Apr 26, 2022
Manchin and Schumer Discuss New Tax Hike, Deficit Cut Proposal
(Bloomberg) -- Key holdout Senator Joe Manchin said Tuesday he discussed a tax increase and deficit reduction bill with Senate Majority Leader Chuck Schumer as a way to reduce soaring inflation.
The West Virginia Democrat said he is open to using the fast-track budget process to bypass Republicans and ram corporate and individual tax increases through the Senate given that the GOP wants to “keep things the way they are” in the tax code. Manchin said that it would make sense to include cuts to prescription drug costs in the package, which would need the support of all 50 Senate Democrats.
“We talked about the tax code and doing something to combat inflation. He is just as concerned about inflation as I am,” Manchin said leaving Schumer’s office.
Some Democrats, however, remain skeptical that the party can reach a deal after the failed efforts late last year. Manchin, for instance, supports raising the corporate tax rate, but Arizona Senator Kyrsten Sinema, another Democratic holdout, has been adamant in her opposition to increasing it.
“There are varying levels of optimism among different colleagues in the Senate. I am the most skeptical,” Senator Dick Durbin of Illinois, the chamber’s No. 2 Democrat, said. “I want to put two of my colleagues in a room with a blank sheet of paper and ask them, What will you agree to?”
Separately, Manchin is exploring a bipartisan climate and energy package -- once a key component of Democrats’ climate, tax increase and social safety net bill -- aimed at boosting domestic fossil fuel production to reduce reliance on Russian oil in the wake of the country’s invasion of Ukraine.
Manchin and Schumer met as the Senate returned to Washington from a two-week recess and lawmakers are hoping to make progress on President Joe Biden’s stalled domestic agenda before the end of May. Manchin’s opposition sank the $2 trillion package in December.
Manchin’s latest proposal would use half of the revenue from tax increases to reduce the deficit.
“Debt reduction is the only way to fight inflation,” Manchin said, adding he wants to see the corporate rate to go to 25% and for loopholes to be closed.
Manchin said he does not favor more social spending when asked about proposals to fund child care and paid family leave. Manchin said there are no formal talks with the White House on his proposal and would not say what the next steps are.
A bipartisan group of senators that met Monday evening on the separate energy proposal plans to meet again.
“We hope we can get something done like we did on infrastructure,” Manchin said, referring to the $550 billion bipartisan roads, transit and bridges package he helped author into law last year.
But at least one Democrat raised questions about whether Manchin could craft an energy package with Republicans that Democrats could sign on to.
“Look, God bless ’em. If we can get a bipartisan group to do things that are as meaningful as where I thought we were heading on reconciliation, that’s fine,” Maryland Democratic Senator Benjamin Cardin said. “I think it’s a heavy lift to try to get that and I think it’ll be a moving target.”
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