Expect Higher Taxes, Possibly a VAT, to Support Huge $4 Trillion Infrastructure Bill
Manchin Open to VAT
Last month Manchin called for 'Enormous' Infrastructure Package Paid for With New Taxes.
"I'm sure of one thing: It’s going to be enormous," the West Virginia Democrat, who is seen as a swing vote in a chamber divided 50-50, told reporters at the Capitol.
While he didn't predict a price tag, Manchin said Congress should do "everything we possibly can" to pay for it. He said there should be "tax adjustments" to former President Donald Trump’s 2017 tax law to boost revenues, including by raising the corporate rate from the current 21 percent to at least 25 percent.
The tax benefits in the Republican law were "weighted in one direction to the upper end," Manchin said. He also suggested an "infrastructure bank" paid for with revenues, potentially a value-added tax, that would be used for "rebuilding America."
"I'm not afraid to look at other things," he said.
Pulling Biden to the Left
Yesterday, NY Magazine reported Joe Manchin May Be Pulling Biden Left on Infrastructure.
Joe Manchin is an odd Democrat. This is true in a banal sense, in that the West Virginia senator is far more conservative than the median member of his party on a whole host of issues. At present, Manchin is directly blocking the passage of progressive gun safety, voting rights, and minimum wage bills, and indirectly obstructing just about every other item on President Biden’s agenda, by opposing substantial reforms to the legislative filibuster.
But on infrastructure, Manchin is a different kind of strange. Whenever the subject comes up, the man’s mood grows lighter, his eyes grow wider, and a wee bit of socialism creeps into his heart.
In an interview with the Bipartisan Policy Center in February, Manchin likened the scale of his desired infrastructure package to that of the New Deal or Dwight Eisenhower’s federal highway bill.
What Does Manchin Want?
If Manchin values “paying for” infrastructure more than he does bipartisanship, he could actually force the White House to roll its remaining spending priorities into one giant reconciliation bill, which Republicans would have no influence over. That could both expedite the passage of a bill permanently extending the American Rescue Plan’s child allowance, while also pushing the details of the physical infrastructure package in a more progressive direction.
It normally takes 60 votes to pass a bill in the Senate to kill a filibuster.
In special situations, however, Reconciliation Rules allow passage by a simple majority.
Reconciliation bills can be passed on spending, revenue, and the federal debt limit, and the Senate can pass one bill per year affecting each subject. Congress can thus pass a maximum of three reconciliation bills per year, though in practice it has often passed a single reconciliation bill affecting both spending and revenue.
Policy changes that are extraneous to the budget are limited by the "Byrd Rule", which also prohibits reconciliation bills from increasing the federal deficit after a ten-year period or making changes to Social Security.
The reconciliation process was created by the Congressional Budget Act of 1974 and was first used in 1980.
The Lock and the Key
Manchin's vote can prevent passage of a bill or ram it through.
Without Manchin, Democrats come up short in the Senate 51-49. With Manchin on board, the Senate ties 50-50 and Vice President Kamala Harris gets to cast the tie breaker.
Using the EU as an example model, a VAT would be very destructive to the economy.
Manchin is both the lock and the key. With Manchin on board, the smart money expects higher taxes of some kind.