There was a time when West Virginia Sen. Joe Manchin, because he represented by far the most conservative state of any Senate Democrat, was considered the primary obstacle to Democrats’ proposed Build Back Better Act, the signature piece of social infrastructure and climate change legislation they’re slowly negotiating and I’m constantly writing about.
That may no longer be the case. Congratulations, then, to Arizona Sen. Kyrsten Sinema. Democrats have been clamoring to know what her red lines are on the legislation. Now that they know, they wish they didn’t.
Manchin, who had privately documented his concerns about the original $3.5 trillion proposal back in July, does not bring many surprises. He wants to spend less on the overall package, and he wants to narrow eligibility for certain programs. His representation of West Virginia energy concerns are going to complicate the climate change portion of the bill. He is, however, on board with the basic means of funding the bill, such as tax increases on corporations and high earners and drug pricing reforms, all of which poll extremely well.
As several outlets reported Wednesday, though, Sinema is not on board with a number of the key revenue-raisers that Manchin supports. Sinema, the Wall Street Journal reported, “continues to oppose any increase in marginal rates for businesses, high-income individuals or capital gains.” These objections alone could blow a hole of nearly half the cost of the bill, which Democrats are now negotiating to come in at around $1.75 trillion to $1.9 trillion. It is not necessarily that the White House didn’t know until Wednesday that Sinema felt this way. It was more that they thought they could change her mind. The administration and congressional negotiators are now starting to believe that they can’t, and are looking at other options.
Reversing unpopular, central planks of the 2017 Trump tax law, including the corporate tax cut at its core, was not supposed to be a problem. It was supposed to be the easy money for funding the Democrats’ agenda. From the minute Republicans signed into law a steep cut in the corporate rate nearly four years ago, Democrats started campaigning on reversing some of it, and designing an agenda that they could fund with that revenue. Reversing the Trump tax cuts for the wealthy was something most Democrats campaigned on for the last two election cycles. One typical 2018 campaign ad, for example, hit a Republican opponent for supporting “huge tax breaks for the wealthy and large corporations at the expense of our middle class.” You guessed it: Then-Rep. Kyrsten Sinema ran that ad in her Senate campaign.
Due to Sinema’s objections, Democrats are now on the verge of something that could prove inexplicable to their voters: leaving the core of Republicans’ one major, unpopular legislative accomplishment relatively untouched. And don’t they know it.
“Every Democrat in the House and Senate voted against the Trump tax cuts,” Rep. Richard Neal, chairman of the tax-writing House Ways and Means Committee, told CNN on Wednesday. “This is a chance to address it. So if you were against it, this is a chance to repeal it.”
“If that’s the case,” Hawaii Sen. Mazie Hirono said of the possibility that Democrats abandon those tax rate increases, “considering that is the way we’re going to pay for so much of the programs that are in the bill, I would not be able to support any kind of posture like that.”
“There is a sense in which we no longer live in a democracy,” New York Rep. Ritchie Torres told CNN of the caucus’ (somewhat dramatic) feelings toward Sinema, “we live under the tyranny of Kyrsten Sinema.”
And how, then, would Democrats come up with the budget hole that Sinema’s objections create?
One idea that Sinema hasn’t ruled out is an annual tax on the unrealized gains of billionaires, also known as “mark to market.” This is an approach that has a powerful ally in Senate Finance Committee Chair Ron Wyden, who was pushing it Thursday.
“I’ve been home a lot the last few weeks,” Wyden told reporters, “and when I say, ‘Billionaires are going for years and years paying little or no income taxes,’ I can’t even get to the second sentence when people say, ‘I’m paying taxes with every paycheck!’ Of course you’ve got to make them do it.”
But such an approach could create new foes—like, for example, the wealthy whose wealth it would be targeting. It also would be a new, untested concept likely to run into interference on the Hill.
“I think anytime you get into stuff that’s not proven in the tax code, it becomes a bit dangerous,” Montana Sen. Jon Tester told reporters.
Another option would be to test the original theory: that once you get a deal with Manchin, everyone else will come on board.
“White House officials and Capitol Hill Democrats now believe it will be easier to find agreement with Sen. Joe Manchin (D-W.Va.) than Sinema,” Punchbowl News reported Thursday morning. “So while the Biden administration and Senate Democratic leadership plan to work with both Sinema and Manchin, they now believe it would be more productive to seek a deal with Manchin, bring House and Senate progressives on board and then dare Sinema to block it.”
The theory here makes sense if you believe senators, whatever flights of negotiating fancy they may have, will ultimately bend to their political circumstances. Manchin should be the most difficult because he represents, by a mile, the most conservative state of any Senate Democrat. Once you’ve reached a deal with him, everyone to his left has no excuse not to sign on. Can Sinema, who is staring directly at a tough primary challenge in 2024 and whose problems with Arizona Democrats aren’t getting any better, afford to hold out then?
In other words, they’re betting on Sinema behaving like a rational political actor. The problem is: How has that worked for them so far?