New inflation number feeds angst about Democrats’ $2T bill

Dec 10, 2021, 9:38 AM | Updated: Dec 12, 2021, 11:56 pm
Sen. Joe Manchin, D-W.Va., a key vote on President Joe Biden's domestic spending agenda, gestures t...

Sen. Joe Manchin, D-W.Va., a key vote on President Joe Biden's domestic spending agenda, gestures to reporters, Thursday, Dec. 2, 2021, while boarding an elevator on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)

(AP Photo/Jacquelyn Martin)

WASHINGTON (AP) — Government reports on rising inflation and the potential costs of President Joe Biden’s social and environment legislation raised fresh questions Friday about the bill’s fate, with both sides hoping the new numbers would influence pivotal Sen. Joe Manchin.

The moderate Manchin, D-W.Va., has spent months forcing Democrats to trim the 10-year, $2 trillion package, arguing it’s too expensive and at times citing growing inflation as a reason to slow work on the bill. On Friday, the Labor Department said consumer prices grew last month at an annual rate of 6.8%, the highest in 39 years.

A separate report from the nonpartisan Congressional Budget Office said that if many of the bill’s temporary spending boosts and tax cuts were made permanent, it would add $3 trillion to the price tag. That would more than double its 10-year cost to around $5 trillion. Democrats called the projections from the Republican-requested report fictitious.

Manchin aides did not respond to requests for comment. Manchin said in a brief interview Thursday that he wanted to know “where we are in inflation and where we are on the true price” of the bill, adding he was “very concerned.”

The latest inflation figures prompted Biden to use some of his strongest language yet, telling reporters at the White House on Friday, “I think this is the peak of the crisis.” While the numbers illustrate a clear political danger for the administration, the recent performance of financial markets suggests investors don’t see inflation as a long-term problem.

Friday’s reports popped out two weeks before Christmas, by when Senate Majority Leader Chuck Schumer, D-N.Y., hopes to end months of talks among Democrats and finally push a compromise bill through the Senate. The House approved an initial version last month.

With Manchin still seeking cuts in a measure that originally cost $3.5 trillion, the day’s reports at the least increased his leverage in a tortuous process that’s already seen several near-death moments caused by Democratic infighting. At worst, the numbers fueled worries that Manchin might abandon the package, sinking it.

“I don’t know the answer to that,” Biden said at the White House when asked if he could win Manchin’s support. He said he’d talk to the lawmaker early next week.

Every Democrat in the 50-50 chamber will have to back the bill so Vice President Kamala Harris can cast a tie-breaking vote to approve it.

The political sensitivity of inflation and its impact on the Democratic bill, a collection of family services, health care and climate change priorities, was illustrated as leaders of both parties tried to spin the numbers to their advantage.

Democrats argued that the inflation report intensified the need to approve the measure. They said the legislation’s spending and tax credits for health care, children’s costs, education and other programs would help families cope with rising prices. Most of the bill is paid for with tax boosts on the wealthy and big corporations.

The legislation’s impact will be “reducing costs for ordinary people,” Biden said.

Republicans said the legislation’s expenditures would further feed inflation, which has been driven by supply chain delays making products less available and spending prompted by a strong underlying economy.

Senate Minority Leader Mitch McConnell, R-Ky., said inflation means “the average American has gotten a pay cut,” adding, “It is unthinkable that Senate Democrats would try to respond to this inflation report by ramming through another massive socialist spending package in a matter of days.”

Possibly mitigating the political impact of Friday’s inflation numbers was that they were expected and represented a modest rise from October’s 6.2%.

Adding any additional juice to the economy might worsen inflation. But the extra fiscal stimulus over the next several years in Democrats’ bill would be less than 1% the size of the entire U.S. economy, making its likely inflationary impact mild, said the nonpartisan Committee for a Responsible Federal Budget.

Democrats limited the duration of many initiatives in their package to help contain the bill’s price tag. That includes extending enhancements to the child tax credit for just one year and free, universal pre-school for only six years.

It’s an accounting move both parties have used to make their budget plans seem more affordable — even though they would like their proposals to be permanent and some may be extended because they are popular. Republicans used such phaseouts robustly for their big tax cuts in 2001 and 2017.

“If you believe these programs go away after one, two or three years, you shouldn’t have a driver’s license,” said Sen. Lindsey Graham of South Carolina, top Republican on the Senate Budget Committee, who requested the CBO estimates. He said the bill’s higher price tag and rising inflation meant Democrats’ legislation would be “lethal to the economy and lethal to your paycheck.”

Democrats argued the estimated added $3 trillion cost was bogus because if they decided to seek any future extensions of their initiatives, they would propose savings to pay for them.

As if sharing a script, Psaki called the GOP claims “fundamentally dishonest” and Senate Majority Leader Chuck Schumer, D-N.Y., said Republicans were using “fake scores based on mistruths.” House Speaker Nancy Pelosi, D-Calif., called the numbers “a phony score of an imaginary bill.”

Outside groups have produced similar estimates about the legislation’s cost if its programs were permanent. CBO numbers usually have more clout in Congress because the agency’s impartiality is respected.

Much about the legislation remains in play. Manchin still wants to remove a paid family leave program and curb or eliminate some tax breaks aimed at encouraging a shift to cleaner energy. Moderate Sen. Kyrsten Sinema, D-Ariz., has also pushed to trim the measure.

Democrats have also had differences over how to ease limits on federal tax deductions that people can take on state and local taxes. In addition, the Senate parliamentarian must decide whether some provisions — including a top party priority of letting millions of migrants remain in the U.S. — violate the chamber’s rules and should be removed.

That’s left it unclear whether Schumer will be able to meet his Christmas deadline.

___

AP reporter Josh Boak contributed to this report.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - Rhode Island Army National Guard Staff Sgt. Andrew Bates pulls up tape marking a line at a c...
Associated Press

Army Guard troops risk dismissal as vaccine deadline looms

WASHINGTON (AP) — Up to 40,000 Army National Guard soldiers across the country — or about 13% of the force — have not yet gotten the mandated COVID-19 vaccine, and as the deadline for shots looms, at least 14,000 of them have flatly refused and could be forced out of the service. Guard soldiers have […]
5 hours ago
Associated Press

French MPs want abortion rights inscribed in constitution

PARIS (AP) — A group of lawmakers belonging to French President Emmanuel Macron’s party will propose a bill to inscribe abortion rights into the country’s constitution, according to the statement by two members of parliament on Saturday. The move comes after the U.S. Supreme Court overturned a 50-year-old ruling and stripped women’s constitutional protections for […]
5 hours ago
A strike sign is displayed by an entrance at Waterloo train station, in London, during a railway wo...
Associated Press

Here we go again: Strike snarls UK trains for a third day

LONDON (AP) — Train stations were all but deserted across Britain on Saturday, as the third day of a national strike snarled the weekend plans of millions. Train companies said only a fifth of passenger services would run, as about 40,000 cleaners, signalers, maintenance workers and station staff walked off the job in Britain’s biggest […]
5 hours ago
Local resident Tetyana points at her house heavily damaged by the Russian shelling in Bakhmut, Done...
Associated Press

Russia pushes to block 2nd city in eastern Ukraine

KYIV, Ukraine (AP) — Russian forces are trying to block a city in eastern Ukraine, the region’s governor said Saturday, after their relentless assault on a nearby city forced Ukrainian troops to begin withdrawal after weeks of intense fighting. Russia also launched missile attacks on areas far from the heart of the eastern battles. Serhiy […]
5 hours ago
Bangladesh's longest bridge, which took eight years to build amid setbacks involving political conf...
Associated Press

Bangladesh marks opening of country’s longest bridge

DHAKA, Bangladesh (AP) — Bangladesh’s Prime Minister Sheikh Hasina on Saturday celebrated the opening of the country’s longest bridge, which took eight years to build amid setbacks involving political conflict and corruption allegations. The 6.51-kilometer (4.04-mile) bridge spanning the Padma River cost an estimated $3.6 billion and was paid for with domestic funds after the […]
5 hours ago
Police prepare their equipment and gather prior to a demonstration ahead of the G7 summit in Munich...
Associated Press

Protests expected as G-7 leaders set to arrive in Germany

MUNICH (AP) — Tens of thousands of protesters are expected to gather in Munich on Saturday as the Group of Seven leading economic powers hold their annual gathering in the Bavarian Alps in Germany, which holds the G-7´s rotating presidency this year. Police were expecting at least 20,000 protesters in the Bavarian city, the German […]
5 hours ago

Sponsored Articles

(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
...
CANVAS ANNUITY

Best retirement savings rates hit 4.30%

Maximize your retirement savings with guaranteed fixed rates up to 4.30%. Did you know there is a financial product that can give you great interest rates as you build your retirement savings and provide you with a paycheck for life once you retire? It might sound too good to be true but it is not; this product is called an annuity.
...
Day & Night Air

Tips to lower your energy bill in the Arizona heat

Does your summer electric bill make you groan? Are you looking for effective ways to reduce your bill?
New inflation number feeds angst about Democrats’ $2T bill