago, is less than half the $3.5 trillion most Democrats support.

But Manchin is touting it as a compromise, saying he wanted to “pause” and not spend anything else on top of some $5 trillion in COVID-19 relief measures since early 2020, plus the bipartisan infrastructure bill that would allocate $550 billion in new spending over five years. Manchin says he’s concerned about inflation and economic uncertainty stemming from COVID-19 and the U.S. withdrawal from Afghanistan.

‘It will be changed’

The $1.5 trillion topline isn’t enough to pay for everything other Democrats want to include: money for climate programs and clean energy tax incentives; subsidies for paid family and medical leave, child care, home health care, affordable housing; extensions of tax breaks to help subsidize health insurance and child care and more.

“It’s problematic,” Sen. Richard Blumenthal said. The Connecticut Democrat said he hasn’t talked to Manchin to see how flexible he is but “as the final number it certainly seems low.”

Senate Majority Whip Richard J. Durbin seemed adamant that $1.5 trillion would not be the final number. “It will be changed,” the Illinois Democrat said.

President Joe Biden has been negotiating with Manchin and Sinema this week in hopes of reaching agreement with them on a topline that other Democrats could support, along with an understanding of the programs they will agree to fund under that amount.

Earlier in the week Manchin said he’d not discussed a topline figure with Biden, but on Thursday he said they did discuss his $1.5 trillion ceiling.

“He would like to have a lot more than that,” Manchin said of the president.

Sinema has repeatedly declined to comment on the negotiations, but her spokesman John LaBombard on Thursday disputed assertions that she hasn’t detailed her demands on the reconciliation package.

“She shared detailed concerns and priorities, including dollar figures” directly with Schumer and the White House in August, LaBombard said in a statement, adding that “she continues to engage directly in good-faith discussions” with Biden and Schumer.

Unmoved since July

Top Senate Democrats and White House officials agreed to a $3.5 trillion topline for the reconciliation package on July 13. Budget Chairman Bernie Sanders, I-Vt., who had originally pushed for $6 trillion, said every senator on his panel agreed to the lower figure, which he and others have said was a compromise between moderates and progressives.

But Manchin and Sinema never agreed to that number.

Manchin signed a one-page memo more than two months ago saying his topline was $1.5 trillion. He and Schumer both signed the July 28 memo that included a list of Manchin’s spending and offset “conditions.” A Democratic aide confirmed the authenticity of the memo, which first reported by Politico.

The conditions Manchin mentioned include: means testing and “guardrails” on new family and health programs as well as “targeted spending caps” on existing programs; climate programs that are “fuel neutral,” with spending directed to “innovation, not elimination”; a ban on eliminating fossil fuel tax incentives if the measure included breaks for solar and wind; and ensuring no new funds approved in the measure could be spent until all COVID-19 relief money has been disbursed.

Manchin also listed tax conditions that he has talked about publicly: a 25 percent corporate rate with a 15 percent minimum tax on domestic income; a 39.6 percent top individual rate; and a maximum rate of 28 percent for capital gains, including the existing 3.8 percent tax on investment income.

He also expressed his support for eliminating the so-called carried interest loophole and counting revenue from stepping up tax enforcement and dynamic growth that the Congressional Budget Office would not typically score as an official offset.

At the bottom of the memo was a note saying Manchin “does not guarantee” he would vote for a final package that exceeds the conditions he outlined.

Schumer added a note by hand next to his signature: “I will try to dissuade JOE of many of these.” A Schumer spokesman said Thursday that the majority leader never agreed to the conditions and that “he merely acknowledged where Sen. Manchin was on the subject at the time.”

“Leader Schumer made clear that he would work to convince Sen. Manchin to support a final reconciliation bill — as he has doing been for weeks,” the spokesman said.

Manchin said when he put together the memo he did not want to do a reconciliation package at all, but he “wasn't trying to be the fly in the ointment” so he offered up some things he would support.

“I've never been a liberal in any way shape or form,” he said. While he doesn’t fault progressives who want to do more, Manchin said for that to happen, voters need to "elect more liberals.”

To put a finer point on that, Manchin said anything above $1.5 trillion is something Democrats “can come back and do later, and they can run on the rest of it later.”

Asked about Manchin’s remarks about electing more liberals, California Rep. Jared Huffman said, “That’s certainly not helpful.”

Huffman, who is among the group of House progressives threatening to oppose the infrastructure bill, added: “And if anything, some of those statements really do validate the position that we have taken that we need rock solid, ironclad assurance that the [reconciliation bill] is going to happen.”

‘Realistic price tag’

Knowing that they still need to bring Manchin along for whatever compromise can be reached, most Democrats were not overtly critical of his offer. But they were not ready to accept it as the last word.

“The significant majority want us to pass something that is probably well beyond $1.5 trillion,” said Colorado Sen. John Hickenlooper, who worked with Manchin and Sinema on the infrastructure bill. “There’s just a lot of things in there that are popular with people.”

Other senators were expecting more dialogue, not just around the topline but the specific programs that would be funded under the package.

“We need broadband, we need child care and expanded health care coverage. And we need to take a bigger swing at fighting back against the climate crisis,” said Sen. Elizabeth Warren, D-Mass. “What we’ve all talked about as Democrats are the things we need to get done, and we need to do that with a realistic price tag.”

Congressional Progressive Caucus Chair Pramila Jayapal, D-Wash., who’s leading the opposition to the infrastructure bill, also declined to discuss the $1.5 trillion number. She said Manchin and the Senate in general have yet to put out a detailed proposal to compete with the expansive legislation House committees marked up earlier this month.

“Our number is 3.5,” she said. “If somebody has a different offer, then they can put it on the table.”

House Democratic moderates who pushed to have the infrastructure vote this week defended Manchin’s position.

“The progressives last week were saying, ‘Can you tell us, can you get them to give us a number?’ They have given us a number,” Texas Rep. Henry Cuellar said.

New Jersey Rep. Josh Gottheimer added: “If you look at what Joe Manchin said today, he was very clear about his values and priorities, and that gives you a clear sense of direction.”

Jessica Wehrman, Paul M. Krawzak, Joseph Morton, Niels Lesniewski and Laura Weiss contributed to this report.