What to Know in Washington: Manchin Prods Sinema to Support Deal

Sen. Joe Manchin (D-W.Va.)—architect of the Democrats’ new tax, climate, and health-care bill—made a public pitch to his colleague Kyrsten Sinema (D-Ariz.) to get on board with the legislation, arguing that it doesn’t raise taxes. Sinema has not divulged her position on the bill and has the power to sink it.

Manchin made his pitch in a series of Sunday political talk show appearances where he defended the proposed Inflation Reduction Act as cutting cost increases despite a study by the University of Pennsylvania’s Wharton School showing it would have little impact or may increase inflation slightly in the near term.

Democrats are seeking to pass the bill this week in the Senate and in the House next week. Doing so would require all 50 members of the Senate Democratic caucus to vote yes on the bill and defeat a slew of Republican attempts to amend it. It would also require all 50 to remain Covid-free and able to endure a long vote series.

Sinema’s office has said she won’t make her position known until later in the week at the earliest, after the top Senate rules official has scrubbed the bill of any non-budgetary items. Manchin said he doesn’t know if Sinema would vote for the bill, but she should. “She has so much in this legislation,” Manchin told CNN Sunday. He said tax changes in the bill don’t amount to tax rate hikes, which Sinema has opposed, citing the economy.

The legislation would levy a 15% minimum tax on large corporations and make changes to how carried interest is taxed to try to force more hedge fund managers to pay their income using the individual code’s higher rate. It would also bolster Internal Revenue Service tax audits by paying for more personnel. “I agree with her 100% in that we are not going to raise taxes,” Manchin said. “And we won’t.” Read more from Erik Wasson and Ian Fisher.

Democrats want to go into the August recess telling their constituents they are lowering what they pay for medicines. But many of their promised changes won’t be felt for years, and only by a fraction of the nation. The drug pricing provisions in Manchin’s agreement with Majority Leader Chuck Schumer (D-N.Y.) is already facing opposition from the pharmaceutical industry and conservatives in television ads and town halls, painting them as ineffective and harmful to drug innovation.

This war on messaging could be challenging for Democrats because some of the major benefits of their drug-pricing bill won’t go into effect until 2025, too late for voters in elections this November. Opponents of the drug bill say they’ll attempt to capitalize on that. “The administration knows none of this is going to help benefit people anywhere around the country, nobody this year,” Sen. John Barrasso (R-Wyo.), chairman of Senate Republicans’ messaging operation, said. Alex Ruoff and Zach C. Cohen have more.

MORE ON THE SWEEPING BILL

OECD Tax Impact: Alternative energy incentives in the package favor certain technologies, like carbon capture and hydrogen, by making them less likely to be disrupted by a global minimum tax pact among 130 countries. But the value of other credits in the bill could be negated by the global deal’s pending 15% minimum tax. Colin Wilhelm and Michael Rapoport have more.
Agricultural Carbon Capture: American farmers would get more incentive to pursue additional sustainable agricultural methods under the $370 billion climate spending package. The package includes $20 billion for “climate-smart agriculture practices” largely geared toward reducing carbon and nitrous oxide emissions. Read more from Maeve Sheehey and Michael Hirtzer.
The deal could cost the oil industry $25 billion in new taxes. The legislation would reinstate and increase a long-lapsed tax on crude and imported petroleum products to 16.4 cents per gallon, according to a summary of the plan released Sunday by the Senate’s tax-writing committee, Ari Natter reports.

Also Happening on the Hill

CONGRESS’ SCHEDULE

The Senate meets at 3 p.m. as senators weigh reconciliation
The House is on recess this week.

Pelosi in Asia: Speaker Nancy Pelosi (D-Calif.) departed for Asia, with visits planned in Singapore and Japan, according to a statement from her office that skipped mention of a potential stopover in Taiwan. She’s leading a congressional delegation that will also visit South Korea and Malaysia, a statement Sunday said. Alfred Liu and Billy House have more.

China again warned that its military would take action if Pelosi makes a landmark visit to Taiwan, as speculation mounted in Taipei that she could arrive there as soon as Tuesday. Read more.

Senate leaders are intensifying efforts on approving bids by Finland and Sweden to join NATO before lawmakers leave town for a month-long break. Accession of the two Nordic nations to NATO amid Russia’s invasion of Ukraine is popular among senators, but the bid is competing with the new Senate reconciliation package of climate and health-care provisions, veterans legislation, and more, for valuable Senate floor time before the recess set to start Aug. 8. Read more from Nancy Ognanovich.

VA Secretary Denis McDonough said he’s confident a veterans’ health bill will pass the Senate. Schumer said he will bring the bill (S. 3373) to provide health care and benefits to 3.5 million veterans exposed to toxic burn pits back to the floor this week, and that he’ll allow Sen. Patrick Toomey (R-Pa.) to bring an amendment addressing his party’s budgetary concerns for debate. Read more from Victoria Cavaliere.

A top Democrat renewed her call for the Department of Homeland Security’s watchdog to “step away” from investigating the loss of Secret Service text messages around the Jan. 6 insurrection, arguing he bungled the probe. House Oversight Chair Carolyn Maloney (D-N.Y.) said she was troubled by new revelations about DHS Inspector General Joseph Cuffari’s handling of the matter. Cuffari “must heed my call to immediately step away from this crucial investigation,” she said. Read more from Billy House and Yoojung Lee.

The Secret Service is supposed to operate in the shadows as an apolitical agency protecting US officials and their families. Like oxygen, it should be vital but largely invisible. So when it emerged the text messages had been deleted, and that Vice President Mike Pence disagreed with the agents on the scene, grievous questions of integrity and politicization loomed. Had the agency been hijacked by Donald Trump? Billy House, Mike Dorning and Ellen Gilmer take a deep dive into the origins of the probe.
Militia Group’s Defense: Members of a right-wing militia group facing trial on the most serious charges stemming from the Jan. 6 assault should be barred from trying to blame Trump for their actions, the Justice Department told a judge. Trump didn’t have the authority to order such an attack and therefore can’t be used in an entrapment defense, the US said, Erik Larson reports.

The Senate’s top agriculture Republican is challenging the Biden administration’s authority to impose new rules on chicken farmers in his state, and looking to a recent Supreme Court decision to buttress his case. Regulatory proposals to strengthen competition in the US meat and poultry industries “arguably carry substantial economic and political consequences,” Sen. John Boozman (R-Ark.) told Agriculture Secretary Tom Vilsack, asking whether the department was reviewing its authority. Maeve Sheehey has more.

The state of the economy looms large in any US election. That spells big trouble for Democrats in November’s midterm vote. A new study by Bloomberg Economics takes one gauge with a knack of predicting ballot outcomes—the misery index, calculated by adding up inflation and unemployment rates—and projects it forward to election day. The result: Based on past voting patterns, President Joe Biden’s party may lose 30 to 40 House seats and a few Senate ones. Read more from Andrew Husby, Gregory Korte, Steven Dennis and Eric Fan.

ALSO ON LAWMAKERS’ RADARS

Pacific Embassies Bill: A bipartisan bill introduced by Sens. Jon Ossoff (D-Ga.) and Todd Young (R-Ind.) would open US embassies in Vanuatu, Kiribati and Tonga to “reassert” America’s presence in the Pacific and counteract China’s influence, according to a statement issued by Ossoff’s office on Friday. Read more from Se Young Lee.
MLB Hearing Planned: The Senate Judiciary Committee is planning a hearing on Major League Baseball’s treatment of minor league players, Chairman Dick Durbin (D-Ill.) said in a statement. Durbin said that MLB Commissioner Rob Manfred’s response to the panel’s request for information “raises more questions than it answers,” Se Young Lee reports.
Assault Weapons Ban: The House voted Friday to ban sales of semi-automatic rifles like those used in recent mass shootings, a largely symbolic move by the Democratic majority that has little prospect of passing the Senate. Passage of the legislation 18 years after an earlier assault weapons ban expired came on a party line 217-213 vote. Diego Areas Munhoz and Emily Wilkins have more.
Wildfire Bill: The House Friday passed bills tackling escalating wildfire and drought in the West, but they face uncertain future in the Senate. The wildfire portion of the legislation (H.R. 5118) would authorize additional investments beyond the 2021 infrastructure law for the government’s 10-year strategy to prevent and fight wildfires. Kellie Luneny have more.

Around the Administration

PRESIDENT’S SCHEDULE

Biden has no public events scheduled.
Press Secretary Karine Jean-Pierre holds a briefing at 1:45 p.m.

Biden tested positive again for Covid-19 in a so-called “rebound” case seen in people who take the antiviral drug Paxlovid. Biden, 79, isn’t experiencing symptoms after getting a positive rapid test on Saturday morning, but will resume isolation at the White House, his physician Kevin O’Connor said. The test once again disrupted Biden’s schedule after he resumed in-person events last week, and a trip to Michigan to celebrate the semiconductor passage was canceled. Read more from Jordan Fabian and Josh Wingrove.

The Transportation Department, tasked with spending the better part of $1 trillion from last year’s infrastructure law, needs over 1,000 new employees to carry it out. Trouble is, it’s struggling just to maintain the size of its workforce. “America is undertaking one of the biggest investments in transportation infrastructure in our history and that means we’re hiring,” said Transportation Secretary Pete Buttigieg in an April video. “We need to recruit a new generation of public servants.” Read more from Lillianna Byington.

The US is tightening restrictions on China’s access to chipmaking gear, two major equipment suppliers said, underscoring the US’s accelerating efforts to curb Beijing’s economic ambitions. Washington had banned the sale of most gear that can fabricate chips of 10 nanometers or better to Chinese leader Semiconductor Manufacturing International without a license. Now, it’s expanded that barrier to equipment that can make anything more advanced than 14 nm, Debby Wu, Ian King, and Jenny Leonard report.

Biden took a political gamble with his visit to Saudi Arabia last month, courting a kingdom he once vowed to punish in a quest for more oil supplies. This week will reveal whether it paid off. The OPEC+ producers’ coalition led by Riyadh will decide on Wednesday whether to oblige, though delegates warn that any supply boost would be modest — and may not materialize at all. Grant Smith and Salma El Wardany preview the meeting.

The White House is planning a summit on advanced air mobility on Aug. 3 as the number of drones operating in the US accelerates, Lillianna Byington reports. Officials, groups, and companies — including Joby Aviation — will discuss the benefits and security concerns with drones and new technology, according to a draft agenda obtained by Bloomberg Government.

WHAT ELSE TO KNOW TODAY

Bedingfield to Stay: White House communications director Kate Bedingfield will remain in her current role, reversing her plan to step down to spend more time with family. “After much thought, discussion and reflection, I’ve decided to stay. I’m not done here, and there is so much more good work to do with all of you,” she wrote to White House staff in an email, Jordan Fabian reports.
Special Needs Families: Families whose children have disabilities or specific nutritional needs have been hit particularly hard by the ongoing formula shortage that resulted from an Abbott Laboratories plant being closed over bacterial contamination earlier this year. In response, parents and doctors are creating ad hoc networks. Read more from Ayanna Alexander.
US, Korean Drills: The US and South Korea agreed to further expand joint military drills after a fresh threat from North Korean leader Kim Jong Un to fight the allies. Defense Secretary Lloyd Austin and his South Korean counterpart met in Washington and agreed to “expand the joint exercises in the second half of 2022,” the Korean defense ministry said. Jeong-Ho Lee has more.

To contact the reporter on this story: Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Michaela Ross at mross@bgov.com; Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com