White House sidelined as Manchin crushes Biden’s political ambitions again

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NUSA DUA, Indonesia — President Biden was in the Middle East and Treasury Secretary Janet L. Yellen was here in Southeast Asia when talks on the administration’s long-delayed sweeping economic program stalled again.

Sen. Joe Manchin III (DW.Va.), the most conservative Democrat in the Senate, told Democratic leaders Thursday that he would not support tax hikes on the wealthy or any new clean energy spending as part of of an economic package in Congress this summer, dealing a blow to two of the administration’s most important policy goals.

On Friday afternoon, Biden urged lawmakers to take whatever action they could to reduce health care costs, which Manchin said he would support, and vowed to take “strong executive action” to fight. against climate change if the Senate does not act.

Manchin says he won’t support new climate spending or tax hikes for the rich

But a president who spent 36 years in the Senate and eight others working closely with him as vice president had already taken a back seat in the bid to push his economic agenda priority through a Congress his party controls. by the narrowest margins. The White House had much earlier left Senate Majority Leader Charles E. Schumer (DN.Y.) to negotiate with Manchin on how to prepare a bill that the West Virginia centrist could support. White House Chief of Staff Ron Klain has long been skeptical of the possibility of a deal with Manchin, according to three people with direct knowledge of his private remarks.

Asked if Manchin negotiated in good faith, Biden told reporters in Saudi Arabia: “I didn’t negotiate with Joe Manchin; I have no idea.”

Speaking to reporters outside the G-20 conference on Saturday, Yellen also touted the potential economic benefits of a policy-focused healthcare reform package as a significant step forward.

“These are very important initiatives to reduce costs and address the high cost of living for American families,” Yellen said. “We should not minimize the positive impact these changes can have. They are important to American families.

Talks between Biden and his party’s 50th Senate vote broke down last winter when Manchin publicly announced his opposition to an earlier, more ambitious version of the legislation, and the two men had a heated conversation afterwards. Trust between their camps never really recovered.

On Friday, Manchin insisted he could still consider backing some climate change investments and raising some taxes, but only after seeing inflation data for July, which is expected to be released on August 10. Even if it does, delaying the legislation until then would make it nearly impossible to get past the Sept. 30 deadline to use the process known as budget reconciliation to push it past a GOP filibuster in the Senate. . Manchin’s opposition to tax reform marks a major reversal after months in which he called on Democrats to repeal key elements of former President Donald Trump’s 2017 tax bill to fight inflation.

Manchin’s latest abandonment of Biden’s national agenda also marks another substantial defeat for White House aides who just a year ago dreamed of transformational changes in the economy, the safety net, the education system and the US tax code.

Initially, the White House released about $4 trillion in new spending plans. While some of this was incorporated into the bipartisan $1 trillion infrastructure bill passed by Congress last fall, most of it now seems never to pass. Manchin told Democratic leaders he was open to a move to lower prescription drug costs and expand subsidies to millions of Americans who buy health insurance through exchanges created by the Health Insurance Act. affordable care, but this week’s inflation news has, he told reporters on Wednesday, made him “very, very cautious” about most new federal spending.

Manchin’s position also undermines the White House’s international political ambitions, with the administration trying to rally the world to join the action to fight climate change and Yellen pushing for a new global minimum corporate tax that the position de Manchin now prevents the United States from implementing.

In the Nusa Dua interview, Yellen said the United States and its allies were determined to move the global tax deal forward despite Manchin’s opposition to the broader tax package. Yellen pointed out that the global tax agreement gives countries taxing rights on the profits of multinational companies accounted for in jurisdictions where taxes are lower than the new minimum of 15%. Yellen argued that this means the United States will have an incentive to raise its tax rate or lose government tax revenue, despite Manchin’s current opposition to the provision.

“There is huge global momentum to move forward. Other countries are moving forward,” Yellen said. “It will create momentum for us to join in as well.”

Yet despite Biden’s call for more aggressive executive action on climate, Yellen appeared to reject calls to expand the work of the country’s banking officials to make lending to fossil fuel producers more expensive. Some climate advocates and liberals have pushed for this use of the Financial Stability Oversight Board – a body of independent financial regulators run by the Treasury – to tackle global warming, but the Treasury has so far resisted this approach. “The FSOC is primarily concerned with assessing the risks of climate change to financial stability,” Yellen told The Washington Post. “It’s not really a direct tool to fight climate change.”

How the White House lost Joe Manchin and his plan to transform America

Feeling burned by the failure of negotiations last fall, White House aides had backed down and let Schumer take the lead more recently. Schumer regularly briefed White House officials on progress, but the administration’s role in the negotiations was significantly reduced starting in the fall.

“This is how the White House has always feared it will end. It vindicates their skepticism of Manchin over the past six months, but it also marks the death of their climate agenda and their ambitions to transform the country” said an outside White House adviser, speaking on condition of anonymity to reflect conversations with administration officials.

Now White House officials face a difficult dilemma: Should they criticize Manchin for rejecting the climate bill, or try to coax him into approving the much narrower prescription drug and drug reforms? health insurance subsidies?

Biden landed in Saudi Arabia on Friday after spending two days in Israel. He once promised to make the kingdom a “pariah” state for human rights abuses, but Russia’s invasion of Ukraine and the resulting disruption of global oil markets forced the White House to engage with Saudi officials. Gasoline prices have soared this year, although they have fallen over the past month. As a major oil producer, Saudi Arabia has the power to increase global supply, but it is unclear whether it intends to do so or whether it would significantly affect prices at the pump. .

Yellen, meanwhile, is immersed in her efforts at a conference of finance officials from the Group of 20 industrialized nations to enact a price cap on Russian oil purchases. The Treasury Secretary has had minimal involvement in negotiating the Democrats’ national economic agenda with Congress. Treasury staff have not been a major participant in discussions among congressional Democrats over one of the most significant tax code overhaul proposals in decades, even before Manchin kicked it out of negotiations, said two people familiar with the matter, speaking on condition of anonymity. reflect domestic affairs.

Asked about Manchin saying he was worried the legislation would drive up costs, Yellen said Thursday in Bali that cutting prescription drug costs and cutting the deficit “would be a very positive way to fight inflation.” .

Various administration officials attempted to woo the senator. White House National Economic Council Director Brian Deese traveled in March to meet Manchin in West Virginia, where the two went ziplining. Manchin went with Interior Secretary Deb Haaland to New River Gorge State Park in Glen Jean, West Virginia, after which he posted photos of them smiling together on social media.

White House senior climate adviser John F. Kerry had dinner with Manchin in Paris this spring. Manchin spoke frequently with Steve Ricchetti, one of the president’s top aides, and Klain personally apologized to Manchin for any misunderstandings after talks broke down in December. Energy Secretary Jennifer Granholm traveled with Manchin to West Virginia in June to tout a plan to promote U.S. offshore wind projects. Granholm later said she was “optimistic” about the prospect of a climate deal with Manchin’s endorsement.

None of these efforts allowed Manchin to stay on board with Biden’s top priorities.

“I’m sure they’re furious… It must be disappointing; they keep getting closer to Manchin’s position and he keeps changing his position,” said Dean Baker, a liberal economist in communication with senior administration officials. “They tried to negotiate in good faith, acknowledging Manchin’s concerns. But he keeps moving the ball, and it looks like he brought the ball home.

Tyler Pager and Tony Romm contributed to this report.

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