Now that the Democrats have gotten Joe Manchin (D-WV) to bend the knee on a reconciliation package called the "Inflation Reduction Act" - which doesn't actually reduce inflation to any meaningful degree, all eyes are on Sen. Kyrsten Sinema (D-AZ), whose vote will be crucial to passing the bill in the Senate.
Thus far, she's been silent regarding her position on the bill after Senate Majority Leader Chuck Schumer (D-NY) kept her in the dark as he worked out a secret deal with Manchin in isolation, which according to Mish Talk, "was a purposeful gamble and perhaps a bad one."
On Sunday, Machin made the rounds on the political talk circuit where he defended the reconciliation package - claiming it would halt price increases, which Bloomberg notes, comes "despite a study by the University of Pennsylvania’s Wharton School showing it would have little impact or could increase inflation slightly in the near term."
Democrats are seeking to pass the bill this week in the Senate and in the House next week. Doing so would require all 50 members of the Senate Democratic caucus to vote yes on the bill and defeat a slew of Republican attempts to amend it. It would also require all 50 to remain Covid-free and able to endure a long vote series.
Sinema’s office has said the Arizona Democrat won’t make her position known until later in the week at the earliest, after the top Senate rules official has scrubbed the bill of any non-budgetary items. -Bloomberg
"I respectfully disagree with the people from Penn Wharton," Manchin said on CNN, claiming that the study doesn't properly credit the effects of $300 billion in lower budget deficits in the bill, the report continues.
Meanwhile, the West Virginia Senator said Sinema has nothing to complain about.
"She has so much in this legislation," Manchin told CNN regarding Sinema, adding that the tax changes in the bill don't amount to tax rate increases, which Sinema staunchly opposed during previous negotiations, citing the economy.
The bill would slap large corporations with a 15% minimum tax, as well as make changes to how carried interest is taxed - which will hit hedge fund managers at their individual rates. The bill will also beef up IRS tax audits by increasing the agency's head count.
"I agree with her 100% in that we are not going to raise taxes and we won’t," said Manchin.
All of that said, Sinema may want to change the Schumer-Manchin deal, according to Axios.
Sinema has leverage and she knows it. Any potential modification to the Democrat's climate and deficit reduction package — like knocking out the $14 billion provision on carried interest — could cause the fragile deal to collapse.
- Her posture is causing something between angst and fear in the Democratic caucus as senators wait for her to render a verdict on the secret deal announced by Senate Majority Leader Chuck Schumer and Sen. Joe Manchin last Thursday.
Sinema has given no assurances to colleagues that she’ll vote along party lines in the so-called “vote-a-rama” for the $740 billion bill next week, according to people familiar with the matter.
- The vote-a-rama process allows lawmakers to offer an unlimited number of amendments, as long as they are ruled germane by the Senate parliamentarian. Senators — and reporters — expect a late night.
The big picture: Schumer made a calculated decision to negotiate a package with Manchin in secrecy. He assumed that all of his other members, including Sinema, would fall into line and support the deal.
According to Minneapolis Fed President Neel Kashkari, the bill "may have some effect" in the long run.
"My guess is over the next couple of years, it’s not going to have much of an impact on inflation," he told CBS's "Face the Nation," adding that there's "an acute mismatch between demand and supply" that the Federal Reserve can resolve by reducing demand.
As Mish Talk notes further, there are four ways the bill could die.
- The Senate parliamentarian can rule against permit reform. That would likely kill everything right there.
- The Republican poison pill kill method could work, but I suspect there are ways for that to backfire as well.
- Sinema can easily kill this bill herself, but I suspect she would rather have Manchin on board or hopes Manchin kills it himself after an adverse parliamentarian ruling.
- Poison pills aside, many specifics are still missing. How is this Medicare cost reduction idea going to work? Bickering over missing details could kill this.
If the bill dies, the most likely way is via the Senate parliamentarian. Joe Manchin can then say he tried, and Sinema might escape without having to take an actual position.
The saga continues.
I will not be surprised by any outcome including an even bigger boondoggle that is currently on the table.