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Wednesday, November 30, 2022

Biden budget has Manchin priorities: tax-rich, cuts deficit

WASHINGTON ( Associated Press) – President Joe Biden’s $ 5.8 billion budget for next year would cut federal deficits and boost taxes on the richest Americans. Both can appeal to Sen. Joe Manchin amid the Democratic hope of reviving talks with him on the party’s derailed social and environmental plan.

The question is whether the decisive West Virginia Democrat can be sought this time around to create a scaled-down version of his party’s $ 2 trillion, 10-year package. Before Christmas, Manchin sank that plan, which had already passed through the House, says it will fuel inflation and deepen deficits.

Biden and his assistants presented his budget, which was unveiled on Monday, as a focus on fiscal responsibility, security at home and abroad and investments in social programs to help families afford housing, childcare, health care and other expenses.

Another highlight: $ 2.5 trillion in 10-year tax increases on the highest-income individuals and corporations. That included $ 361 billion of a minimum tax of 20% on families worth $ 100 million or more – the top 100% of earners – though it elicited some criticism from Manchin.

“An unprecedented commitment to building an economy where everyone has a chance to succeed. A plan to pay for those investments we need as a nation, ”Biden described his budget to reporters.

Republicans rejected Biden’s priorities.

Senate Minority Leader Mitch McConnell, R-Ky., Said the president’s defense proposal would, at best, “let our armed forces simply tread water” due to inflation. He said larger budgets for agencies such as the IRS and the Environmental Protection Agency are “inflated liberal nonsense.” And he called Biden’s $ 2.5 trillion, 10-year tax increases, which the president said would only affect the country’s highest earners, a “bomb of tax increases”.

McConnell’s critique came as no surprise. Presidents’ budgets are usually ignored or reworked by Congress and ridiculed by the opposition party, a moment that allows both sides to draw battle lines that are useful in upcoming elections.

But Biden’s budget could also be seen as a move to lure Manchin, arguably the Senate’s most conservative Democrat, back to the negotiating table. Manchin on Monday dropped reports that he had resumed talks with top Democrats on a new plan.

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“No, there is nothing serious going on,” he told reporters on Monday. But he also said any new package should be completed by early summer because the autumn congressional campaigns could make too difficult progress later.

While much of Biden’s budget was similar to last year’s, it was also a more centrist repackaging that reformed some of his emphasis in Manchin’s direction.

Its proposed $ 795 billion for defense includes an increase for the Pentagon and a plan to help law enforcement recruit more officers and improve training. “The answer is not to repay our police departments,” Biden told reporters, a sharp rebuke of a rallying cry embraced by some progressives but rejected by almost all Democrats.

The flow of new revenue is helping Biden claim that its plan will reduce deficits by more than $ 1 trillion over the next decade – a goal that was not emphasized last year. However, just over two-thirds of the deficit cuts would come in the plan’s last five years, postponing the most painful cuts and suggesting it would never happen.

The new revenue will also be used to reduce costs for families, Biden said, as Democrats confront the country’s fight with inflation which has become a major political burden.

Reducing budget deficits. the fight against inflation and the increase in income from the rich are also big demands for Manchin.

“He remains seriously concerned about the financial status of our country and believes that fighting inflation by restoring justice in our tax system and paying off our national debt should be our first priority,” his spokesman Sam Runyon said on Monday.

Manchin, chairman of the Senate’s Energy and Natural Resources Committee, has repeatedly said he wants any new package to focus on domestic energy independence. He also wants an “all of the above” policy that combats climate change but helps all forms of energy.

Manchin and its position represent a state that relies heavily on coal and energy production, and have received political onslaught due to Russia’s invasion of Ukraine.

“What Russia has spent needs to be replaced,” he said, referring to the US cut in that country’s oil imports.

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Of the House-approved $ 2 trillion bill, $ 555 billion was for tax concessions and other initiatives to encourage a shift to cleaner energy. At Manchin’s insistence, that bill abandoned the original plan’s biggest effort to do so by offering financial rewards or fines to energy producers.

Manchin also expressed support for the inclusion of provisions that reduce the cost of prescription drugs. The previous bill would have done this by strengthening the government’s ability to negotiate the prices it pays for some pharmaceutical products it buys, which would save the government money.

Nevertheless, the White House kept some details to itself of what it could offer Manchin in talks.

Budget documents said it included some revenue proposals such as pricing prescription drugs in a “deficit-neutral reserve fund”. It did not provide details “because talks with Congress are continuing,” the documents said in a footnote.

Biden’s proposed new minimum tax on the richest Americans is likely to face an uphill battle. Manchin has supported higher taxes on the rich and big companies, but he suggested Monday that Biden’s plan entails complications.

“There are other ways people can pay their fair share,” he said.

A somewhat similar tax on billionaires last year by Senate Finance Committee Chairman Ron Wyden, D-Ore., never made it to the final package. And last year’s House-approved bill has already had savings of about $ 2 trillion, suggesting that new proposals may not be necessary.

Sen. Kyrsten Cinema, D-Ariz., Opposed her party’s efforts to raise tax rates on individuals and corporations last year and apparently did not change her view. Spokeswoman Hannah Hurley said Monday Cinema likes proposals that “target tax avoidance and ensure corporations pay taxes while not increasing costs on small businesses or everyday Americans.”

Democrats will need all their votes in the 50-50 Senate because all Republicans seem to be sure against whatever they produce. Vice President Kamala Harris would bring the tie.

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Associated Press Congress correspondent Lisa Mascaro contributed to this report.

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