(Bloomberg) -- Key Democratic Senator Joe Manchin laid out a path to reviving President Joe Biden’s economic agenda, saying he could support a slimmed down version that splits any revenue raised between shrinking the deficit and new spending.
His proposal includes partially rolling back the 2017 tax cuts by raising rates on upper-income Americans and corporations, with half the increased revenue going toward “fighting inflation or deficit reduction.”
“The other half you can spend on a 10-year program, whatever you think is the highest priority,” the West Virginia senator, whose vote is pivotal in the 50-50 Senate, told reporters. “Right now it seems to be the environment, which is a rather costly one.”
Manchin’s proposal would require progressives to abandon some key priorities, such as spending for child care and education that were in the $2 trillion package the House passed last year. And his tax plan may run into trouble with Senator Kyrsten Sinema of Arizona, who has opposed repealing the Trump-era tax cuts. Manchin acknowledged Sinema’s reluctance to raise tax rates and did not dismiss outright the workaround in the House bill which imposes wealth based surtaxes and a minimum corporate tax.
Manchin said he hasn’t had formal talks with the White House but “they know where I stand.”
Democrats need 50 votes to pass any economic proposal in the Senate using the budget reconciliation process and Republicans are uniformly against Biden’s agenda. Manchin’s opposition stalled the House-passed version. Among other issues, he cited the impact of more government spending on accelerating inflation.
Politico first reported the news of Manchin’s counteroffer.
The White House has not directly engaged in talks with Manchin since September and instead has leaned on moderate senators like Mark Warner of Virginia to try to broker a compromise.
Congress for the moment is focused on reacting to Russia’s invasion of Ukraine, finishing the delayed full-year government funding bill, and a confirmation vote in the Senate for Biden’s Supreme Court nominee.
Senate Majority Leader Chuck Schumer told reporters that he does plan to return to the Biden agenda, but so far no new strategy has emerged.
“This is going to be a real focus for the president and for the Democratic House and Senate over the next months,” Schumer told reporters ahead of Biden’s State of the Union address on Tuesday.
Manchin in December balked at the House-passed version of the bill which included items like an expansion of Medicare, paid family leave benefits and refundable child tax credit payments he had never signed off on. The House climate package would cost $500 billion. The tax and drug proposals in the House bill raise nearly $2 trillion.
Manchin added any new spending has to be paid for over 10 years. The House bill contained dozens of new programs funded for a shorter term.
Biden during the speech laid out a version of the Build Back Better bill designed to appeal to Manchin and focused on health care costs. Provisions curbing prescription drug prices, bolstering Obamacare premiums and subsidized child care would be pared with tax breaks for climate change initiatives. Biden said he would continue to propose tax increases on the wealthy and corporations to pay for these initiatives while also reducing the budget deficit.
That plan “will grow the economy and lower costs for families. So what are we waiting for? Let’s get this done,” Biden said.
The pitch was largely the same one the White House has been making in the more than two months since the Biden plan known as Build Back Better stalled in the Senate.
Frustration is building among Democrats, especially those in the House, over the lack of movement on the Biden agenda. On Tuesday ahead of the Biden speech, the heads of the Progressive Caucus, New Democrat Coalition, Black Caucus and Hispanic Caucus issued a statement demanding action on the bill to address social ills.
“Congress must act quickly to address these challenges, especially as we continue to face systemic racism’s disparities and inequities, as well as rising prices squeezing working people, and the climate crisis that is escalating every day. It’s not too late to meet this moment,” the statement said.
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