(Bloomberg) — Senator Joe Manchin, the architect of the Democrats’ new tax, climate and drugs bill, made a public pitch to his colleague Kyrsten Sinema to get on board with the legislation, arguing that it doesn’t raise taxes.
Sinema has not divulged her position on the bill and has the power to sink it.
Manchin made his pitch in a series of Sunday political talk show appearances where he defended the proposed Inflation Reduction Act as cutting price increases 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.
Manchin said he doesn’t know if Sinema would vote for the bill, but she should.
“She has so much in this legislation,” Manchin said on CNN’s “State of the Union.” The West Virginia senator said tax changes in the bill don’t amount to tax rate increases, something Sinema has opposed, citing the economy.
The bill would impose a 15% minimum tax on large corporations and make changes to how carried interest is taxed to try to force more hedge fund managers to pay their income using the individual code’s higher rate. It would also beef up Internal Revenue Service tax audits by paying for more personnel.
“I agree with her 100% in that we are not going to raise taxes and we won’t,” Manchin said.
Sinema in the past has opposed closing the carried interest loophole and Manchin last week said he is “adamant” it remain in the bill.
On ABC’s “This Week,” Manchin cited Sinema’s role in the bill’s drug-price provisions.
“She has an awful lot in this piece of legislation, the way it’s been designed, as far as the reduction of Medicare, letting Medicare go ahead and negotiate for lower drug prices,” Manchin said. “She’s very involved in that.”
Manchin last week announced a deal with Senate Majority Leader Chuck Schumer to fund $370 billion in energy and climate change funding and three years of subsidies for Obamacare health insurance premiums, using money from the tax code changes and savings from lower prescription-drug prices bought by Medicare.
He touted the bill as the Inflation Reduction Act of 2022, but a study out Friday from Penn Wharton economists found that the bill would increase inflation slightly before 2024 and reduce it slightly in year after that.
“I respectfully disagree with the people from Penn Wharton,” Manchin said on CNN.
He said the study doesn’t properly credit the effects of $300 billion in lower budget deficits in the bill, lower drug prices and increased fossil fuel energy production he secured in a side deal with Schumer to pass a separate bill easing environmental permitting.
Minneapolis Fed President Neel Kashkari said on CBS’s “Face the Nation” that the measure “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 said. Right now, there’s “an acute mismatch between demand and supply” that it’s up to the Federal Reserve to resolve by reducing demand, Kashkari said.
(Updates with Kashkari’s comments in last two paragraphs.)
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