White House sidelined as Manchin again crushes Biden’s policy ambitions

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NUSA DUA, Indonesia — President Biden was in the Middle East and Treasury Secretary Janet L. Yellen was here in Southeast Asia when talks over the administration’s long-delayed sweeping economic agenda stalled yet again.

Sen. Joe Manchin III (D-W.Va.), the Senate’s most conservative Democrat, communicated to Democratic leadership on Thursday that he would not support tax hikes on the wealthy or any new spending on clean energy as part of an economic package in Congress this summer, delivering a major blow to two of the administration’s most important policy goals.

By Friday afternoon, Biden urged lawmakers to pass whatever they could to lower health-care costs, which Manchin has said he’ll support, and promised to take “strong executive action” to address climate change if the Senate wouldn’t act.

Manchin says he won’t support new climate spending or tax hikes on wealthy

But a president who spent 36 years in the Senate and another eight working closely with it as vice president had already taken a back seat in the attempt to push his economic agenda priority through a Congress his party controls by the narrowest of margins. The White House had much earlier left Senate Majority Leader Charles E. Schumer (D-N.Y.) to negotiate with Manchin over how to assemble a bill the West Virginia centrist could support. White House Chief of Staff Ron Klain has long been skeptical about the potential for a deal with Manchin, according to three people with direct knowledge of his private remarks.

Asked about whether Manchin had negotiated in good faith, Biden told reporters in Saudi Arabia: “I didn’t negotiate with Joe Manchin; I have no idea.”

Speaking to reporters outside the conference of global financial officials on Saturday, Yellen touted the potential economic benefits of a package focused on the health care reform policies as a meaningful step forward for the country.

“Those are very important initiatives to hold costs down and address a high cost of living for American families,” Yellen said. “We shouldn’t minimize the positive impact that those changes can have. They’re significant for American families.”

Talks between Biden and his party’s 50th vote in the Senate broke down last winter when Manchin publicly announced his opposition to an earlier, more ambitious version of the legislation, and the two men had a heated conversation afterward. Trust between their camps never really recovered.

On Friday, Manchin insisted he might still consider supporting some investments on fighting climate change and raising some taxes, but only after seeing inflation data for July, which is due to be released on Aug. 10. Even if that’s the case, delaying the legislation until then would make it nearly impossible to pass before a Sept. 30 deadline for using the process known as budget reconciliation to get it past a GOP filibuster in the Senate. Manchin’s opposition to tax reform marks a major reversal after months in which he called for Democrats to repeal key parts of former president Donald Trump’s 2017 tax law to fight inflation.

Manchin’s latest abandonment of Biden’s domestic agenda also marks another substantive defeat for White House aides who had just a year ago dreamed of transformational changes to America’s economy, safety net, education system and tax code.

In 2021, Sen. Joe Manchin III (D-W.Va.) changed his top line spending number for President Biden’s agenda more than half a dozen times. (Video: JM Rieger/The Washington Post, Photo: Jabin Botsford/The Washington Post)

Initially, the White House released roughly $4 trillion in new spending plans. While some of that was incorporated into the $1 trillion bipartisan infrastructure law Congress approved last fall, the bulk of it now appears likely never to pass. Manchin’s position also undermines the White House’s international policy ambitions, with the administration trying to rally the world to join in action to fight climate change and Yellen pushing a new global minimum tax on corporations that Manchin’s position now prevents the U.S. from implementing.

“This is how the White House has always feared this would end. It vindicates their skepticism toward Manchin over the past six months, but it also marks the death of their climate agenda and ambitions to transform the country,” said one outside White House adviser, speaking on the condition of anonymity to reflect conversations with administration officials.

In the interview in Nusa Dua, Yellen said that the U.S. and its allies were still committed to moving forward on the global tax deal despite Manchin’s opposition. Yellen highlighted that the global tax agreement gives countries taxing rights on multinational firms’ profits booked in jurisdictions where taxes below the new minimum of 15 percent. Yellen argued that means the U.S. will have an incentive to increase its tax rate or lose out on government tax revenue, despite Manchin’s current opposition to that provision.

“There’s huge global momentum to move forward. Other countries are moving forward,” Yellen said. “It will create a momentum for us to join in, too.”

Still, despite Biden’s call for more aggressive executive action on the climate, Yellen appeared to reject calls to expand the work of the nation’s banking officials to make it more expensive to loan to fossil fuel producers. Some climate advocates and liberals have pushed this use of the Financial Stability Oversight Council — a body of independent financial regulators led by Treasury — to combat global warming, but Treasury has so far resisted that approach. “FSOC is mainly concerned with evaluating the risks of climate change for financial stability,” Yellen told The Washington Post. “It’s not really a direct tool to address climate change.” Yellen said she would support the president’s executive actions on climate and pointed to her existing work on international climate finance.

How the White House lost Joe Manchin, and its plan to transform America

Biden landed in Saudi Arabia Friday after spending two days in Israel. He once promised to make the kingdom a “pariah” state for human rights violations, but Russia’s invasion of Ukraine and the resulting disruption to global oil markets has forced the White House to engage with Saudi officials. Gas prices have soared this year, though they’ve fallen over the past month. As a major oil producer, Saudi Arabia has the power to increase the world’s supply, but it’s not clear that they intend to do so or whether that itself would notably affect prices at the pump.

President Biden on July 15 claimed wins on oil and diplomacy after his meeting with several Saudi officials. (Video: The Washington Post)

Yellen, meanwhile, is immersed in her efforts at a conference of financial officials from the Group of 20 industrialized nations to enact a price cap on purchases of Russian oil. The treasury secretary has had only minimal involvement in negotiating Democrats’ domestic economic agenda with Congress. Treasury staff were not major participants in discussions among congressional Democrats over one of the most significant proposed overhauls of the tax code in decades, even before Manchin ruled it out of negotiations, two people familiar with the matter said, speaking on the condition of anonymity to reflect internal matters.

Various administration officials have tried to court the senator. White House National Economic Council Director Brian Deese traveled in March to meet Manchin in West Virginia, where the two went zip-lining, according to CNN. Manchin went with Interior Secretary Deb Haaland to New River Gorge National Park in Glen Jean, W.Va., after which he posted photographs of them smiling together on social media.

John F. Kerry, the White House’s senior climate adviser, dined with Manchin in Paris this spring. Manchin talked frequently with Steve Ricchetti, one of the president’s top aides, and Klain personally apologized to Manchin for any misunderstandings after talks fell apart in December. Energy Secretary Jennifer Granholm traveled with Manchin to West Virginia in June to tout a plan to promote U.S. offshore wind projects. Granholm later said she was “bullish” about the prospect of a climate deal with Manchin’s approval.

None of those efforts kept Manchin onboard with Biden’s top priorities.

“I’m sure they are furious … It has to be disappointing; they keep moving closer to Manchin’s position and he keeps changing the position,” said Dean Baker, a liberal economist in communication with senior administration officials. “They’ve been trying to negotiate with good faith, recognizing Manchin’s concerns. But he keeps moving the ball, and it just looks like he took the ball home.”

Tyler Pager and Tony Romm contributed to this report.

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