Schumer's big deal: Whither Sinema -- and House Dems?

AP Photo/Manuel Balce Ceneta

Just because Chuck Schumer and Joe Manchin agreed on a reconciliation deal in principle doesn’t mean it will pass — in either the House or the Senate. If you haven’t yet read Allahpundit’s detailed review of the new Build Back Whatever plan, be sure to do so now. Ambiguities still abound, including the actual price of the bill, which is being described in media as anywhere between $670 billion and $800 billion — still a small fraction of the original $6 trillion demanded from progressives and championed by Joe Biden.

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The proposal will get fleshed out in legislative language quickly and submitted to the “Byrd bath” of the Senate parliamentarian, but it might have bigger conceptual problems.

First, though, Schumer has a structural problem that might make this moot. Democrats will need all 50 of their senators available for a vote when this hits the floor, and Nancy Pelosi will need to make sure all but two of her caucus are present. COVID-19 is presently running through Washington DC at the moment, and Pat Leahy’s availability is questionable after two surgeries on his hip. Republicans won’t let Schumer off the hook for a short caucus on this bill like they did with the confirmation of Steve Dettelbach as ATF director. There won’t be any “paired” voting to allow the Schumer-Manchin deal to move forward if a Senate Democrat can’t make it for the vote. Pelosi, with her three-vote margin, may have a similar structural problem.

Even apart from that, though, this deal isn’t a fait accompli yet. Axios reported last night that Senate Democrat Kyrsten Sinema got blindsided by the deal — and perhaps a couple of provisions in particular which she has long opposed:

“We do not have a comment, as she will need to review the text,” a Sinema spokesperson said in the hours after news broke of Manchin’s stunning reversal.

One of the first signs Sinema wasn’t consulted on the Schumer-Manchin agreement was that it included some $14 billion in new revenue from taxing carried interest, which she has indicated she opposes.

Between the lines: Sinema was on record last December supporting the 15% corporate tax rate, which will raise an estimated $313 billion to fund the Democrats’ climate priorities.

But that was before inflation took off and constant chatter about a potential recession subsumed Washington. …

And throughout the spring, Sinema shared and encouraged the view that Build Back Better — and any corporate tax increases — was dead.

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Does Sinema still oppose either or both of these provisions? And might she resent the fact that neither Schumer nor Manchin bothered to consult with her on it? This is no small matter, especially in an economy where recession looms if it hasn’t yet arrived. Arizona may not be as deep red as West Virginia but it ain’t blue, either. Tax hikes and massive spending won’t be popular in Arizona under current economic conditions, which Democrats triggered by their previous massive spending. Voters there will not have forgotten that point, especially while inflation still erodes their buying power.

Sinema has something else to worry about even if she’s inclined to buck public opinion on tax-and-spend policies. What if she goes along with the deal and assumes all that political risk, only to see House Democrats kill the bill? Punchbowl reports this morning that it’s no sure thing that House progressives or House moderates in Nancy Pelosi’s caucus will pass the Schumer-Manchin BBB-lite without significant changes:

House Ways and Means Committee Chair Richie Neal – who was just as surprised as Republicans over the announcement – scrambled to get details on Wednesday night. Neal liked what he’d seen generally. But he’s also a huge proponent of extending the Child Tax Credit, which was a big plank in BBB, and that provision isn’t included.

“Obviously there are parts of it that are gonna have broad support, but others, it’s all about the details, so we’ll have to wait and see,” the Massachusetts Democrat said in an interview. “I am pleased that they’ve made some headway.” …

But it’s important to keep in mind that House Democrats only have a four-seat vote cushion now. That shrinks to three-seat advantage come Aug. 9, after a special election in Minnesota that will be won by Republicans. This is a big package, so there will be Democratic skeptics, and it won’t be easy to get something with this big a price tag through the chamber.

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The Child Tax Credit isn’t the only missing component. Manchin balked at re-expanding the state and local tax (SALT) credit, which would have amounted to a massive tax cut for the wealthy … many of whom are represented by House Democrats. Punchbowl’s team believes that the “SALT caucus” will drop their insistence on reinstating this tax break:

Remember this: Reps. Josh Gottheimer (D-N.J.), Tom Suozzi (D-N.Y.) and Mikie Sherill (D-N.J.) have vowed for nearly a year that they would not change the tax code if the legislation did not also include lifting the state-and-local deduction caps. Now they have to decide if they are going to abandon that pledge or take down this massive bill filled to the brim with Democratic priorities. We imagine they’ll forget about SALT real quickly.

Yeah, well, maybe. Unlimited SALT restoration isn’t a small issue in states like New York, New Jersey, and California, where the Trump-era limitation of $10,000 for the deduction hammers Democrats’ deep-blue donor base. They have pledged to restore that not just for their donors but also for their state Democratic Party orgs too, as the limit on SALT puts enormous pressure on Democrat-run states to either stop raising taxes or cut them, along with Democrat-favored policies that need the funding. A betrayal on SALT now means that the opportunity to restore it will be lost for years, perhaps decades. If they forget about SALT, they will likely face tough, party-backed primary challenges in their next cycles — especially when the economic consequences of more spending and tax hikes hits the economy.

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On top of that, House progressives spent most of last year snatching defeat from the jaws of victory on infrastructure in a vain effort to keep the original BBB intact. They begrudgingly acceded to cutting the package by more than half to somewhere around $2 trillion on face value, but even then still demanded budget gimmicks to hike spending to around double that amount. Does anyone really expect them to quietly go along with this rump bill that barely touches their hobby-horse agenda, which will get entirely precluded after the midterms?

It’s possible that Sinema and House Dems swallow their bitter pills and vote for passage, but … that hasn’t been their track record this year at all. Schumer and Manchin had better buckle up for a very bumpy ride, especially after today’s GDP and the next CPI and PPI reports go public.

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