Manchin’s behavior during President Joe Biden’s tenure was not exemplary. But it is also true that the bill passed by the House of Representatives was bad. Had it become law, inflation would have been worse today, and most of the money involved would have been wasted on temporary initiatives.
Yes, it could also have achieved some useful things – notably in terms of prescription drugs and energy production – but by most accounts, Manchin remains interested in dealing with these issues, and there is some hope of getting something done. For the party to reach a “yes” to that agenda, it will require all parties to get past some bitterness and accusations. A good way to start is for progressives to admit that Manchin was right to worry.
Here it is worth recalling a few details: After the White House initially proposed a 10-year set of programs that cost more than $3 trillion, congressional leaders agreed to target a more modest figure of $1.8 trillion. They achieved this not by trimming individual proposals, but by scheduling their phase-out.
Had the House bill become law, for example, a new program to subsidize child care costs for parents of children under age 3 would have been phased out over a two-year period and then disappeared in 2028. A new cost-sharing program from providing custody of children 3 to 4 year olds expired the same year. The program to provide additional food assistance to poor children during the summer months was supposed to end in 2025, along with increased subsidies for low-income users in the Affordable Care Act exchanges. Reinforcements to the Child Tax Credit and the Earned Income Tax Credit could have lasted until the end of 2022.
The goal was to create a scenario in which 10-year tax increases could “push” temporary spending programs in the hope that the programs would prove so popular that they would be extended or made permanent.
But while the effect of this structure was to ensure that while Build Back Better was deficit-neutral over a 10-year period, the year-to-year effects were quite diverse. According to an analysis by the Federal Responsible Budget Committee, the bill as written would have raised the deficit by about $155 billion in 2022 and would continue to generate a deficit of more than $100 billion through the end of 2026. After that, with tax increases continuing but if terminated Gradually, these short-term increases in deficits will be offset by long-term reductions in deficits.
In mechanical terms, this would have further stimulated an economy already suffering from inflation.
In the short term, this would have meant that inflation in the first half of this year was higher than what the US is experiencing now. In the long run, the Federal Reserve could, and could, offset this inflationary effect by increasing the frequency of interest rate increases, and reducing private and public investment and the productive capacity of the economy.
And while the new permanent social programs financed through redistributive taxes may be somewhat inflationary, given that low-income people consume a greater share of their income than the rich, Democrats at least had created something of lasting value for their problem. The drawback of the “Build Back Better” program is that by increasing inflation in order to create a large number of short-term programs, it could simply have triggered a political backlash that ensured that the programs would not be expanded.
It’s all well and good for Democrats to lament that their consolidated control of government did not create a universal preschool program, a childcare support program, or an expanded tax credit for children. But it’s not Manchin’s fault that these things didn’t happen – their legislation would not have created them. It was a bad bill.
Democratic members of Congress were well aware of this at the time. The bill came together because most Democrats didn’t want to pick and choose from programs—their expectation was that Manchin would pick and choose them. This will allow every non-Mansion member to tell frustrated advocacy groups that Mansion is a mistake that their favorite show didn’t work.
It would have been right for Senate Majority Leader Chuck Schumer, House Speaker Nancy Pelosi and dozens of other Democratic members of Congress. But Manchin didn’t want to wear the black hat any more than they did.
He also believed that the White House and the Federal Reserve were reducing the risks of inflation in the economy. Looking back, it was clear that he was right.
Throughout this time, it’s worth noting that the one piece of legislation Democrats have always kept in place is the provision of tax credits to support zero-carbon energy production. This was organized to try to be more technology-neutral than US support for the current climate, to be permanent rather than temporary, and to be simpler and more efficient than the current system. This part of the puzzle is well designed in its standards, is at least somewhat anti-inflationary in its effects, and is easy to pay for in the context of a package that in the aggregate reduces the deficit by taxing the rich.
Manchin has never completely rejected these ideas, and his crew continues to negotiate with other senators about their exact determination. Anyone who cares about inflation, climate change, or the legacy of the Biden administration should hope that he and his interlocutors can reach yes. A good starting point would be for everyone to admit that this approach isn’t just the second best alternative to Build Back Better, it’s actually even better — and that the West Virginia senator has had a point all along.
More from Bloomberg Opinion:
• Democrats should blame themselves, not Joe Mansion: Ramesh Ponoro
The Case of Stubborn Mansion: The Editors
• Mansion’s climactic statement is nonsense: Liam Denning
This column does not necessarily reflect the opinion of the editorial staff or Bloomberg LP and its owners.
Matthew Iglesias is a columnist for Bloomberg Opinion. A co-founder and former columnist at Vox, he writes the Slow Boring blog and newsletter. He is the most recent author of The Billion Americans.
More stories like this are available at bloomberg.com/opinion