Trump Tax Cuts Are Big Winners in Latest Dem Disappointment

Plus, value of minimum wage hits 66-year low ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Happy Monday and welcome to what promises to be a critical week for Congress. After Sen. Joe Manchin (D-WV) once again balked at quickly passing a climate, energy and tax package, Democrats are set to move ahead with a narrower budget reconciliation bill focused on health care. As we wait for baseball’s Home Run Derby and the new Derek Jeter docuseries tonight, here’s a look at the fallout from Manchin’s change of mind and the latest legislative maneuverings. Sen. Joe Manchin (Allison Bailey/NurPhoto) The Fallout From Manchin’s Big Balk President Joe Biden and Senate Democratic leaders are prepared to take whatever win they can get and move on. When Manchin pulled the plug on Democrat’s Build Back Better package late last year, the White House responded with fury. The tone this time has been much different — in fact, the statement released by Biden last week after talks between Manchin and Senate Majority Leader Chuck Schumer fell apart did not mention the West Virginia senator at all. Instead, the White House and Senate Democrats are looking to press ahead with a budget reconciliation package that aims to lower prescription drug prices and extend increased Affordable Care Act subsidies for two years. And for all their fury, Democrats recognize that they still need Manchin’s vote on this and other legislation. “While a slimmed-down version of a slimmed-down version of a slimmed-down version of the original vast reconciliation proposal isn’t what Democrats wanted, prescription drug reform is something the party has been promising for years and is, crucially, popular with just about everyone in the party,” Politico’s Eugene Daniels and Ryan Lizza [note](. The Senate parliamentarian is expected to hear so-called Byrd bath arguments on Thursday to determine whether Democrats’ plan to allow Medicare to negotiate some drug prices complies with the special rules for the budget reconciliation process. Democrats are still fuming at Manchin: Of course, Democrats’ willingness to move on — and set aside a long list of progressive climate and social priorities — doesn’t mean the frustrations with Manchin will be forgotten, or forgiven. Appearing on ABC’s "This Week" on Sunday, Sen. Bernie Sanders (I-VT) blasted the senator from West Virginia and accused him of “intentionally sabotaging the president’s agenda, what the American people want, what a majority of us in the Democratic caucus want.” Sanders went on to say there was nothing new in Manchin’s latest actions. “And the problem was that we continue to talk to Manchin like he was serious,” Sanders added. “He was not. This is a guy who is a major recipient of fossil fuel money, a guy who has received campaign contributions from 25 Republican billionaires." Moving forward with CHIPs bill, too: Manchin’s torpedoing of a broader reconciliation bill may have opened the door to faster action — and Republican support for — a bill to provide $52 billion in aid for the U.S. semiconductor industry. “This will green light proceeding this week to shore up the dangerous vulnerability of US supply chain for advanced semiconductors,” Sen. John Cornyn (R-TX) tweeted Sunday about Manchin’s move. Schumer is reportedly hoping to launch the floor process on the bill as soon as Tuesday, potentially setting up final passage next week. “In addition to the $52 billion in chipmaker subsidies, the bill is also expected to include an investment tax credit that was initially part of the bipartisan FABS (Facilitating American Built Semiconductors) Act,” Punchbowl News reported Monday morning. “This provides a tax credit for building or modernizing semiconductor fabrication facilities, the real cornerstones of the industry.” Democrats have failed to reverse the Trump tax cuts: “Despite a full Democratic-controlled Washington, the Trump tax code architecture from 2017 will hold in place,” notes analyst Chris Krueger of the Cowen Washington Research Group. David Dayen of liberal magazine [The American Prospect]( notes that Democrats in recent years had put forth a slew of grand policy proposals that they promised would be fiscally responsible because they would be paid for by rolling back or repealing the 2017 Republican tax cuts. Only the party couldn’t hold together and follow through on those tax hikes, with Manchin’s rejection of tax hikes last week “There are many implications to the failure of talks on what was once the Build Back Better Act and what is now the Negotiate Prices on Ten Drugs Starting in 2026 Act of 2022 (working title),” Dayen writes. “But one of the biggest is that the Trump tax cuts will make it through the first two years of the Biden administration unscathed—and could very well become permanent, a symbol of the one-way ratchet in favor of the top 1 percent that characterizes U.S. policymaking.” Dayen suggests that failure points to a larger problem with the Democratic Party: “If you have unanimous opposition to a bad policy with no real political proponents and then can’t get a single thing done about it in the space of five years, it speaks to an essential malfunctioning at every level of the party and the process. Nobody should get a pass for it. It's nothing short of an embarrassment.” The bottom line: Despite their numerous failures, Democrats still appear poised to pass the most significant healthcare legislation in years before lawmakers leave for their August recess. That would be a big win for Biden and his party — even if it doesn’t exactly feel like it given the other big agenda items that have been dropped from Democrat’s legislation. “Drug pricing has been the Democratic policy Moby Dick for generations,” writes Krueger. “Layer in preventing health insurance premium shocks… and make the GOP vote against both. Then add a likely Trump 2024 Presidential announcement in October, Roe v Wade, poor GOP Senate candidates & you (Democrats) have a decent little midterm message to run on.” At the same time, Krueger notes that “execution risk remains quite high” given the “general disorder/malpractice” among Democrats and the narrow margins they have in Congress. So stay tuned. Quotes of the Day: Manchin's Inflation Fears “I haven’t walked away from anything. And inflation is my greatest concern because of how it has affected my state and all over this country, and that’s all I have to say. … I don’t know what tomorrow brings.” – Manchin, [insisting to reporters]( Monday that he hasn’t walked away from talks over Democrats’ proposed climate and tax provisions. “Senator Manchin is absolutely right to be more worried about inflation after the Friday report. That means we're going to need to do more. The Fed's probably going to telegraph larger rate increases in the future. It also means Congress should be trying to do their part in helping out. If they can cut the deficit, including raising taxes on high income households, that would, you know, reduce a bit of spending in the economy. It would cool the economy down a little bit and actually take some pressure off the Fed. The Fed would not need to raise rates by quite as much if Congress did their job.” — Jason Furman, who led the Council of Economic Advisers under President Obama, speaking to Margaret Brennan of CBS News on “Face the Nation” Sunday. Furman [said]( that Manchin’s resistance to President Biden’s long-term spending plan earlier this year may have made sense at the time, but his more recent concerns about the inflationary effect of a slimmed-down plan to raise taxes on the wealthy appear to be misplaced. “The difference is that we're talking about something exceedingly different then -- now than then,” Furman said. “That was $1.9 trillion of new spending. Now on the table was something like $500 billion of deficit reduction. It was a net reduction in the deficit. I think almost anyone, regardless of where they were on the political spectrum that was an expert on this topic, would agree that would lower inflation.” Chart of the Day: In the Hot Seat As temperatures around the world soar this week, some global warming skeptics are citing a heat wave that occurred in Western Europe in 1976 to argue that there’s nothing new going on. But climate scientists are quite certain there is something going on, and it’s causing record temperatures and thousands of deaths. “We have not seen anything like it,” [said]( meteorologist Scott Duncan, who tweeted the charts below. “A warmer world, thanks to human induced climate change, makes it almost effortless to break extreme heat thresholds. We continue to see this across the planet.” Meanwhile, the apparent failure of Biden’s climate-focused spending bill will make it much more difficult to fulfill his pledge to reduce U.S. emissions by half by the end of the decade, The Washington Post’s Chris Mooney and Harry Stevens [report](. "In 101 months, the United States will have achieved President Biden’s most important climate promise — or it will have fallen short," Mooney and Stevens say. "Right now it is seriously falling short, and for each month that passes, it becomes harder to succeed until at some point — perhaps very soon — it will become virtually impossible. That’s true for the United States, and also true for the planet, as nearly 200 nations strive to tackle climate change with a fast-dwindling timeline for doing so." Value of Minimum Wage Hits 66-Year Low: Report The federal minimum wage hasn’t been raised since 2009, the longest period without an increase since the wage was established by Congress in 1938. According to an [analysis]( by the Economic Policy Institute released last week, the value of the wage has been falling steadily thanks to inflation, and it’s now worth less than at any point in the last 66 years. In February 1956, the nominal value of the minimum wage was 75 cents an hour, which translates to $7.19 per hour once inflation is taken into account. The wage has been worth more than that ever since, until now. “[A] worker paid the current $7.25 federal minimum wage earns 27.4% less in inflation-adjusted terms than what their counterpart was paid in July 2009 when the minimum wage was last increased, and 40.2% less than a minimum wage worker in February 1968, the historical high point of the minimum wage’s value,” EPI analysts say. Less than 2% of hourly workers are paid the bare minimum wage, in part due to the fact that 30 states and more than 50 cities and municipalities have enacted higher local minimums. Still, about a third of all workers make less than $15 per hour, and labor advocates argue that raising the federal minimum would help workers all along the long-income scale. “A national $15 minimum wage would raise the incomes of tens of millions of workers, including servers in restaurants, grocery store employees, and essential health care workers,” the EPI report says. News - [Manchin Insists He’s Not Walking Away From Dems-Only Talks as Colleagues Fume]( – Politico - [Democrats’ Tax-Hike Plans Are Imperiled — With or Without Joe Manchin]( – Bloomberg - [The U.S. Plan to Avoid Extreme Climate Change Is Running Out of Time]( – Washington Post - [After Manchin Tanks Talks, Climate Action Moves to Life Support]( – Roll Call - [Biden Approval on Economy Hits New Low: Poll]( – The Hill - [Scaled-Back Semiconductor Funding Bill Set Up for Senate Vote]( – Bloomberg - [The US Is Exporting Inflation, and Fed Hikes Will Make It Worse]( – Bloomberg Businessweek - [Soaring Dollar Could Help Fed in Fight Against Inflation]( – Washington Post - [Fauci Says He'll Retire by End of Biden's Term]( – Axios - [Covid Rises Across U.S. Amid Muted Warnings and Murky Data]( – New York Times - [For Monkeypox Patients, Excruciating Symptoms and a Struggle for Care]( – New York Times - [Worst Backslide in Global Vaccinations ‘in a Generation,’ U.N. Says]( – Washington Post - [U.S. Pays $4.2 Million to Victims of Jail Guard’s Long-Running Sex Abuse]( – New York Times Views and Analysis [A Surprising Inflation-Fighting Tool]( – Kate Davidson, Politico [Inflation Report Makes Congress’s Economic Plan Even More Necessary]( – David Super, The Hill [The US Is Exporting Inflation, and Fed Hikes Will Make It Worse]( – Ben Holland et al, Bloomberg [A Recession Would Be Worse Than Today’s Inflation]( – Josh Bivens, Economic Policy Institute [Inflation Beast Won't Lie Quietly Again for a Long Time]( – Allison Schrager [When Austerity Is a Bigger Problem Than Inflation]( – John Authers, Bloomberg [Social Security Data Show Pandemic’s Toll — and a Path Forward]( – David A. Weaver, The Hill [Consumers Want Electric Vehicles, but Tax Credits Aren’t Coming]( – Alex Daugherty, Politico [Climate Change Is Pushing Hospitals to Tipping Point]( – Vanessa Montalbano, Washington Post [Ending Tariffs Would Curb Inflation — but Why Ignore the Main Benefits?]( – Dan Pearson, The Hill [This Pioneering Economist Says Our Obsession With Growth Must End]( – David Marchese, New York Times Copyright © 2022 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](