Manchin cites inflation concerns, roiling budget talks anew

FILE – Senator Joe Manchin (D-W.Va.) talks to reporters at Capitol in Washington, June 14, 2022. Manchin is currently roiling the budget talks with Democratic leadership anew. The West Virginia Democrat says the latest inflation surge makes him more cautious about agreeing to federal spending increases that could drive consumers’ costs even higher. (AP Photo/J. Scott Applewhite, File)

WASHINGTON (AP) — Sen. Joe Manchin roiled his budget talks with Democratic leaders anew Wednesday, saying the latest inflation surge makes him “more cautious than I’ve ever been” about agreeing to federal spending increases that could drive consumers’ costs even higher.

The West Virginia Democrat, who single-handedly killed Democrats’ roughly $2 trillion, 10-year social and environment bill before Christmas, has been bargaining with Senate Majority Leader Chuck Schumer over a new economic package that would be around half that size. But Manchin said grim new inflation figures meant the energy, tax and health compromise he’s been discussing with the New York Democrat must be reviewed.

“Everything needs to be scrubbed, anything that can be inflationary,” Manchin told reporters. He said that while agreed-on provisions aimed at containing pharmaceutical prices should remain, “Is there anything more we can do? I don’t know. But I’m very, very cautious.”

Subscribe TodayThe all-new Factor This! Renewable Energy World podcast. This podcast is specifically designed for the solar industry. Everywhere you get your podcasts.

Listen to the latest episode, on the restart of California’s net energy metering reform proceeding  —  and rooftop solar’s biggest fight yet  —  with Vote Solar’s new executive director, Sachu Constantine.

It was unclear what impact Manchin’s comments would have on his closed-door talks with Schumer, which have shown progress lately. But they suggested he believed the day’s inflation report strengthened his leverage in that bargaining and, beyond that, in winning enough Democratic votes to push any agreement through the tightly divided Congress. Unanimous opposition seems certain from Republicans, who say the emerging plan’s spending and tax increases would worsen inflation.

Shortly after the government reported early Wednesday that the consumer price index has grown by 9.1% this past year, Manchin released a statement citing “the pain families across the country are feeling.” It was the largest annual inflation increase in four decades.

“No matter what spending aspirations some in Congress may have, it is clear to anyone who visits a grocery store or a gas station that we cannot add any more fuel to this inflation fire,” Manchin said.

Other Democrats contest Manchin’s assertion that the measure under discussion would make inflation worse. They say it would contain drug prices and half its roughly $1 trillion price tag will be used to reduce government debt.

Experts cite many factors for this year’s relentless inflation increase including the trillions Washington has spent on pandemic relief, record gasoline prices and cheap borrowing from interest rates that were low until recently. Other reasons include the tight job market, global supply chain problems and disruptions to world energy and food markets from Russia’s invasion of Ukraine.

Asked if Manchin’s latest comments were discouraging, No. 2 Senate Democratic leader Richard Durbin of Illinois said, “I’m used to it.” Durbin has been openly skeptical that the effort can be revived following Manchin’s move last year to scuttle the earlier package, which was a top priority for President Joe Biden.

Despite this, some Democrats are cautiously optimistic about a Manchin deal. If anything, it’s a reluctant acknowledgment that a less modest, imperfect election year accomplishment would be better.

Asked if she was concerned that Manchin’s remarks put a revived package in jeopardy, Sen. Elizabeth Warren, D-Mass., said, “We need 50 votes.”

A Schumer spokesperson did not immediately provide a comment about Manchin’s statements.

Other stumbling blocks face Democrats as well.

A handful of moderate Democrats in the House — where leaders can lose no more than four votes — want any agreement to boost federal deductions allowed for state and local taxes. Manchin stated that Schumer has not discussed this proposal with him.

It is unclear whether Schumer and Manchin can reach a deal and pass it before Congress starts its summer recess next month. That timetable is a goal for party leaders because if they don’t do that, they will only have until Sept. 30 before special procedures expire that would let Democrats push it through the 50-50 Senate without any GOP votes.

The Schumer-Manchin talks have focused on provisions that could include protections for the fossil fuel industry and incentives for clean energy, higher taxes on top-earning individuals and companies, prescription drug price curbs and a buttressing of Medicare’s finances, according to people following the talks. A Manchin demand would see that half of the $1 trillion go to deficit reduction.

In his statement, Manchin said it is time for Democrats to “get unnecessary spending under control, produce more energy at home and take more active and serious steps to address this record inflation.”

Asked if his statement meant it would be harder for bargainers to craft a compromise, Manchin said, “No, no, no, not tougher at all, I’m just more cautious than I’ve ever been.”

He did not rule out extending federal subsidies for health insurance costs, favored by many Democrats, saying it depends on whether bargainers could “find a way pathway forward” that would not worsen inflation.

Manchin cited inflation concerns when he lowered the December original legislation. This was before policymakers realized price increases would become permanent. He cited other factors as well including short-term savings that he called “gimmicks,” a need to focus on the pandemic and objections to what he called an attempt to “dramatically reshape our society.”