Manchin offers to gut Trump tax cuts as atonement for killing Biden’s economic agenda

Sen. Joe Manchin III, under fire for killing President Biden‘s mammoth social welfare and climate change bill, is attempting to make peace with Democrats by promising to help them blow up the Trump-era tax cuts.

The West Virginia Democrat has told colleagues the divide over Mr. Biden’s $1.75 trillion Build Back Better Act should not be seen as intransigence toward big policy changes. Rather, the package’s defeat presents an opportunity for Democrats to reorient their agenda to a few key priorities.

One such priority, according to Mr. Manchin, should be the repeal of former President Trump’s signature tax cuts. Democrats have long lambasted the corporate and income tax cuts as a “giveaway to the rich.”

“The only reason I even voted to [advance the Build Back Better Act] was to fix the tax [system] so that everybody paid their fair share,” Mr. Manchin said. “The ultra-wealthy, the corporations that weren’t paying anything, everyone should pay their fair share.”

Given that no Democrat voted in favor of the 2017 cuts, Mr. Manchin argues there should be wide room to haggle over exactly how much of the savings to claw back from taxpayers.

“If you’re going to negotiate, then negotiate,” he said. “Don’t start picking and choosing and playing games.”

Mr. Manchin is increasingly the target of attacks from fellow Democrats for opposing the big spending bill in the 50-50 split Senate.

Since Democrats were planning to move the bill via budget reconciliation, a process that allows some spending and tax measures to avoid the Senate’s 60-vote filibuster threshold and pass via a simple majority, Mr. Manchin’s opposition was essentially a death blow.

“It’s tremendously frustrating for me, as a Black man in America, because once again, it’s an example of Joe Manchin as a White man showing that he doesn’t care about Black people, he doesn’t care about Latinos … he doesn’t care about the poor,” said Rep. Jamaal Bowman, New York Democrat.

Mr. Manchin, for his part, argues he was unable to support the bill because it relied on budget gimmicks and he was concerned it would exacerbate inflation.

Despite killing the bill, Mr. Manchin has worked overtime to assure Democratic lawmakers that portions of the White House’s agenda are still plausible before the 2022 midterm elections.

He told colleagues that before they can consider a revised social welfare bill or other big spending programs it would be prudent to repeal the Trump tax cuts. Such a move, Mr. Manchin claims, will make clear exactly how much Democrats can afford to spend on expanding the social safety net.

Repealing the Trump-era cuts will also need to be done via reconciliation given widespread GOP opposition to hiking taxes. The unity of all 50 Senate Democrats behind the repeal is not assured, however.

Earlier this year, Democrats attempted to repeal a large portion of the Trump tax cuts in the Build Back Better Act. The proposal included hiking the income taxes on top earners and raising the corporate tax rate from 21% to 25% — still lower than the pre-Trump high of 35%.

That effort failed to garner the support of Sen. Kyrsten Sinema, a moderate Arizona Democrat. Instead, Ms. Sinema pushed the White House to back a menu of tax hikes outside of the corporate and income tax rate.

Since the package was moving along party lines, Ms. Sinema got her wish. The White House jettisoned the income and corporate tax rate increase, opting instead to create a new “wealth tax” on individuals making more than $10 million annually and a 15% flat tax on corporate profits.

“This proposal represents a commonsense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” said Ms. Sinema.

Grover Norquist, president of Americans for Tax Reform, said it was a “pipe dream” for Democrats to assume Ms. Sinema would reverse course now. He also noted that Ms. Sinema had backed several tax increases that are unacceptable to Mr. Manchin.

“She’s on record as saying her line in the sand is not raising rates,” Mr. Norquist said. “I don’t know how Manchin thinks this will work out, it will just lead to a back and forth with each proposing taxes the other won’t support.”

It also remains uncertain if repealing the Trump-era reforms will be sufficient to pacify the far-left Democrats upset that Mr. Manchin’ tanked the massive spending on a wishlist of liberal programs.

The 98-member Congressional Progressive Caucus urged Mr. Biden to take executive action to implement several of the package’s programs.

“Build Back Better is popular, transformative, and needed by millions of people,” said Rep. Pramila Jayapal, a Washington Democrat who chairs the caucus. “This fight is far from over. We won’t stop until we deliver.”