Why it matters: Any attempt to modify a deal Senate Majority Leader Chuck Schumer can strike with Sen. Joe Manchin (DW.Va.) could derail the entire package. That could deprive President Biden — and vulnerable lawmakers — of a primary victory at a time of real weakness.
Gottheimer’s debates target a small group that includes Reps. Carolyn Bourdeaux (D-Ga.), Ed Case (D-Hawaii), Tom Suozzi (DN.Y.), Susie Lee (D-Nev.) Dean Phillips (D -Minn .) and Mikie Sherrill (DN.J.).
The big picture: Manchin has been adamant that he wants higher corporate taxes to reduce the deficit and help fight inflation.
For months, his shorthand was a 2:1 ratio of new revenue to new spending, with about $500 billion going to deficit reduction. However, early debates in the House led by Gottheimer do not envision new taxes on corporations or wealthy individuals. Trump’s corporate and personal tax cuts will remain in place. Gottheimer’s formula would leave $177 billion for deficit reduction — a step toward Manchin but a long way from his roughly $500 billion goal.
Be smart: Like an aircraft carrier on the high seas, the runway for President Biden, Schumer and House Speaker Nancy Pelosi to land a reconciliation package is short and emotional.
After declaring Biden’s original $2.2 trillion climate and social spending package dead last December, Manchin revived talks with Schumer on a much smaller deal this spring, and the two sides are continuing negotiations. But Manchin remains concerned about inflation. The new data — as the White House prepares for a potential annual CPI rate of 8.8 percent — could change its calculus. Some House centrists are equally concerned that the economy is on the brink of recession and worried about raising taxes in a slowdown.
Sen. Kyrsten Sinema (D-Ariz.), who rejected plans to raise the overall top corporate tax last year, will have to see the details of any deal Schumer and Manchin strike.
Indeed, he supported a variety of revenue options that added up to $1.8 trillion in new taxes to address tax avoidance by corporations and wealthy individuals.
There have long been questions about how Democratic leaders and the White House could fine-tune the House’s “No SALT, No Deal” caucus in the House.
With Democrats currently holding a 220-210 margin in the House, Gottheimer would need five votes to extract concessions from Senate or House leaders.
By the numbers: Gottheimer’s counterproposal calls for $520 billion in new spending on climate energy and health insurance exchanges, and a total of $627 billion in new money from enhanced IRS enforcement and drug pricing reform.
About $400 billion would come from the IRS provisions, based on the White House’s rosy estimate of how much revenue they can raise by fighting tax fraud. It estimates another $297 billion from prescription drug reform. While he wants to remove the $10,000 deduction cap for state and local taxes (SALT) on federal taxes, his version — which includes income limits — is deficit-neutral.
Flashback: Gottheimer led a group of nine centrist lawmakers last summer to pressure Pelosi to pass the bipartisan infrastructure bill first and then turn to Biden’s larger social spending and climate package.
While the move irked House leaders, the group ultimately prevailed and Biden signed into law about $1 trillion in infrastructure spending.
The bottom line: Gottheimer’s move is a sign that some members of the House are taking the Schumer-Manchin talks seriously.
But just because they’re getting ready to respond to a potential deal doesn’t guarantee a deal.
