Key Democratic Sen. Joe Manchin is expressing alarm again about high prices, saying Congress shouldn’t back spending that would “add any more fuel to this inflation fire.”
So what actually could end up in his party’s so-called reconciliation package?
As Manchin negotiates with Senate Majority Leader Chuck Schumer over the bill, it’s easy to imagine a final product that is rather limited, according to Tobin Marcus, policy and politics strategist at Evercore ISI.
“At this point, we believe the balance of probabilities is likely beginning to shift away from a Manchin-Schumer deal and toward a narrow drug pricing bill,” Marcus said in a note on Wednesday, meaning a measure that just aims to lower the cost of prescription drugs
Such legislation would come together in September, ahead of the end of the federal government’s fiscal year on Sept. 30, according to the Evercore analyst.
“Drug pricing reform polls extremely well and has consistently been the most popular piece of the entire BBB package with voters,” he wrote. BBB refers to President Joe Biden’s Build Back Better plan, which stalled in December due to opposition from Manchin.
Late Thursday, an Associated Press report citing an unnamed source said Manchin in fact plans to support a reconciliation bill only if it’s limited to curbing pharmaceutical prices and extending Obamacare premium subsidies, and he will oppose including climate or energy provisions or higher taxes on the rich or corporations.
Analysts at Capital Alpha Partners have emphasized that Democrats must act before Sept. 30 to extend the Affordable Care Act subsidies that are due to expire, saying it would be “politically disastrous” for the party to have that aid go away just before November’s midterm elections.
“It is looking more and more as if Democrats will have to pass what they can pass now – a healthcare-focused reconciliation bill,” said James Lucier, an analyst and managing director at Capital Alpha, in a note on Thursday.
“There is a strong case to be made that drug pricing reforms combined with an extension of the expanded ACA premium tax credit will be a political winner.”
There still might be some hope eventually for energy provisions. Evercore’s Marcus, who worked as a Biden economic adviser when the veteran politician was vice president, said energy tax credits might get approved after the midterm elections, calling them “one of the main priorities in a busy ‘lame duck’ session running from November through the inauguration of new Republican majorities in January.”
Marcus has cast doubt on the prospects for ACA subsidies, saying they could be rejected by Manchin as they “flow straight into consumer income” and have a clear inflationary impact.
Manchin’s support is critical for any tax and spending package, as Democrats only control the 50-50 Senate because Vice President Kamala Harris can cast tiebreaking votes. The party’s grip on the House is also tenuous.
The West Virginia lawmaker aired his latest concerns about inflation on Wednesday after a June reading for the consumer price index showed a year-over-year rise of 9.1%, a nearly 41-year high.
Democrats are aiming to pass the legislation through a process known as budget reconciliation, which requires only a simple majority vote in the Senate.
gained Friday, but remained on track for weekly losses, hurt by disappointing bank earnings and the prospect of another large interest-rate hike by the Federal Reserve, as the central bank tries to fight inflation.