U.S. growth in jeopardy after Manchin says he won’t vote for Build Back Better: Goldman Sachs

President Joe Biden faces the unexpected task of quickly rewriting his policy agenda in a crucial election year after a key Senate Democrat abruptly rejected his signature $1.75 trillion economic plan.

Senator Joe Manchin stunned the White House and fellow Democrats Sunday by announcing his opposition to a tax-and-spending package tailored to win his support after months of courtship by Biden and other administration officials. The move effectively torpedoes Biden’s campaign promises to address climate change, health-care costs and child-care needs.

Losing support from Manchin, a moderate from West Virginia, is essentially fatal in a 50-50 Senate where Republicans uniformly oppose the plan, known as Build Back Better. Biden and top congressional Democrats must now regroup at once on those priorities, with little more than 10 months before midterm races that will decide control of Congress.

Failure to deliver on the legislation risks ripples through a U.S. economy still recovering from the pandemic. Biden had lately portrayed it as an inflation-fighting measure, and Goldman Sachs lowered its estimates for U.S. economic output next year after Manchin’s move. 

While a scaled-back version of the economic package remains possible, its collapse right before the holidays nonetheless marks a bruising defeat for the president, who has long touted his legislative acumen honed over 36 years as a senator. He regularly scoffed at concerns he couldn’t thread the needle to pass a sprawling social bill through a razor-thin Congress, where any one senator essentially held a veto.

And the timing could hardly be worse for an administration facing another resurgence of the pandemic and national unease over the new omicron variant of the coronavirus.

Manchin’s decision, which he announced publicly on Fox News Sunday, blindsided the White House, Biden aides said. It also unleashed a torrent of outrage and finger-pointing from Democrats. Several White House officials expressed frustration with Manchin; one said the failure hurt all Democrats but that Manchin’s move wasn’t entirely unexpected after months of talks with little progress.

They asked not to be identified criticizing the senator.

‘Inexplicable Reversal’

In a sharp statement marking an abrupt shift in tone after months of deference to Manchin, White House Press Secretary Jen Psaki said his comments represented “a sudden and inexplicable reversal in his position, and a breach of his commitments to the president and the senator’s colleagues in the House and Senate.”

She said Manchin had presented Biden a written counter-offer on Tuesday similar in scope to Biden’s plan. A person familiar with Manchin’s outline said it carried a price tag of $1.8 trillion over 10 years. Spokespeople for Manchin didn’t respond to questions about the proposal.

“While that framework was missing key priorities, we believed it could lead to a compromise acceptable to all,” Psaki said. “We will continue to press him to see if he will reverse his position yet again, to honor his prior commitments and be true to his word.”

Manchin said in his statement that Democrats sought in the legislation to “dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face,” including the pandemic and foreign adversaries. He cited a Republican-requested cost estimate of the legislation that the White House has assailed as inaccurate, saying Democrats sought to “camouflage the real cost” of the measure.

“As the omicron variant spreads throughout communities across the country, we are seeing COVID-19 cases rise at rates we have not seen since the height of this pandemic,” Manchin said. “We are also facing increasing geopolitical uncertainty as tensions rise with both Russia and China. Our ability to quickly and effectively respond to these pending threats would be drastically hindered by our rising debt.”

Biden has described the Build Back Better package as a pillar of his legacy and crucial to his push to rebalance American life back toward the middle class. He staked much of his own credibility on its passage, including in persuading most House progressives to vote for a separate infrastructure plan on a promise Manchin would eventually be on board for the second bill.

Now his administration limps toward the end of its first year empty-handed on some core priorities and beset by high inflation, the continuing pandemic and an erupting party rift.

Delivering unusually sharp criticism of a colleague, the Senate’s No. 3 Democrat, Patty Murray of Washington, said Sunday in a statement that “Joe Manchin might have woken up today and decided his job changed, but I know exactly what mine is: fighting for Washington state workers and families.”

Liberals in the House were even more harsh, with Congressional Progressive Caucus Chair Pramila Jayapal saying in a statement that Manchin had “betrayed his commitment not only to the president and Democrats in Congress but most importantly, to the American people.”

And some expressed anger toward Biden for encouraging them to trust that the West Virginia senator would eventually come around. “You need to fix this,” Missouri Representative Cori Bush tweeted at Biden’s official account.

Policy, Political Fallout 

The collapse risks further fueling disenchantment among the Democratic base with Biden, who’s already under fire from supporters for not doing enough to expand voting rights and racial equity. Some liberals threatened electoral consequences. The head of the Sunrise Movement, a progressive climate advocacy group, said the blame rests not only with Manchin, but also with Biden, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi.

“They had a moral obligation to play hard ball with Joe Manchin and chose not to,” the group’s executive director, Varshini Prakash, said in a statement. “Our leaders have failed us, and we will replace you.” 

Manchin’s hasty announcement and Psaki’s scathing rebuttal may cloud any steps forward, for now. The White House and Schumer must determine whether they can salvage any of the tax-and-spending bill while both addressing Manchin’s concerns and maintaining the support of the rest of the fractious Democratic caucus. 

Representative Suzan DelBene, who leads the moderate New Democrat Coalition, said that “prioritizing doing a few things well for longer” from the package Manchin killed would “open a potential path forward for this legislation.” Biden’s chief of staff, Ron Klain, tweeted her statement.

Biden made no public appearances Sunday and is due to return to the White House from Delaware on Monday, before delivering a speech Tuesday on the latest surge in COVID cases. Salvaging parts of Build Back Better is a task that may stretch well into 2022, as Democrats simultaneously race to defend their congressional majorities.

“It will take some time to sort out what Manchin will accept in reconciliation, if anything,” one Democrat, Senator Sheldon Whitehouse, tweeted. “In the meantime, remember it’s a season of miracles.”

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