Manchin and Sinema force Dems to drop corporate tax rate hike, fossil fuel penalties, and free community college


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Child Tax Credit

Sen. Joe Manchin (D-WV) reportedly wants to impose an income cap and work requirement for the reconciliation bill’s child tax credit (CTC) in order to gain his support. A new analysis from the Niskanen Center, a moderate DC-based think-tank, found that Manchin’s $60k a year income cap would cut benefits from 37.4 million children, or 60% of the kids currently receiving the monthly payments.

In West Virginia, 170,000 children became newly eligible under the tax credit expansion, which was included in Biden’s $1.9 trillion stimulus package passed in March. The changes to the tax credit raised the maximum benefit from $2,000 to $3,600 per child per year and dramatically expanded the share of poor families receiving the credit. In July, the food insecurity rate in West Virginia households with children dropped from 11.6 percent to 8.4 percent, and in September a survey found 86 percent of West Virginians felt the payments had made a “huge difference.”

  • “Manchin’s work requirement for child benefits would throw grandparent-led families under the bus,” WaPo.
  • “Biden says he does not support adding a work requirement to the child tax credit,” CNN.

Climate change

A key provision in the reconciliation bill to fight climate change has been dropped due to the opposition of Sen. Joe Manchin…who just so happens to make millions from the fossil fuels industry. The Clean Electricity Performance Program (CEPP) would drive a transition to 100% clean electricity over the next 15 years by rewarding utilities that increase their share of clean electricity by 4% annually and charging a fee to those who don’t.

Nearly all Senate Democrats appear to be on board with the program, supported by 66% of voters, except for Manchin. According to his spokesperson, the Senator can’t support “using taxpayer dollars to pay private companies to do things they’re already doing.”

“The transition’s already happening,” Manchin told CNN. “So I’m not going to sit back and let anyone accelerate whatever the market’s changes are doing.”

You may think he is simply advocating for his state, which is heavily reliant on coal, but West Virginians are paying a steep price:

The residential electricity rates of AEP’s West Virginia subsidiaries have risen 122% over the last 13 years, from an average of $62.46 per month in 2008 to $138.57 per month in 2021… AEP’s three coal-fired power plants in West Virginia — John Amos, Mountaineer, and Mitchell — are in need of $448 million worth of mandatory upgrades in order to remain federally compliant, causing electricity rates to increase by 3.3% starting in September 2022, according to Tammy Ridout, a spokesperson for AEP. These upgrades would allow the plants to stay open until 2040, rather than being shut down in 2028.

Kentucky and Virginia’s public service commissions recently pulled their support from AEP’s three West Virginia plants in need of upgrades, saying the plants are too expensive to support. But West Virginia’s Public Service Commission recently ruled in favor of approving the upgrades to allow the plants to operate until 2040. “The policy question here is whether it’s appropriate for West Virginia ratepayers to pay more to keep uneconomical plants open,” West Virginia House Delegate Evan Hansen told CNN. “How many subsidies keep getting thrown at coal fired power plants to keep them open?”

The more likely explanation for Manchin’s stubborn resistance to clean energy is his bank account. Since he was elected to the Senate 11 years ago, Manchin has raked in over $4.5 million from coal companies he founded. These firms have destroyed the local environment, sickened residents, and received numerous EPA and safety violations.

Democrats are suggesting provisions to replace the CEPP but have not yet coalesced around a specific proposal. One is keeping the incentive portion of the CEPP but getting rid of the fine for failing to switch over to clean electricity in the hopes of winning Manchin’s support. This approach risks losing progressive lawmakers, like Rep. Jared Huffman (D-CA):

Rep. Jared Huffman (D-Calif.), a member of the Congressional Progressive Caucus, warned that any replacement to the CEPP must make significant progress toward President Biden’s goal of reducing emissions at least 50 percent by 2030. “You can’t just throw money at any old thing and call it a deal,” Huffman told The Climate 202 on Wednesday. “So we’ve really got to replace it with something that provides comparable emission reductions in the power sector.”

Another alternative under examination is “a voluntary emissions trading system among aluminum, steel, concrete and chemicals manufacturers that would provide federal funding to help companies curb pollution.” It’s unclear how such a program would be structured.

The White House is also exploring using different agencies to accomplish the same climate change goals:

A White House-backed clean power program that was rejected by Senator Joe Manchin could be resurrected as a grant program that would reward states that increase clean energy… The notion of using grants, which would require congressional funding through the spending bill being hashed out in Congress, dovetails with remarks made by Energy Secretary Jennifer Granholm, who earlier this year said a national clean energy mandate could be done as a national contest between states if Congress doesn’t go along with the plan…

“There is a variety of discussions right now about how to have different authorities, different funding streams that can work in partnership with states, with utilities, with others in the private sector and local governments as well,” [David Turk, the Energy Department’s deputy secretary,] told a Bloomberg Live event Tuesday. “There are a number of pathways here and those are the discussions we are having with key leaders on the Hill.”

Tax hike

The other roadblock in the Senate, Kyrsten Sinema (D-AZ) has taken issue with raising taxes to pay for the reconciliation bill’s social and climate programs. Democrats’ original plan included increasing the corporate tax rate and individual tax rate for high earners, partially undoing the 2017 GOP tax cuts under President Trump. Sinema reportedly opposes any tax hike, even on the super rich, despite voting against the GOP tax cuts.

“She is committed to ensuring everyday families can get ahead and that we continue creating jobs,” [Sinema spokesman John LaBombard said]. “She has told her colleagues and the president that simply raising tax rates will not in any way address the challenge of tax avoidance or improve economic competitiveness.”

In order to pay for the bill and win Sinema’s support, Democrats are working on alternative proposals like a targeted tax on billionaires:

Under the “Billionaire Income Tax” proposal, a summary of which was obtained by The Washington Post, the federal government would require billionaires to pay taxes on the increased value of assets such as stocks on an annual basis, regardless of whether they sell those assets. Billionaires would also be able to take deductions for any annual loss in value of those assets.

The plan would also set up a system for taxing assets that are not easily tradable, such as real estate. The tax would apply to billionaires and people earning more than $100 million in income three years in a row.

Sinema’s opposition to a broad tax increase on those making over $400,000 a year puts her at odds with most Americans: “68% support raising taxes on wealthy Americans and 62% say the same for raising the corporate tax rate,” according to a Morning Consult poll.

Drug pricing

Moderate House and Senate Democrats are also forcing their party to weaken their Medicare drug price negotiation plan, prompting some to despair that it’d be better to drop the idea altogether:

“It’s been eviscerated,” said Rep. Lloyd Doggett (D-Texas), who chairs the health subcommittee of House Ways and Means, and has pushed for aggressive drug price controls. “At some point you have to ask: Is it worth it to pass it at all if it’s going to be some meaningless thing?”

In its original form, the proposal would have given Medicare broad powers to bargain down the cost of hundreds of drugs, making them more affordable for all. The first sign of trouble came last month when three moderate Democrats on the House Energy and Commerce Committee—Reps. Scott Peters of California, Kathleen Rice of New York and Kurt Schrader of Oregon—joined with Republicans to drop the drug pricing language from a draft bill.

Sen. Kyrsten Sinema has since joined the opposition group, according to unnamed sources cited by Politico, despite campaigning on lowering drug prices in 2018.

During her 2018 Democratic primary campaign, Sinema released a direct-to-camera ad noting that her family had struggled with healthcare costs when she was younger. “We need to make healthcare more affordable, with access to the lowest-cost prescriptions, and fix what’s broken in the system,” she said in the ad.

Sinema’s 2018 campaign website featured similar language: “Kyrsten is committed to making sure Arizonans have access to more health care choices, low-cost prescription drugs, and high-quality, dependable coverage. As one of the most independent-minded members of Congress, she’s committed to working with anyone – regardless of party – to get it done.”

The likely cause for her change of heart: a flood of money from pharmaceutical companies. During the 2019-2020 election cycle, Sinema received nearly $100,000 from political action committees run by employees of drug companies and their trade groups.

That stands out in a Congress in which a third of the members got no pharma cash for the period and half of those who did got $10,000 or less. The contributions give companies a chance to cultivate Sinema as she restocks from a brutal 2018 election victory that cost nearly $25 million.

Her pharmaceutical haul since 2017 totals nearly $400,000.

The slow progress is in part due to an all-out lobbying campaign from the Pharmaceutical Research and Manufacturers of America, the drug industry’s powerful trade group, to ensure nothing like the House proposal makes it into the reconciliation bill. PhRMA shelled out more than $22.4 million lobbying on drug pricing and other issues in the first nine months of the year, according to recent disclosure filings. And it has run TV ads warning the proposal will mean that “politicians … decide which medicines you can and can’t get.”

…PhRMA appears mainly to have focused its efforts on lawmakers with concerns about House Democrats’ proposal. They include three House Democrats who opposed drug-pricing language in committee last month, and Sens. Tom Carper (D-Del.), Kyrsten Sinema (D-Ariz.) and Robert Menendez (D-N.J.).

Other programs at risk

Community College

Manchin has opposed a plan for tuition-free two-year community college education, saying he prefers making student loans forgivable. “Let them earn it. Don’t give it on the front end. Let them earn it on the back end,” Manchin said.

Manchin’s position follows his stated belief that social spending leads to an “entitlement society.”

“I’m just not, so you know, I cannot accept our economy or basically our society moving toward an entitlement mentality. I’m more of a ‘rewarding’, because I can help those who are going to need help if those who can help themselves do so.”

A week later, he criticized Sen. Bernie Sanders’ (D-VT) approach to social spending:

“I’ve been very clear when it comes to who we are as a society, who we are as a nation,” Manchin said. “I don’t believe that we should turn our society into an entitlement society. I think we should still be a compassionate, rewarding society.”

The tuition-free college plan has consequently been dropped from the reconciliation bill.

Paid leave

Manchin similarly is against the 12 weeks of paid leave, forcing Democrats to pare the time back to just four weeks or less.

Asked Monday if he had concerns about the paid leave proposal, Manchin said: “I’m concerned about an awful lot of things.”

Sen. Kirsten Gillibrand (D-NY) is among those pushing Manchin to support more paid leave and was seen negotiating with him on Monday:

“I’m hoping to work with him on an employer, employee matching plan. That’s something he’s very interested in and I’m going to try to work with him on a plan that meets his area of interest,” Gillibrand told reporters…

Medicare expansion

On Monday, Manchin told reporters that he opposes expanding Medicaid to cover hearing, dental, and vision care without first addressing “insolvency” (clip):

“Medicare and Social Security is a lifeline for people back in West Virginia, most people around the country, and you’ve got to stabilize that first before you look at basically expansion. So, if we’re not being fiscally responsible, that’s really concerning…I’ve always said that I believe that government should be your best partner, but it shouldn’t be your provider.”