(Bloomberg) -- The White House and congressional Democrats are in advanced talks on legislation that aims to fight inflation, rein in the deficit and revive parts of President Joe Biden’s stalled economic agenda.
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The contours of a potential deal remain under negotiation, but the package would likely include capping the price of insulin -- a key medicine for diabetics -- and federal investments in both clean energy and fossil fuels, according to people briefed on the talks. It would also further reduce the budget deficit and boost taxes on the wealthy, corporations or both, they said.
An agreement could come together as soon as next week, two people said, though others were more cautious, noting many details remain to be resolved. Climate provisions are a particularly tricky area, and differences could still scotch a deal, one person said.
The people familiar with the talks asked not to be identified because of the sensitivity of the negotiations, in which Senator Joe Manchin of West Virginia plays a central role.
The president has hinted at a coming agreement, framing the legislation primarily as a move to cool consumer-price increases, which unexpectedly accelerated to an annual 8.6% in May.
“I believe I have the votes to do a number of things,” Biden said Thursday in an interview with the Associated Press, citing capping insulin costs as an example. “We can reduce it to 35 bucks a month and get it done. We have the votes to do it. We’re going to get that done. I can’t get it all done.”
Democrats are desperate for a policy response to inflation, which is at a four-decade high and, unless curbed, is all but certain to cost them control of the House, Senate or both in November’s midterm elections. Gasoline, a critical component of the American household budget, costs $5 a gallon on average nationwide, according to the AAA motor club, and hit a record earlier this month.
Seeking to quell the surge in living costs, the Federal Reserve accelerated its monetary-tightening campaign this week, executing the biggest interest-rate hike since 1994. The moves have driven fresh losses on Wall Street and increased the odds of a recession that would only compound Biden’s political troubles.
Biden ordered a record release from the nation’s oil reserves earlier this year to try to curb gasoline prices, but to little effect. Now, he’s looking to help households save money on everyday needs like drugs, utilities and internet access, and by cutting the government’s budget deficit, which reached a record $3.13 trillion in fiscal 2020, during the pandemic.
The president sought to cut drug prices and raise taxes on the wealthy in last year’s economic plan, called Build Back Better, which Manchin killed in December by saying he’d vote against it. Democrats need all 50 of their Senate caucus members to pass legislation in the 100-seat chamber under the so-called budget-reconciliation process, which can bypass a Republican filibuster.
The White House for months has refused to publicly comment on any talks with Manchin. The West Virginia senator bristled at White House statements late last year as he, other Democrats and the president’s aides negotiated.
The relationship between the White House and Manchin was so damaged in the aftermath of that chapter that some White House officials still avoid saying his name aloud.
“The president remains engaged with Congress. This is an important part of his economic agenda,” Cecilia Rouse, chair of the White House Council of Economic Advisers, said Friday at the White House.
Along with the new legislation, Biden has recently touted a provision of the infrastructure law enacted last year that offers full rebates for some home-internet plans for low-income households.
He’s also urged Congress to pass separate legislation that would encourage domestic manufacturing of semiconductors to help ease global shortages that have contributed to rising prices for cars and consumer electronics.
Together, he argues the measures would provide Americans a counterbalance for higher food and gasoline prices. The administration is also clamoring for new Covid funding from Congress, but as of now there are no plans to roll that into any reconciliation deal, two of the people said.
Biden met Wednesday with Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi, with the trio discussing next steps on a fresh bill to pass through the reconciliation process. The White House called the measure their “shared agenda of tackling inflation and lowering prices and transitioning from a historic economic recovery to stable, steady growth” in a statement on the meeting.
The talks have largely narrowed to two men: Schumer and Manchin. The basis for their discussions is legislation the House passed last year that would raise federal revenue by $1.5 trillion over a decade, one person said.
White House spokespeople didn’t immediately respond to a request for comment on the talks. A person familiar with Manchin’s thinking said he is continuing to negotiate with Schumer, and hasn’t set a July 4 deadline for reaching a deal. The person said energy and climate is just one of the issues still being worked on.
The House bill included a surtax on wealthy Americans, expanded levies on investments, had a 15% minimum rate for corporations and a tax on stock buybacks. Savings in drug costs could push so-called pay-fors in the bill to $1.8 trillion over a decade. Manchin has insisted that at least half of the new tax revenue in the bill go to reducing the deficit.
Senator Kyrsten Sinema, however, has signaled objections to many tax increases, leaving unclear which revenue measures might make a final agreement. The Arizona Democrat this week said she’s focused on talks on new gun-safety legislation.
Energy provisions remain among the sticking points in the negotiations on the reconciliation bill, with Manchin -- whose state still produces much of the nation’s coal supply -- advocating for fossil-fuel suppliers. Proponents of the legislation are aiming for a deal soon that can pass before members of Congress leave for their annual August recess.
After that, lawmakers will have little time to legislate as they focus on their re-election campaigns.
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