Reconciliation bill moves forward as Biden meets with Manchin and Sinema at the White House

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Deadlines

Bipartisan infrastructure bill: Promised to hold a vote in the House by Sept. 27.

Reconciliation bill: If Democrats plan to keep the two infrastructure bills tied together, this would also have to be done by Sept. 27.

Government funding: A government shutdown will occur if an appropriations bill is not passed by the end of the month.

Debt ceiling: The Treasury says the US will default in October if the debt ceiling is not raised.

Immigration reform

Democratic staff met with the Senate parliamentarian last week to present their case for including elements of immigration reform in the reconciliation bill. According to CNN, aides argued that allowing certain classes of immigrants – like DACA recipients and essential workers – to apply for Legal Permanent Residency would impact the federal budget through additional cost to social programs. All provisions of a reconciliation package must impact the federal budget, either positively or negatively, in order to be approved by the parliamentarian.

Democrats estimate their legislation would make roughly 8 million immigrants eligible for Legal Permanent Residency status, short of the 11 million that would have benefited from the 2013 comprehensive immigration bill, but aides say the goal of this legislation is more narrow than the bill nearly a decade ago.

“Look, this is not comprehensive immigration reform,” one Democratic aide said Thursday. “This is a budget reconciliation bill, we feel, and our bosses clearly feel that in terms of satisfying the very stringent test for inclusion in the budget reconciliation bill that these populations were most appropriate for inclusion.”

Manchin in the mud

Unsurprisingly, West Virginia Sen. Joe Manchin (D) continues to vociferously oppose the planned reconciliation bill. On his weekly media tour and in an op-ed, Manchin frames the package in terms of a $3.5 trillion price tag, ignoring that pay-fors have not yet been taken into account. The net cost will surely be lower than the $3.5 trillion he balks at.

  • Manchin reportedly does not agree with broadening the child tax credit, wants to limit universal pre-K and tuition-free community college provisions, and is lobbying to reduce funding for come-care services.
  • As he’s previously stated, Manchin remains opposed to aggressive clean energy measures. I’m finding out there’s a lot of language in places they’re eliminating fossils, which is very, very disturbing,” the senator said over the summer.
    • An independent analysis found that the national Clean Electricity Payment Program contained in the reconciliation package would create 7.7 million jobs and add over $900 billion to the economy between now and 2031.
  • One pay-for Manchin supports is raising the tax rate for corporations: “I want to increase taxes on corporations, I’ve spoken to corporations, I want the wealthy to pay their fair share.”

CNN’s Dana Bash tried to pin down Manchin on what price tag would be acceptable. He refused to answer (clip):

Bash: Do you have a specific number in mind?

Manchin: Here’s a number you should be getting to. First of all, I have agreed to get onto the reconciliation, because that’s the time for us to make financial adjustments and changes. I thought the 2017 tax code and tax law, the way it was changed, was barely — very, very unfair. And it was weighted to the heavy — to the wealthy.

Bash: So what’s the number?

Manchin: And bottom line is, what’s — the number would be what’s going to be competitive in our tax code. I believe the corporate rate should be at 25, not 21.

Bash: But what’s the overall number for the budget bill?

Manchin: You know, I think that you’re going to have to look at it and find out what you’re able to do through a reasonable, responsible way.

Biden is meeting with Manchin and Sinema today at the White House.

SALT cap

Another, less publicized division among Democrats is centered on the SALT cap, a limit imposed by Republicans in 2017 on the federal deduction of taxes paid to state and local governments. The cap, set to $10,000 under Donald Trump, disproportionately impacts Democratic coastal states.

Rep. Thomas Suozzi (D-NY) is among several lawmakers who say they won’t support the reconciliation bill without a full repeal of the cap:

“We need to have this state and local tax deduction. We built a whole system around it,” said Suozzi, who since 2017 has represented parts of Long Island and northeastern sections of Queens, New York. “People are leaving our states. And when they leave, it leaves behind a hole in our revenues.”

“We’re in a competition with states that do not insure their children, do not pay their teachers, do not have mass transit and think that climate change is a hoax,” he said. “And as a result, their costs are cheaper.”

Others, like progressive Rep. Alexandria Ocasio-Cortez (D-NY), call a full repeal “a giveaway to the rich.” Instead, they suggest raising the cap as a compromise.

Tax the rich

Lobbyists are ramping up efforts to get their interests included in – or excluded from – the reconciliation bill. Former North Dakota Senator Heidi Heitkamp joined the fray on behalf of superlobbyist John Breaux to oppose taxing appreciated assets at death for income over $1 million. Under Biden’s proposal, a loophole that allows people to avoid capital gains taxes on inherited investments will be closed, generating funds to help pay for the bill’s social programs.

Heitkamp, who chairs a dark money nonprofit called Save America’s Family Enterprises, claims the capital gains tax would hurt middle-class families and minority-owned businesses.

The argument fails, [Steven Rosenthal, a senior fellow at the Tax Policy Center,] notes, because Biden’s plan taxes such capital gains only at over $1 million per person, which means it would target a very small slice of the ultrawealthy.

What’s more, the plan would allow owners of family businesses to indefinitely defer such taxes as long as the business remains in the family. “Biden structured his proposal to avoid taxing family farmers,” Rosenthal told me.

A Center for American Progress analysis reached the same conclusion, noting that the plan “taxes billionaires and protects family farms and businesses.”

It would be prudent to keep in mind that Heitkamp’s nonprofit is running a six-figure ad campaign against the proposal without disclosing their funding. Furthermore, let’s recall that just 5 months ago Heitkamp said the loophole was “one of the biggest scams in the history of forever.”