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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 as talks on the administration’s long-delayed comprehensive economic agenda hit another deadlock.
Sen. Joe Manchin III (DW.Va.), the Senate’s most conservative Democrat, told Democratic leadership Thursday that he would not support tax increases on the wealthy or new clean energy spending as part of an economic package in Congress in this summer, dealing a major blow to two of the administration’s most important policy goals.
By Friday afternoon, Biden urged lawmakers to pass what they can to reduce health care spending, which Manchin said he would support, and vowed to take “strong executive action” to address climate change if the Senate did not act.
Manchin says he won’t support new climate spending or tax increases on the wealthy
But a president who spent 36 years in the Senate and another eight working closely with him as vice president had already taken a backseat to trying to push the priority of his economic agenda through Congress, which his party controls by the slimmest of margins. The White House had much earlier let Senate Majority Leader Charles E. Schumer (DN.Y.) negotiate with Manchin on how to craft a bill the West Virginia centrist could support. White House chief of staff Ron Klein has long been skeptical about the potential for a deal with Manchin, according to three people with direct knowledge of his personal memos.
Asked if Manchin had negotiated in good faith, Biden told reporters in Saudi Arabia: “I have not negotiated with Joe Manchin; I have no idea.”
Speaking to reporters on the sidelines of the Global Financial Officials Conference on Saturday, Yellen touted the potential economic benefits of a package focused on health care reform policies as a significant step forward for the country.
“These are very important initiatives to contain costs and to address the high cost of living for American families,” Yellen said. “We should not minimize the positive impact these changes can have. They are important to American families.
Talks between Biden and his party’s 50th Senate vote broke down last winter when Manchin publicly said he opposed an earlier, more ambitious version of the legislation, and the two men had a heated exchange afterward. Trust between their camps was never restored.
On Friday, Manchin insisted he could still consider supporting some climate change investments and raising some taxes, but only after seeing inflation data for July, due Aug. 10. Even if that were the case, delaying the legislation until then would make it nearly impossible to pass before the Sept. 30 deadline for using the process known as budget reconciliation to get through the GOP’s line in the Senate. Manchin’s opposition to tax reform marks a major reversal after months in which he urged 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 major defeat for White House aides who only a year ago were dreaming of transformational changes to America’s economy, safety net, education system and tax code.
In 2021, Sen. Joe Manchin III (DW.Va.) changed his top 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)
The White House initially released about $4 trillion in new spending plans. While some of that was included in the bipartisan $1 trillion infrastructure bill passed by Congress last fall, most of it now looks likely to never pass. Manchin’s position also undermines the White House’s international policy ambitions, with the administration trying to rally the world to join action on climate change and Yellen pushing a new global minimum corporate tax that Manchin’s position now prevents the U.S. to apply.
“That’s how the White House always feared it would end. It vindicates their skepticism of Manchin over the last six months, but it also marks the death of their climate agenda and ambitions to transform the country,” said an outside White House adviser, speaking on condition of anonymity to reflect conversations with administration officials.
In the interview in Nusa Dua, Yellen said the US and its allies were still committed to moving forward on the global tax deal despite Manchin’s opposition. Yellen stressed that the global tax agreement gives countries rights to tax the profits of multinational firms booked in jurisdictions where taxes are below the new minimum of 15 percent. Yellen argued that this means the US would have an incentive to raise its tax rate or lose government tax revenue, despite Manchin’s ongoing opposition to the provision.
“There is a huge global momentum to move forward. Other countries are moving forward,” Yellen said. “That will create momentum for us to join as well.”
Still, despite Biden’s call for more aggressive executive action on climate, Yellen appeared to reject calls to expand the work of national bankers to make it more expensive to lend to fossil fuel producers. Some climate advocates and liberals have pushed for this use of the Financial Stability Oversight Board — a body of independent financial regulators led by the Treasury Department — to fight global warming, but the Treasury Department has so far resisted the approach. “The FSOC is primarily concerned with assessing the risks of climate change to 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 action on climate and pointed to her existing work on international climate finance.
How the White House lost Joe Manchin and his plan to transform America
Biden landed in Saudi Arabia on Friday after spending two days in Israel. He once promised to make the kingdom a “pariah” state for human rights abuses, but Russia’s invasion of Ukraine and the resulting disruption in global oil markets forced the White House to reach out to Saudi officials. Gas prices have soared this year, although they fell in the last month. As a major oil producer, Saudi Arabia has the power to increase global supply, but it is unclear whether they intend to do so or whether that alone will significantly affect pump prices.
President Biden on July 15 said he won oil and diplomacy after meeting with several Saudi officials. (Video: The Washington Post)
Yellen, meanwhile, is mired in her efforts at a conference of finance officials from the Group of 20 industrialized nations to impose a price ceiling on purchases of Russian oil. The Treasury Secretary had only minimal involvement in the negotiations of the Democrats’ domestic economic agenda with Congress. Treasury officials were not major players in discussions among congressional Democrats over one of the most significant proposed changes to the tax code in decades, even before Manchin cut it out of the talks, two people familiar with the matter said, speaking on the condition of anonymity. anonymity reflect internal matters.
Various administration officials tried to woo the senator. White House National Economic Council Director Brian Dease traveled in March to meet with Manchin in West Virginia, where the two went ziplining, according to CNN. Manchin went with Interior Secretary Deb Haaland to New River Gorge National Park in Glen Jean, West Virginia, then posted photos 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 speaks frequently with Steve Ricchetti, one of the president’s top aides, and Klein personally apologized to Manchin for any misunderstandings after talks broke down in December. Energy Secretary Jennifer Granholm traveled with Manchin to West Virginia in June to tout a plan to promote American offshore wind projects. Granholm later said she was “optimistic” about the prospect of a climate deal with Manchin’s approval.
None of those efforts got Manchin on board with Biden’s top priorities.
“I’m sure they’re furious… It must be frustrating; they keep getting closer to Manchin’s position and he keeps changing his position,” said Dean Baker, a liberal economist in communications with senior administration officials. “They are trying to negotiate in good faith, acknowledging Manchin’s concerns. But he keeps moving the ball and it just looks like he put it away.
Tyler Pager and Tony Rom contributed to this report.
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