U.S. markets closed
  • S&P 500

    4,122.47
    -17.59 (-0.42%)
     
  • Dow 30

    32,774.41
    -58.13 (-0.18%)
     
  • Nasdaq

    12,493.93
    -150.53 (-1.19%)
     
  • Russell 2000

    1,912.89
    -28.31 (-1.46%)
     
  • Crude Oil

    90.49
    -0.01 (-0.01%)
     
  • Gold

    1,792.40
    -1.60 (-0.09%)
     
  • Silver

    20.49
    +0.00 (+0.01%)
     
  • EUR/USD

    1.0211
    -0.0006 (-0.06%)
     
  • 10-Yr Bond

    2.7970
    +0.0320 (+1.16%)
     
  • GBP/USD

    1.2075
    -0.0002 (-0.01%)
     
  • USD/JPY

    135.1400
    +0.0240 (+0.02%)
     
  • BTC-USD

    23,179.27
    -629.85 (-2.65%)
     
  • CMC Crypto 200

    537.23
    -20.12 (-3.61%)
     
  • FTSE 100

    7,488.15
    +5.78 (+0.08%)
     
  • Nikkei 225

    27,999.96
    -249.28 (-0.88%)
     

Democrats’ Tax-Hike Plans Are Imperiled — With or Without Joe Manchin

·3 min read

(Bloomberg) -- The US Senate’s arcane budget rules threaten Democrats’ plans to increase taxes on the wealthy and corporations and invest in climate programs before November’s midterm elections, even if they can win Joe Manchin’s support.

Most Read from Bloomberg

Manchin, the key holdout vote who last week scuttled talks of a revived economic agenda, said he could support a broader tax and spending bill in September, if inflation cools. But there simply may not be time then for the grueling late-night votes and other procedures required to push the legislation through.

President Joe Biden made it clear he isn’t willing to gamble on a bigger bill later when his party can pass legislation now lowering prescription drugs and extending Obamacare subsidies -- the two things the West Virginia Democrat says he can support.

Those two provisions fall far short of Biden’s once-sweeping plan to overhaul tax policy and spending while addressing climate change, but they must pass if Democrats have any hope of holding on to one or both chambers of Congress.

With social programs like a child tax credit and child care subsidies already cut from Biden’s plan, a tax bill that implements a 15% corporate global minimum tax and imposes a surcharge on the wealthiest Americans is increasingly a long shot.

Senate Majority Leader Chuck Schumer is moving forward on the Manchin-approved legislation before the August recess -- just before many Americans would receive notification that their Affordable Care Act premiums are set to skyrocket come January.

The first stop is the Senate parliamentarian, who will decide whether the pared-back legislation is eligible for a fast-track procedure allowing a simple majority to pass a bill in the evenly divided Senate.

Once the Senate acts on the health-care bill, options -- especially for tax legislation -- get more limited.

There is precedent for multiple so-called reconciliation bills, but only if they neatly divide into separate tax, spending and debt bills. But the health-care bill will touch the tax code, meaning Congress can’t use the same budget to make other tax changes later on, Ashley Schapitl, a spokeswoman for the Senate Finance Committee said.

The Senate would instead need to craft a fiscal 2023 budget resolution to act on the tax and climate bill, Bill Hoagland, a former Senate Budget Committee Republican staff director, said. That process would involve yet another round of unlimited amendments known as a vote-a-rama, an hours-long process that can keep senators in session overnight.

This vote-a-rama would come on the heels of the taxing series of political gotcha amendments on the upcoming health-care bill.

Another potential option -- revising the existing budget resolution -- is the subject of much debate and could allow additional bills to be produced using the same budget outline. But even so it would trigger a time-consuming amendment process.

The unlimited vote series will be grueling, and all Democrats would likely need to remain on the floor to provide a 50-vote majority to defeat GOP amendments.

Time isn’t on Democrats’ side. Congress in September also must pass a spending bill to keep the government open after the Oct. 1 start of the new fiscal year. And many lawmakers, especially those in swing states, will be eager to return to the campaign trail before November’s midterms.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.