The most powerful tool congressional Democrats have in their pocket right is one they don’t know how, when, or whether to use. It’s called the budget reconciliation process — a boring name for an important legislative instrument — and it could allow the governing majority to pass an ambitious spending package without worrying about a Republican filibuster.
That is, at least in theory.
In practice, Democrats have spent the better part of a year trying to figure out what to do with this special opportunity, and thanks to the resistance of a small handful of conservative and centrist members, those efforts haven’t gone especially well.
To be sure, the party has all kinds of options. Rules dictate that their reconciliation bill focus on taxes and spending, but that leaves the door wide open for the party to tackle everything from climate to health care to education, or some combination of this and other domestic priorities.
The original plan — President Joe Biden’s ambitious Build Back Better agenda — passed the House, before being rejected by West Virginia Sen. Joe Manchin. But while the conservative Democrat derailed that bill, he did not derail the possibility to some other slimmed-down bill. In fact, in recent weeks, Manchin has signaled a willingness to at least have a conversation about an alternative package.
It’s precisely why the White House has told everyone in the president’s employ that they are not, under any circumstances, allowed to say anything critical of the West Virginian to anyone, on the record or off. The negotiations will be difficult enough; if Manchin starts seeing Biden aides taking rhetorical shots at him in the press, the talks would likely collapse again.
But to assume that Manchin is the key to the entire process would be to miss the bigger picture. As Business Insider reported, Republicans are counting on one the conservative Democrat’s colleagues to ensure the latest efforts fail.
Senate Minority Leader Mitch McConnell believes that Sen. Kyrsten Sinema’s opposition to raising tax rates on large companies and wealthy Americans could be enough to sink Democratic efforts to revive their stalled climate and social bill. “Sinema is unenthusiastic about tax hikes,” he said at a Kentucky Chamber of Commerce event on Tuesday. “Hopefully that will be enough to keep this thing underwater permanently.”
Or put another way, GOP leaders want to see the Democratic package die, and they’re hoping Arizona’s senior Democratic senator will give them a hand.
McConnell’s cautious optimism is rooted in fact. When it comes to paying for a possible package, the governing majority is eager to roll back some of the Republicans’ ineffective Trump-era tax breaks for the wealthy and big corporations — and on this, Manchin isn’t the problem.
As we discussed a couple of months ago, the West Virginian is prepared to significantly roll back the Republicans’ Trump-era tax breaks — which Manchin voted against at the time — creating a higher corporate tax rate, a higher top marginal rate for the wealthy, a higher capital-gains rate, a higher rate on carried-interest income, and even raising the income threshold for taxes that fund Social Security from $147,000 to $400,000.
While Republicans hate each of these ideas with the heat of a thousand suns, all of this could be done through the budget reconciliation process, and each of these changes would enjoy broad support among congressional Democrats in both chambers. They’d also likely be popular with voters in an election year.
What’s more, by making these changes, policymakers would be able to make new domestic investments and reduce the deficit, which Manchin considers a priority.
So why don’t Democrats simply do this? Because as McConnell accurately noted, Sinema is apparently against the idea. In fact, the Arizonan — who, it’s worth emphasizing, voted against the Trump-era tax breaks five years ago — said last fall that she wouldn’t accept any higher rates on the wealthy or big corporations, and there’s little to suggest the senator has changed her mind.
In fact, Axios reported last week, “In closed-door conversations, Sinema has told donors a path to revival is unlikely.”
If Sinema continues to protect the ineffective tax breaks she opposed, GOP leaders are confident, as the minority leader put it, the Democratic bill will be “underwater permanently.”
That said, the door is not closed, at least not yet. Sinema talked last week to the National Federation of Independent Business, a prominent corporate advocacy organization, and said she’s “always willing“ to take part in negotiations.
A Politico report added this week, “[P]rivately, Democrats close to the deliberations say the hope is to clinch a framework by June, if not sooner. If a final deal doesn’t materialize by July Fourth, they say, it will probably never happen.”
Watch this space.