Senator Joe Manchin threw more cold water on President Joe Biden’s spending plans after inflation spiked to a 7.5% in January, the highest rate in four decades.
Manchin for months has been raising alarms about the impact of federal spending on inflation and in December pulled the plug on negotiations over Biden’s economic plans, citing rising prices as among his concerns.
He’s also been urging the Federal Reserve to act more aggressively to stem inflation, which he said is “causing real and severe economic pain that can no longer be ignored.”
“It’s beyond time for the Federal Reserve to tackle this issue head on, and Congress and the Administration must proceed with caution before adding more fuel to an economy already on fire,” the West Virginia Democrat said Thursday in a statement.
Manchin separately reiterated his support for raising taxes on corporations, the wealthy and lifting the cap on income subject to Social Security taxes to shore up the nation’s finances.
“Let’s get a tax bill that really puts us on the path to financial solvency,” he said in an interview with West Virginia MetroNews.
Biden and other Democratic leaders have argued the president’s plan, known as Build Back Better, would boost the economy and help tame inflation by cutting costs for prescription drugs and child care. But Manchin, a pivotal vote in the evenly divided Senate, has declared the plan as currently configured “dead.”
“The bottom line, you just got to get your trajectory going the right direction right now. We’re not going in the right direction with our debt, with inflation, with any of our monetary policy,” Manchin told reporters at the Capitol. “The most important thing we have to deal with is our fiscal responsibilities and basically our financial position that we’re in in our country.”
So far other moderate Democrats are not leaping to abandon Biden’s agenda. Jon Tester of Montana said he supports passing a version of the bill that reduces costs, as well as enacting immigration reform to increase the supply of workers.
But Manchin’s remarks show how far Democrats are from agreeing on a way forward. Arizona Senator Kyrsten Sinema has blocked the corporate and individual tax rate increases Manchin wants, putting his party in a bind in the 50-50 Senate where every Democrat has a veto.
Manchin has said some pieces of Biden’s plan could pass later after Congress acts on a bipartisan bill to fund the government, though he wants them to go through a committee process. His statement made clear he’s focused on inflation and debt.
“As inflation and our $30 trillion in national debt continue a historic climb, only in Washington, D.C., do people seem to think that spending trillions more of taxpayers’ money will cure our problems, let alone inflation,” he said.
Economists at the Penn Wharton Budget Model in December projected that the House-passed Build Back Better bill would add as much as 0.2% to inflation over the next two years and reduce inflation by a similar amount later in the decade. Most of the inflationary effects would come from child tax credit payments, which have now expired.
The Congressional Budget Office has said the House version of the Build Back Better plan would add $367 billion to U.S. budget deficits over the decade while the White House produced its own rival score for the bill showing a $112.5 billion deficit decrease, when its estimate of revenue gains from stricter tax enforcement is included.
Democrats look for a reboot
Democrats have struggled to find a path forward on Biden’s economic agenda. Most still cling to the hope that a scaled back package can eventually win Manchin’s approval.
“There are some pieces of what was previously being discussed that would directly reduce consumer costs,” Senator Chris Coons of Delaware said. “My hunch is that our only path forward is a bill that is fully paid for, frankly that generates additional revenue that can be used to reduce the debt and deficits, and that directly reduces consumer prices.”
Some like Senate Budget Chairman Bernie Sanders and Senator Amy Klobuchar want to bring smaller bills to the floor for votes in the meantime. Sanders said Wednesday he has urged Majority Leader Chuck Schumer to move on items like legislation to cut prescription drug prices — a popular issue that drug companies have successfully blocked for a generation.
That’s an issue on which Manchin, who has backed having the government negotiate lower drug prices, is aligned with other Democrats.
Biden touted his efforts to roll back drug costs in his statement Thursday on inflation and is traveling to Culpeper, Virginia, Thursday to highlight the issue.
— With assistance from Laura Litvan
