Joe Manchin’s Bargain

Joe Manchin’s bargain | GUEST COMMENTARY
By George Liebmann
For The Baltimore Sun

Aug 2, 2022

From the beginning of discussion of the Biden administration’s Build Back Better proposal, I forecast that the time would come when Sen. Joe Manchin of West Virginia would be “bought off” by the Biden administration with the provisions of benefits to his state. Mr. Manchin held out for longer than expected, and drove a harder bargain than expected — to the nation’s benefit. Along the way, he successfully torpedoed grandiose plans for the nationalization of day care, elder care, preschool classes and the dental profession, as well as assorted gifts to the teachers’ and construction unions and other Democratic interest groups. A plan that would have increased coming deficits by several trillion dollars has been transformed into a bill of about one-fifth the original size, which will actually reduce deficits, though not until 2024.

Any measure that relieves the Federal Reserve Board from sole responsibility for combating inflation is to be welcomed, lest the burden fall disproportionately on the construction industry and real estate values, re-creating the “stagflation” of the 1970s. The bill does not do much to relieve pressure on interest rates, but it does do something. Even its delayed effect in this respect is not too deplorable; expectations of the future feed into the present. The minimum corporate tax, increased IRS appropriations, and constriction but not elimination of the “carried interest” exemption are to be welcomed as steps toward a fairer tax system, notwithstanding the wails and lamentations from the Club for Growth and the Wall Street Journal, who never find a tax increase that is worthy of support.

Were I a congressman, I would hold my nose and vote for the bill, and would forever thereafter be stigmatized as a traitor, a RINO or worse.

Yet Mr. Manchin’s bargain is regrettable on two counts. The first is in the outrageous continued subsidies and tax credits for the electric car industry. Even Elon Musk, whose fortune is due to these subsidies, has recognized that “startup” subsidies are no longer needed. Senator Manchin welcomes them because he realizes, as the climate change hysterics in large-cities do not, that electric car enthusiasts do not dwell in the sunny, windy and sparsely populated spaces of “flyover country,” but in large Eastern and Midwestern cities whose utility plants still use coal as their marginal fuel to cover higher electricity demands. In 30% to 40% of the country, including the populous mid-Atlantic states, each new electric car means decreased demand for gasoline and increased demand for West Virginia coal.

Mr. Manchin’s pork-barreling is not as egregious as the fish hatcheries and roads to nowhere favored by his predecessor, Sen. Robert Byrd. But it has unfortunate budget and environmental effects nonetheless.

The second cause for regret is that Mr. Manchin’s spending programs replace and are at the cost of some of the worthier items in Mr. Biden’s original proposals. These included proposals for a Climate Corps along the lines of the New Deal’s highly successful Civilian Conservation Corps. If modified to enhance the Army’s role in training, as with its ancestor organized by General George Marshall, this would have provided an alternative for youth, while providing for needed soil conservation, flood control and reforestation projects. It has been estimated that 40% of the nation’s Paris Treaty objectives can be achieved through reforestation. But the planting of trees, unlike the manufacture of electric cars, has no friends on K Street, the source of all Democratic omnibus bills. The bill does provide a billion dollars, a drop in the bucket, for urban forestation.

The family tax credit, fostered in recent years by an unusual cast of characters — including Newt Gingrich, Bernie Sanders, Ivanka Trump and Mike Lee — also has disappeared from the reconciliation legislation, though it would have benefited the child victims from the upsurge in births out of wedlock, the product of the liberalization of sexual mores. Sen. Lee of Utah sensibly proposed that its expansion be modified by including a part-time work requirement so as not to re-create the perverse incentives of the former Aid to Families with Dependent Children program, but instead it has fallen completely by the wayside.

Also discarded is Congressman James Clyburn’s effort to extend the drug treatment programs of the recent Medicaid expansion to opt-out states in the Deep South much in need of it. Instead, the Manchin bill perpetuates the widely dispersed Obamacare subsidies, a consumer crowd pleaser that does much for the health care professions and little for public health.

But one cannot have everything. “In the Kingdom of the Blind, the one-eyed man is King.” That, for the moment, is Senator Manchin, without whom there would have been no revenue measures at all, and no deficit reduction once the Republicans regain Congress.

George Liebmann is president of the Library Company of the Baltimore Bar and the author of numerous works on law and history, most recently “Vox Clamantis In Deserto: An Iconoclast Looks At Four Failed Administrations.”

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