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White House aides weigh deficit reduction as way to revamp economic plan for Manchin

cigaretteman

HR King
May 29, 2001
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White House aides have in recent days discussed revamping President Biden’s economic package so it substantially reduces the budget deficit, in an appeal designed to win over Sen. Joe Manchin III (D-W.Va.), said one administration official and three other people familiar with the matter.

Biden administration officials have been adamant that earlier versions of the Build Back Better proposal — stalled for months largely because of Manchin’s opposition — is fully paid for and would not add to the deficit. But that argument has not persuaded either Manchin or some of the Washington budget hawks in communication with him. To try to control costs, Democrats had structured several programs in the bill to last only a few years. This would have reduced the headline cost of the legislation even if party officials aim to later extend those programs. Manchin, though, was unimpressed and had dismissed this tactic as a budget gimmick, effectively derailing the whole package.
Manchin’s $1.8 trillion spending offer appears no longer to be on the table
Hoping to resurrect the legislation, White House officials have in recent days discussed structuring the package so it would meet Manchin’s demands that it reduce the deficit without the measures he regards as gimmicks, a step that would require axing many key domestic policy priorities from the legislation.


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The government already has between $23 trillion and $30 trillion in debt, depending on the measurement. Without any changes, the annual deficit — or the gap between spending and revenue — is projected to be approximately $1.2 trillion in 2022, according to the Congressional Budget Office, and then is likely to fall in 2023 as pandemic spending fades.
“A lot of people in the White House are spending time looking at what they can do to make deficit reduction central to Build Back Better, with a strategy of appealing to an audience of one,” said one person in close communication with senior administration officials. “More so than at any other time in this administration, deficit concerns are driving a lot of policy and rhetoric inside the building.”
The precise ideas on the table are not clear, and the people familiar with the discussions cautioned they are preliminary and that no written plan has emerged. White House officials have circulated internally a column by the liberal commentator Matt Yglesias suggesting the party could approve $500 billion in climate programs and $400 billion in health-care initiatives — and still unify behind enough tax hikes that the legislation would curb the deficit over 10 years by $800 billion. That kind of bill would probably exclude Biden’s expanded child tax credit, a key priority for fighting childhood poverty, but many Democrats believe it would be better than the current alternative of passing nothing. The people spoke on the condition of anonymity to reflect administration conversations.




Manchin says he ‘cannot vote’ for Democrats’ $2 trillion spending package, drawing sharp White House rebuke
Manchin included the tax measures, climate programs and some health-care initiatives in his $1.8 trillion counteroffer to the administration in the fall, but then made clear that this offer was off the table.
Asked about focusing legislation on deficit reduction by NBC News last week, Manchin said: “That’s music to my ears. … Deficit reduction, inflation, being fiscally responsible — sounds like something we should be talking about!”
Manchin reiterated to WV MetroNews on Thursday that he believes Democrats should prioritize getting the nation’s “financial house in order. … Let’s get a tax bill that really puts us on a path to financial solvency.” Manchin again signaled support for higher taxes on the rich and corporations, calling for reversing the GOP 2017 tax act. Manchin also told reporters on Thursday that he wants “nothing at all” to do with child care.



Senate Finance Chairman Ron Wyden (D-Ore.) said in an interview on Thursday that there is growing interest in a package centering on an expansion in the Affordable Care Act, prescription drug reform, climate change and tax measures that would reduce the deficit.
“It is my opinion there is growing interest in this,” Wyden said. “I know [Manchin] has been very interested in deficit reduction. … We’re in a position, if Senate Democrats go that route, to have a list of items that can pay for any number of initiatives and also get the deficit reduction he talked about today.”
Manchin told White House he would support version of tax on billionaires
Even if Democrats can craft a tax bill that has Manchin’s support, the obstacles to passing it remain substantial. Sen. Kyrsten Sinema (D-Ariz.) has repeatedly opposed increasing tax rates on corporations and wealthy people, although she did signal support for other tax increases that would affect those groups. Democrats must also resolve an impasse over the state and local tax deduction. Some Democrats may also be uneasy about championing deficit reduction when families are facing higher costs.



The administration maintained its original plans were fiscally responsible, with Biden making that a condition of his plan from the beginning of the process. While Manchin grew uneasy with structuring Build Back Better so that many of its programs would only last a few years, that kind of policy design has long been commonplace in Washington. Republicans in 2017, for instance, made their corporate tax cut permanent but scheduled many of their income tax cuts for individual taxpayers to expire in 2025 — a move that, like Democrats’ efforts, was aimed at reducing its top-line cost. Democrats have also said that any programs they extended in the future would be paid for at that time with new tax hikes.
Still, some Washington budget groups have argued to Manchin that the plans were fiscally irresponsible. R Street, a center-right think tank, produced an analysis that found the original Build Back Better “would make Biden’s first 14 months more expensive than Obama’s entire presidency.” R Street staff talk to Manchin’s office regularly, two people familiar with the interactions said.
“I think the only way Manchin will see this as a real deficit reduction bill is if it’s reducing deficits every year, not playing games like the last version,” said Ben Ritz, director of the Center for Funding America’s Future at the Progressive Policy Institute. “It’s definitely a good pivot, but it actually needs to be a deficit reduction bill for this to work.”

 
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