So, I have an idea to resurrect the Build Back Better Act, Joe Biden’s social spending and climate bill that, as of now, appears to be dead in the water. On the policy merits, it is objectively dumb—just completely pointless and maybe even self-defeating. But as a political compromise that might entice a certain senator from West Virginia, I think it’s just ridiculous enough to work.
It is time, perhaps, to transform BBB into a deficit reduction bill, by making sure it raises significantly more new revenue than it spends.
I’m cringing just typing those words. (Sincerely.) During the 2020 Democratic primary, I wrote at length about how the worst-case scenario in a Joe Biden presidency was that he might rediscover his old deficit hawkishness and make a premature turn toward fiscal austerity. But please consider the circumstances Democrats now find themselves in: Negotiations over BBB crashed to a halt in December, when Joe Manchin shocked his party by announcing that he was a hard no on the legislation during a Fox News interview. It was later reported that the senator had made a private, $1.8 trillion counteroffer to the administration, including hundreds of billions in spending for climate, but became enraged when the White House released a press release blaming him for the bill’s delay, despite his asking them not to.
A thin-skinned overreaction? Perhaps. But the prospects for a bill only appear to have dimmed since that pre-holiday blowup. On Saturday, the Washington Post reported that Manchin’s $1.8 trillion offer appeared to be off the table. “Privately, he has also made clear that he is not interested in approving legislation resembling Biden’s Build Back Better package and that Democrats should fundamentally rethink their approach,” the paper reported. “Senior Democrats say they do not believe Manchin would support his offer even if the White House tried adopting it in full—at least not at the moment—following the fallout in mid-December.”
Meanwhile, inflation continues to chug along. On Wednesday, the Bureau of Labor Statistics reported that the consumer price index rose 7 percent last year, the most since 1981, and showed little sign of losing momentum in December. This is a problem for Democrats’ legislative hopes, since Manchin has cited out-of-control inflation as one of his main reasons for opposing BBB. As an economic matter, it doesn’t make much sense—even inflation hawks like Larry Summers have said the package is unlikely to make prices rise any faster. (The spending isn’t large enough, it’s spread over time, and it is paid for with tax increases.)
But reality isn’t what matters here. Joe Manchin’s perception of it does.
Given all these developments, it is possible that BBB is simply dead. If so, it would be a tragedy not just for the Democratic Party but for the country and planet, given that this may be our only window of opportunity to take serious climate action in the coming decade. However, it might be the case that BBB is merely in a coma and on life support, and that resuscitating it may require extreme measures—which is where deficit reduction comes into play.
Why might deficit reduction bring Manchin to the table? First, it’s something he actually wants, unlike much of what’s contained in BBB. One of the odd dynamics of this entire negotiation is that Democrats have consistently ignored Manchin’s explicit demands when it came to how the bill should be structured, and then acted surprised when he turned down their offers. They also haven’t tried to lure him with something big he truly desires.
The man has said he’s open to spending on pre-K, and open to a lot of the climate agenda, but they don’t appear to be must-haves in his mind. By all accounts, however, Manchin really, truly does care about the deficit. This is a man who reportedly asks his aides to text him every morning with how much the national debt grew overnight. Democratic aides have semi-jokingly told me that Manchin would probably be happiest with a bill that just raised taxes and put the money toward debt reduction. Nobody thinks he’s kidding on this issue (even if the infrastructure bill he helped negotiate was funded in large part with gimmicks—nobody’s accusing him of total consistency). Making deficit reduction at least a part of Build Back Better might actually give him something to be excited about.
Second, including deficit reduction in BBB would address some of Manchin’s concerns about inflation, at least on a cosmetic level. After all, in theory, tightening fiscal policy and reducing demand is a straightforward way to take pressure off prices, not to mention one which is perpetually popular with American political moderates. In reality, eliminating $200 billion or $300 billion from the deficit over 10 years probably isn’t going to have any significant impact on near-term inflationary pressures. But it would at least let Democrats make a more convincing surface-level argument that their bill is a sincere response to rising consumer costs—both to voters and to Manchin. Keep in mind the Biden administration has already tried to frame BBB as a response to inflation, by arguing that it will reduce the cost of major family expenses like day care and health care. But polling from Data for Progress has shown that voters only find that argument mildly compelling, and Manchin doesn’t seem to be buying it at all. If Biden wants to look like he’s trying to respond decisively to inflation, he probably needs a new approach.
Finally, as I mentioned earlier, the Washington Post reports that Manchin wants Democrats to “fundamentally rethink their approach” on Build Back Better. Turning it into an oh-so-virtuous deficit reduction bill, instead of a mere spending bill, would fulfill that demand.
What are the downsides? There aren’t many, at this point. Deficit reduction could weaken the economy, if it were too aggressive. But spreading a few hundred billion over 10 years probably won’t be the end of the world in an otherwise strong macro environment. Beyond that, saving room in the bill to cut the deficit would require Democrats to downsize some of their ambitions more than they already have. But, at this moment, the Democrats’ ambitions mostly appear to be in flames anyway, kind of like half of California on any given weekend in the fall. (Have I mentioned that we really need to enact climate legislation?) Passing something is clearly better than storming off and settling for nothing.
With that, let’s talk about what a version of Build Back Better designed to cut the deficit might look like. The counteroffer Manchin made the White House last month and has supposedly revoked might be a good starting point. According to the Post, that proposal would have included $500 billion to $600 billion in climate spending, extended the expansion of the Affordable Care Act Democrats passed as part of their COVID bill, and provided money for universal pre-K, among other things. Given that Manchin has demanded each piece of the legislation be funded for a full 10 years, those basic ingredients would add up like this:
• Climate: $500 billion
• Obamacare improvements: $400 billion
• Pre-K: estimated $350 billion
• Total: $1.25 trillion
(Note: Nobody knows exactly how much universal pre-K would cost because the Congressional Budget Office’s score for the program lumps it in with the Democratic child care plan. But most experts I’ve spoken with think $350 billion is a reasonable guesstimate.)
Meanwhile, between tax hikes, prescription drug negotiations for Medicare, and better tax enforcement, Democrats have already agreed on about $1.68 trillion of score-able revenue. That means legislators could easily fit another major priority in, like improving home care services for the disabled and elderly (10-year cost: $209 billion) while still achieving some deficit reduction. So the package might look like this:
• Climate: $500 billion
• Obamacare improvements: $400 billion
• Pre-K: estimated $350 billion
• Home care: $209 billion
• Total spending: $1.46 trillion
• Revenue from IRS enforcement, tax hikes, and prescription drug negotiations: $1.68 trillion
• Total deficit reduction: $220 billion
Play around with the numbers if you like. Make your own package. Go nuts. The point is you can scrape together a bill that includes historic spending on climate and early childhood education, some necessary upgrades to our health care system, and some deficit reduction to make Manchin and other moderates happy. One big thing you might notice missing from this list is the Biden administration’s expansion of the child tax credit, which expired this year. Extending that benefit would have been a massive achievement in the fight against child poverty, but Manchin has made it clear he does not want to do so unless the program includes a work requirement, which would make it significantly less useful as a poverty-fighting tool while still costing quite a bit of money. Given that the expansion has already sunset, Democrats might be better off letting it be and salvaging other parts of the agenda.
Of course, the big, overriding question about the fate of BBB is whether Manchin wants a bill at all. The honest answer is nobody but Joe Manchin seems to know. One popular theory is that the senator is secretly opposed to any significant climate action, because of his personal and political connections to West Virginia’s coal industry, and is simply stringing Democrats along by negotiating in bad faith, then moving the goal posts for a deal every time the sides get close.
Honestly, there are dark moments where I find myself believing that. But one problem with this theory is that it’s a little impossible to judge, because Democrats have never actually come even close to meeting all of Manchin’s major demands for the legislation. Another is that it clashes with Manchin’s public and private actions. Last week, he told reporters, “I think that the climate thing is one that we probably can come to agreement much easier than anything else.” This surprised many, but makes some sense when you realize that the core of the bill’s climate section was in fact written to match his specific parameters. Moreover, he’s continued trying to negotiate the details of an energy plan, at least through the press; on Thursday, Bloomberg reported that he was interested in expanding BBB’s subsidies for nuclear power, for instance. That’s the behavior of a person who might be open to some sort of deal on climate.
But also, whether or not Democrats think Manchin has been operating in good faith just isn’t all that important in the end. It’s a guessing game. Maybe he is. Maybe he isn’t. But what else are lawmakers going to do for the next several months, if not hope for the best and try to cajole the guy into blessing a bill? Talk about how they can’t pass voting rights? Quietly await electoral slaughter during the midterms? It at least seems plausible that the promise of deficit reduction might lure Manchin back to the table for a deal. Even if the gamble fails, it’s not as if Biden and the Dems have much else left to lose.