The Build Back Better Act is dead. But will Democrats at least try to build back a tiny bit better?
Possibly! During Tuesday night’s State of the Union address, Joe Biden tried to revive momentum for his marquee social spending and climate bill, pointedly leaving out its name while asking Congress to pass a few of its key pieces.
In doing so, he attempted to reframe his agenda to fit a moment in which inflation is a top economic concern for Americans, telling the audience that his plan would “lower your costs and lower the deficit.” Rhetorically, it appeared to be an olive branch to Sen. Joe Manchin, who shocked fellow Democrats by shutting down negotiations over Build Back Better late last year, but had recently said he would consider passing a major piece of climate legislation if it also lowered the deficit.
Now, Manchin has offered his broad terms for a deal. On Wednesday, he outlined his proposal to Politico:
Manchin said that if Democrats want to cut a deal on a party-line bill using the budget process to circumvent a Republican filibuster, they need to start with prescription drug savings and tax reform. He envisions whatever revenue they can wring out of that as split evenly between reducing the federal deficit and inflation, on the one hand, and enacting new climate and social programs, on the other—“to the point where it’s sustainable.”
“If you do that, the revenue producing [measures] would be taxes and drugs. The spending is going to be climate,” Manchin said.
“And the social issues, we basically have to deal with those” afterward, he added.
So … tax hikes on the rich, prescription drug negotiations, climate spending, and maybe, possibly, some social spending as a treat. Back in January, I argued that Democrats should try to woo Manchin by offering him this sort of deal. Now, he’s demanding it.
A few thoughts.
1. At absolute best, this bargain is going to include climate and one other social spending priority.
In the version of Build Back Better passed by the House, Democrats managed to agree on about $1.68 trillion worth of revenue raisers. I don’t think they’ll do much better here. Cut that in two, and you have about $840 billion.
What can that buy you? Well, Democrats were envisioning over $500 billion in climate spending, but you could probably do the core of the climate plan—including the green energy and electric vehicle tax credits responsible for basically all of its projected CO2 reductions—for around $400 billion. For another $400 billion, you could make permanent the improvements to Obamacare’s insurance subsidies that were in the American Rescue Plan, and provide coverage to poorer Americans in states that haven’t expanded Medicaid. Alternatively, you might be able to do a universal pre-K program, which Manchin has expressed interest in. Either way, at absolute best, we’re talking climate plus one, assuming Democrats can agree on the same level of tax hikes they did before. But based on his comments, Manchin seems to be skeptical that any social spending would be included.
2. Democrats should (probably) take this deal if they care at all about the climate.
Look, Manchin isn’t even offering Democrats half a loaf here. At best, we might be talking about one-thirteenth of a loaf, given that progressives began this process with visions of a $6 trillion Green New Deal–esque piece of legislation. But you know what? The planet is frying, and with every year that passes without us transitioning away from fossil fuels, the heat gets higher (figuratively and sometimes literally). If Manchin is willing to pass climate legislation somewhat similar to what was included in the House bill, it could potentially get us within a hair’s breadth of the commitments to cut greenhouse gases Biden has made under the Paris climate accords, which frankly aren’t enough but are still substantial.
If it’s on the table, Democrats have a moral imperative to seize it.
Emphasis on if. The one big caveat: We don’t know precisely what climate provisions Manchin, a pro-coal senator from the most famously pro-coal state in the nation, would actually agree on. Despite his reputation as Mr. Anthracite, Manchin has consistently expressed more openness to Build Back Better’s climate provisions than almost any other part of the legislation—possibly because they were written with many of his demands in mind. But with oil prices spiking thanks to the Ukraine crisis, he apparently wants an “all of the above” energy strategy that makes more room for fossil fuels going forward, according to Politico:
Manchin, who also chairs the Senate Energy Committee, said that the climate portion of any theoretical bill will look different now that Russia is invading Ukraine. He’s calling for the U.S. to ban oil imports from Russia and ramp up domestic energy production, including fossil fuels. He would support big clean energy investments in a potential deal, he said, but wants domestic oil, gas and coal production to still be a big part of the mix.
There aren’t enough details here to tell whether Manchin is describing a deal that would be worthwhile for other Democrats. If he wants incentives that increase oil and gas production in the short term during this conflict, but decarbonize the economy over the long term, that should be workable. If he wants to make it substantially harder to scrub carbon out of the electric grid over the next decade, it’s not. And if his proposal is a goofy nonstarter—$400 billion on clean coal subsidies, or something—I’m probably just going to crawl in a hole and give up on writing about domestic policy because why even bother then? We’ll have to see.
3. This bill would give Democrats a popular talking point about inflation.
The Democratic Party policy agenda—including green energy spending, prescription drug negotiations, and raising taxes on the rich—is generally pretty popular. But the Democratic Party is not particularly beloved at the moment, and Joe Biden’s approval ratings are absolutely in the doghouse, because a lot of Americans are angry about inflation. Notably, Data for Progress just released polling testing out different Democratic messages about the best way to fight inflation. The most effective option among all voters and independents in particular? Raising taxes on the rich.
Now, to be clear, I do not think that raising taxes on the wealthy will do much in the short term to tame inflation. Add together the fact that rich folks have a lower propensity to spend rather than save income and that the hikes would be spread over a relatively long period of time, and it just seems unlikely that the hikes would have much impact on the consumer demand helping to push up prices.
That said, asking the wealthy to pay their fair share is a fine, morally sound policy choice on its own terms (I mean, it’s not like Manchin wants to stanch the federal budget’s red ink by slashing Social Security or something). And what’s important politically is that Americans think raising taxes on the rich will have an effect on inflation.
In short, it seems like a green new deficit and inflation reduction package would be pretty broadly popular and deliver some fine policy. If Manchin is genuinely willing to offer one—as in a bargain that trims the deficit on the backs of the wealthy and makes serious strides toward decarbonizing the economy rather than just greenwashing some fossil fuel subsidies—then other Democrats should get on board at this point.
3. Democrats might not take the deal.
Of course, they might not. At this point, it seems like progressives sort of understand they have zero leverage and are willing to just hand Manchin the pen. (Rep. Barbara Lee reportedly “scoffed” at the offer, but others like Sen. Elizabeth Warren sounded open to it, according to Politico.) The bigger unknown is whether other moderate Democrats will agree to the tax hikes Manchin wants, especially if their wealthier constituents aren’t set to benefit from new spending. The biggest question mark of all is hanging over Arizona Sen. Kyrsten Sinema.
The basic dynamic is that Manchin, a genuine fiscal conservative, wants to roll back pieces of the Trump tax cuts, which he thought were excessive, for instance by raising the corporate rate. Sinema does not, and has instead only agreed to a sort of bizarre suite of tax hikes that, from a policy perspective, are basically third-best options but allow her to say she didn’t raise the top rates on businesses. Can they come to an accord? Who knows? At the very least, Manchin has started publicly putting some pressure on her to bend. “I respect her and what her concerns may be, but I think basically our financial situation is getting worse, not better, so maybe we can take another look at it,” Manchin said last month.
4. I doubt this is all for show.
Throughout the negotiations over Build Back Better, there’s been a lot of speculation about whether Manchin simply does not want a deal at all, possibly because of his concerns about coal, and has been moving the goal posts to kill the bill without ever being the one to explicitly administer a lethal blow. Likewise, it’s pretty common to hear speculation that he and Sinema are secretly working in tandem to kill the legislation, by making separate sets of demands on spending and taxes that can’t be reconciled.
I … don’t really believe either of those things are going on. If Joe Manchin wanted Biden’s domestic agenda to stay dead at this point, he could sit back, remain quiet, and it would stay dead. His piping up with an offer this soon after the State of the Union sure seems like a sign he’s actually open for business. I really hope it is, anyway.