Manchin Floats His Own Agenda for Democrats

Plus, Biden's new pandemic road map ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Happy hump day! Here’s what’s happening. [*] After Biden’s Big Speech, Manchin Floats His Own Agenda for Democrats President Joe Biden didn’t use the phrase “Build Back Better” in his State of the Union [speech]( Tuesday night, further proof that name is dead and buried even as the president sought to revive elements of the bill under slightly different branding. Biden touted many of the policies in the failed plan, calling on Congress to pass clean energy tax credits, reduce the cost of child care and cut the cost of prescription drugs by allowing Medicare to negotiate prices with drugmakers and capping the cost of insulin. “Economists call it increasing the productive capacity of our economy. I call it building a better America,” Biden said. “My plan to fight inflation will lower your costs and lower the deficit.” It didn’t take long for Sen. Joe Manchin (D-WV) to suck some of the air out of that effort. Manchin effectively killed the House-passed version of the plan by announcing in December that he couldn’t support it, and Biden’s reframing sought to win Manchin’s support by addressing inflation and the deficit, concerns that Manchin has repeatedly raised in objecting to the proposed new spending programs. Manchin wasn’t moved. “Nothing’s changed,” he [told reporters]( after the speech, during which he sat on the Republican side of the aisle — a gesture that his office reportedly said was meant to serve as a reminder that bipartisanship is still alive in the Senate. Asked if he was surprised Biden had tried to use the speech to revive his domestic agenda, Manchin reportedly joked, “They just can’t help themselves.” And he again cast doubt on Biden’s claims that the plan would fight inflation. “I’ve never found out that you can lower costs by spending more,” he said. Manchin lays out a scaled-back plan: The senator told reporters on Wednesday that he could vote for a reconciliation package focused on tax reform and lowering prescription drug costs — if half of the revenue raised is used to reduce the deficit and fight inflation and the other half is used to fully pay for programs to combat climate change, or whatever idea Democrats can rally around. “The one thing that we as Democrats all agreed on was the 2017 tax cuts were weighted unfairly,” Manchin told reporters, according to [The Hill](. “So if you want to fix the tax cuts and make everyone pay their fair share, whether it’s the very wealthiest or the corporations that pay nothing — I think the president identified that last night — then you have to fix the tax code.” The Hill’s Alexander Bolton reports that Manchin made clear he hasn’t offered a formal counterproposal to the White House but was just outlining the elements of a package that he and Senate Democrats could back. Why it matters: “It may be Democrats’ best and last chance to get at least some of their biggest domestic priorities done before the midterm elections, but would require everyone in the party — particularly liberals — to concede that what’s possible doesn’t come close to the $1.7 trillion package Manchin spurned in December,” Politico’s Burgess Everett and Nicholas Wu [say](. Fed’s Powell Backs Quarter-Point Interest Rate Hike in March Federal Reserve Chair Jerome Powell said Wednesday that he expects the central bank to raise interest rates by a quarter-point this month, despite the economic uncertainty generated by the Russian invasion of Ukraine. “I do think it will be appropriate to raise our target range for the federal funds rate at the March meeting in a couple of weeks, and I’m inclined to propose and support a 25-basis-point rate hike,” Powell told the House Financial Services Committee. The Fed chief said he thinks inflation will ease in the coming months, “as supply constraints ease and demand moderates because of the waning effects of fiscal support and the removal of monetary policy accommodation.” At the same time, Powell reiterated that the Fed would continue to monitor the economy for new signs of trouble, including problems that could arise from the situation in Ukraine. “The conflict is causing tremendous hardship for the Ukrainian people,” he said. “The implications for the U.S. economy are highly uncertain, and we will be monitoring the situation closely.” If inflation fails to ease, Powell said the Fed was ready to take stronger action: “To the extent that inflation comes in higher or is more persistently high … then we would be prepared to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings.” Economy showing strength: “The labor market is extremely tight,” Powell said, noting that January’s 4% unemployment rate is close to the “longer-run normal level.” Powell noted that labor market improvements have been widespread, with wages rising at the fastest pace in years. Reducing the Fed’s balance sheet: As part of its effort to provide a cushion for the Covid-ravaged economy, the Fed bought Treasuries and mortgage-backed securities at a rapid clip, bringing the total value of the bank’s balance sheet to nearly $9 trillion. Now the Fed plans to start reducing its holdings, though the timing is still uncertain. “The process of removing policy accommodation in current circumstances will involve both increases in the target range of the federal funds rate and reduction in the size of the Federal Reserve’s balance sheet," Powell said. "As the FOMC noted in January, the federal funds rate is our primary means of adjusting the stance of monetary policy. Reducing our balance sheet will commence after the process of raising interest rates has begun, and will proceed in a predictable manner primarily through adjustments to reinvestments." Aiming for a soft landing: Some economists warn that the Fed is running the risk of crashing the recovery if it raises rates too aggressively. But Powell said he was confident that the central bank can reduce inflation without causing a recession. “It’s more likely than not that we can achieve what we call a soft landing,” he said. White House Announces New Pandemic Road Map In his State of the Union address, President Biden told Americans that the country has reached a new stage in the battle against Covid-19. “We are moving forward safely, back to more normal routines,” he said. On Wednesday, the White House released a new blueprint for how to approach the pandemic as coronavirus cases wane across the country. The 96-page National COVID-19 Preparedness Plan (overview [here]( full plan [here]( lays out four main goals for the next phase of the response to the coronavirus: * “Protect Against and Treat COVID-19” by continuing to develop and manufacture vaccines, tests and treatments. * “Prepare for New Variants” by monitoring heath levels, stockpiling materials and improving FDA response time for new drugs as needed. * “Prevent Economic and Educational Shutdowns” by providing schools and businesses the supplies and guidance they need to remain open. * “Continue to Lead the Effort to Vaccinate the World and Save Lives” by increasing the U.S. investment in the Initiative for Global Vaccine Access (Global VAX). The implementation of the plan requires funding from Congress, however, and the Biden administration has asked for $30 billion to pay for the next phase of the Covid response. But a group of Republicans led by Sen. Mitt Romney of Utah signaled Wednesday that they might hesitate to provide any more money for the response to Covid-19 until they were satisfied that previous outlays are properly accounted for. In a letter to Biden, three dozen GOP senators questioned the need for additional funding, noting that the federal government has already approved nearly $6 trillion for the response to Covid. The use of some of that money has come into question, and the senators cited an investigation by The Washington Post that claimed the uncover “immense fraud” in the distribution of Covid funds. The senators also want to know more about any leftover funds that may exist, and more details about the use of the $30 billion requested by the White House. “We strongly believe Americans should continue to take precautionary measures to protect against the pandemic,” the senators wrote, “and it must be an urgent priority that the trillions of taxpayer dollars already appropriated are being spent effectively.” --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( for their own copy of this newsletter. --------------------------------------------------------------- News - [Manchin Lays Out a Dem Bill He Can Back: Taxes, Prescription Drugs, Climate Cash]( – Politico - [Paid Sick Leave Makes a Comeback in New Biden Plan]( – Axios - [Biden’s Domestic Priorities Still Stalled After State of the Union Address]( – Wall Street Journal - [The White House Unveils a New Covid Strategy, but It Will Need Congressional Funding]( – New York Times - [Biden Wants to Move U.S. Past Covid. Here's His Plan to Do It]( – Politico - [Republicans Signal They May Oppose New Covid Aid Unless White House Accounts for Existing Spending]( – Washington Post - [What the Fed’s Powell Thinks About Inflation and Ukraine]( – Politico - [Pelosi Says Deal on Ukraine Aid Is Imminent]( – The Hill - [Partisan Skirmishes Threaten Swift Omnibus Timetable]( – Roll Call - [Major Corporations Make Last-Ditch Push for R&D Tax Break]( – Roll Call - [Biden Short of Firepower for Election-Year Battle With Inflation]( – Bloomberg - [Most Americans Say the Coronavirus Is Not Yet Under Control and Support Restrictions to Try to Manage It, Post-ABC Poll Finds]( – Washington Post - [Nearly 8 in 10 State of the Union Watchers Approved of Biden's Remarks: Poll]( – The Hill - [Trump’s Border Wall Has Been Breached More Than 3,000 Times by Smugglers, CBP Records Show]( – Washington Post Views and Analysis - [4 Takeaways From Biden’s State of the Union Address]( Blake, Washington Post - [Biden's Still Seeking a Health-Care Win]( – Rachel Roubein, Washington Post - [Biden Has the Right Idea, but the Wrong Words]( – Ezra Klein, New York Times - [A Tale of Two Speeches in Biden’s State of the Union]( – Jeff Greenfield, Politico - [Biden’s State of the Union Was a Repeat Performance]( – Ramesh Ponnuru, Bloomberg - [Biden’s Anti-Inflation Agenda Is Lacking]( – Karl W. Smith, Bloomberg - [Biden Tries to Nix ‘Defund the Police,’ Once and for All]( – Aaron Blake, Washington Post - [Kim Reynolds Shows the True Face of the GOP — but Not the One She Intended]( – Greg Sargent, Washington Post - [Putin's War Has Made Jay Powell's Job Easier]( – Daniel Moss, Bloomberg - [Don't Wait for Billionaire Philanthropy to Fix America]( – Chuck Collins, The Hill Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](