Sinema Could Ruin Dems' Plan to Revive Spending Bill

Plus, Dems' fading political boost from the Child Tax Credit ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Happy Wednesday! Let's start with a bright spot in a dour news environment: The baseball season starts tomorrow! Before the first pitch is thrown, here's what else is going on. (Reuters) Democrats Hope to Revive Their Spending Bill. Sinema Could Stand in the Way. Senate Democrats still hope to revive the bill formerly known as Build Back Better, making another push to enact a package of tax reforms, climate and prescription drug pricing programs over the coming months. But while Sen. Joe Manchin (D-WV) has discussed a scaled-back version of the legislation that he nixed in December — and some Democrats reportedly stand prepared to embrace whatever plan Manchin would back — their efforts could be complicated, or doomed, by the other holdout in their caucus: Sen. Kyrsten Sinema (D-AZ). “In closed-door conversations, Sinema has told donors a path to revival is unlikely,” Axios’s Hans Nichols [reported]( Tuesday night. “That's dampened expectations Congress will act on a slimmed-down bill before Memorial Day. It also means any revived BBB legislation faces an arduous route back to the center of the Senate agenda.” Nichols reported that Sinema has told donors that her focus is mainly on other pieces of legislation, including the $10 billion Covid relief bill, which has been put on hold this week after Senate Republicans demanded a vote on an amendment to reinstate a Trump-era pandemic immigration policy that the Biden administration just ended. The bottom line: The challenge of crafting a bill that can win the support of both Manchin and Sinema isn’t new. Sinema last year balked at proposals to raise tax rates on corporations and top earners, forcing Democrats to find other ways to raise revenue in their bill. Manchin has made clear he prefers to roll back some of the 2017 Republican tax cuts. As Politico [reported]( earlier this week: “One Democrat who regularly talks to Manchin doubted whether any party-line bill checking his boxes is achievable at this point, citing the mismatch between Sen. Kyrsten Sinema‘s (D-Ariz.) and Manchin’s tax positions. The Arizona Democrat prefers surtaxes on the wealthy and big corporations, not the tax rate increases that Manchin likes.” Number of the Day: $95 Billion The Federal Reserve is expected to start selling off some of its massive bond holdings as it moves to withdraw its support of the economy, and newly released minutes of the Federal Open Market Committee’s most recent meeting show that officials agreed to as much as $95 billion in “balance sheet runoff” per month. The sales caps of $60 billion in Treasuries and $35 billion in mortgage-backed securities would likely be phased in over a period of three months, and officials could approve the balance sheet reduction effort at their next meeting in early May. “The move to reduce the balance sheet will extend a sharp pivot toward fighting inflation, as the Fed was buying bonds as recently as last month as it attempted a smooth wind-down of pandemic support,” Bloomberg’s Craig Torres and Steve Matthews [write](. The meeting notes also confirm that multiple officials support a half-percentage point increase in the federal funds rate as part of the overall credit tightening effort, a move that was delayed in March due to concerns about the Russian invasion of Ukraine. Quote of the Day "We no longer see the Fed achieving a soft landing. Instead, we anticipate that a more aggressive tightening of monetary policy will push the economy into a recession." – Deutsche Bank economists led by Matthew Luzzetti in a report cited by [CNN]( forecasting that the Federal Reserve’s efforts to rein in inflation will not be able to steer clear of driving the economy into a mild recession. Deutsche Bank’s analysts cautioned that there is "considerable uncertainty" around their recession call but said they expect the U.S. economy to contract over the final quarter of next year and the first quarter of 2024. Political Boost From Child Tax Credit Fades for Democrats As recently as December, American voters who received enhanced child tax credit payments were more likely to express support for Democratic congressional candidates, perhaps in recognition of the party’s effort to provide enhanced and refundable credits as part of the $1.5 trillion American Rescue Plan last year Despite efforts to extend the program in the now-stalled Build Back Better Act, at a cost of about $120 billion a year, it ceased to operate at the end of 2021, and as of early April, CTC payment recipients are no more likely to express support for Democrats. In fact, according to a new Morning Consult/Politico poll, they are more likely to support Republicans than voters taken as a whole. “Among parents or guardians with at least one child under 18 in the household who received the expanded child tax credit payments, 46% said they are most likely to vote for a Republican congressional candidate this year while 43% said they’re inclined to back the Democratic candidate,” Morning Consult’s Eli Yokley writes. “The narrow GOP advantage among this group stands in contrast with Democrats’ lead of 12 percentage points in late December, before the benefit expired.” While it’s not clear why the shift in opinion has occurred, Yokley notes that a majority (55%) of voters who received CTC payments disapprove of President Joe Biden’s handling of the economy. Poor People Died from Covid at Twice the Rate of the Rich, Study Finds During the Covid-19 pandemic, Americans living in the poorest counties died at twice the rate of those living in the richest counties, according to a report released this week by the Poor People’s Campaign. And death rates during last fall’s Delta variant surge of the virus, death rates in counties with the lowest median income were five times higher than in those with the highest median income, the report found. The study looked at data on Covid deaths, income, race and other characteristics from 3,200 counties. The report says that vaccination status does not fully explain the variation in death rates across income groups: “Average vaccination rates are generally higher in the highest income counties than in middle-and low-income counties, however, these differences do not explain the whole variation in death rates in the later phases of the pandemic.” The study also found that the poorest counties had an uninsured rate that was double that of the highest-income counties, the study showed. “If the nation had paid attention to the widespread poverty that preceded the pandemic, thousands of deaths might have been prevented,” the Rev. William J. Barber II and the Rev. Liz Theoharis, co-chairs of the Poor People’s Campaign, wrote in an opinion piece for [The Washington Post](. --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to [sign up here]( for their own copy of this newsletter. --------------------------------------------------------------- News - [Questions Grow About Biden’s Position on a Gas Tax Holiday]( – The Hill - [Biden Signs Us Postal Service Reform Bill Into Law]( – CNN - [Fed Signals Half-Percentage-Point Rate Increases Could Be Warranted at Coming Meetings]( – Wall Street Journal - [10-Year Yield Rises to 3-Year High as Fed Plans a Speedier Policy Tightening]( – CNBC - [Treasury Loses in Bid to Plug Multi-Billion-Dollar Gap in 2017 Tax Law]( – Wall Street Journal - [Medicare Blockbusters' List Prices More Than Doubled Since Launch]( – Axios - [Biden Extends Federal Student Loan Payment Pause Through Aug. 31]( – Washington Post - [Democrats Accuse Oil Companies of ‘Rip Off’ on Gas Prices]( – Associated Press - [House Democrats Tell USPS to Pump the Brakes on Gas-Guzzling Truck Contract]( – Washington Post - [FDA Advisers Seek Vaccine Update Plan Before Next Big Wave]( – Bloomberg - [Experts Eye a New Game Plan for COVID Vaccines]( – Axios - [Biden’s Planned Global Covid Summit Postponed]( – Politico - [States Are Ready to Live With Covid. Congress' Funding Fight Is Making That Hard.]( – Politico Views and Analysis - [Congress Is Choosing to Prolong the COVID-19 Pandemic]( – Gavin Yamey and Boghuma Kabisen Titanji, Washington Post - [An Inflation Update and How Brainard Is Getting It Right]( – John Authers, Bloomberg - [U.S. Needs a Strategic Reserve for Green Energy]( – Conor Sen, Bloomberg - [The Failure of Covid.gov Is Worse Than Inexcusable]( – Scott Duke Kominers, Bloomberg - [Democrats Needed This Advice From Barack Obama]( – Jennifer Rubin, Washington Post - [What the 2008 Financial Crisis Tells Us About Today’s Inflation Surge]( – Greg Ip, Wall Street Journal - [Injecting Some Insulin Reality]( – Wall Street Journal Editorial Board - [Hidden in Plain Sight: The Force Fueling America’s Covid Catastrophe]( – The Rev. William J. Barber II and The Rev. Liz Theoharis, Washington Post Copyright © 2020 The Fiscal Times, All rights reserved. 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