Tax agenda revival hinges on Manchin and Sinema

 

Democratic hopes of resurrecting key pieces of the stalled Build Back Better (BBB) package in the next several weeks rest with Sens. Joe Manchin, D-W.V., and Kyrsten Sinema, D-Ariz.

 

Several key Democrats expressed guarded hope for a second run at a smaller version of their tax and funding priorities before the Memorial Day recess. The administration is adjusting their negotiating strategy, pledging not to comment in the press on any talks with Manchin. Manchin immediately put this policy to the test, accusing the White House of not doing enough to curb inflation in sharply critical comments.

 

The Biden administration avoided hitting Manchin back, and Manchin has appeared open to reviving key pieces of BBB in recent comments. No real progress has been made, however, and significant hurdles remain. Recent comments from Sinema in particular pose problems.

 

Manchin favors a smaller bill that funds renewable energy tax incentives and select spending priorities with tax increases that would also be partially used to pay down the deficit. Many of the revenue raisers included in the stalled version of BBB could be included, but Manchin would also like to revive increases to the corporate and capital gains rates. Sinema has repeatedly rejected these proposals, and last week reiterated her opposition.

 

“I retain that position,” she said. “Everyone knows it. Not everyone’s happy about it, but that’s my position.”

 

Someone will have to budge for any deal to be possible. It’s also unclear whether progressives can accept the kind of stripped-down bill Manchin envisions. Several Democrats said significant progress would need to occur before the Memorial Day recess, although other members offered looser deadlines of the July 4 or August recesses. The closer the calendar creeps to the November elections, the harder it will become to strike any deal.

 

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