Reports emerged late Wednesday afternoon that Sen. Joe Manchin, D-W.Va., had reached an agreement with Majority Leader Chuck Schumer, D-N.Y., to revive Build Back Better legislation. Details remain scarce, but the agreement would go beyond Democrats’ most recent plan: to raid the Medicare prescription drug program to fund welfare subsidies for the wealthy. In addition to these provisions, the nascent agreement would raise taxes to fund a series of “green energy” climate subsidies.
The timing of the announcement seems very intentional — on multiple levels. First, it came mere hours after the Senate approved a package of subsidies (read: corporate welfare) for semiconductor chip manufacturers that Minority Leader Mitch McConnell, R-Ky., had said in June he would block if Democrats continued with a partisan reconciliation bill. For Manchin and Schumer to revive a beefed-up Build Back Better in a way that double-crossed McConnell makes the latter look somewhere between weak and foolish.
But more importantly, Schumer publicly locked Manchin into supporting tax increases mere hours before the Bureau of Economic Analysis reports on second-quarter gross domestic product. That report could well show that GDP contracted for the second straight quarter, meaning we’re in a recession — despite what the media tell you.
Democrats Violate Obama’s Example
Piling on revenue hikes when the economy has begun sputtering violates advice that Barack Obama, of all people, gave in 2010. In response to a question asking “how raising taxes on anyone during a deep recession is going to help with the economy” — with the emphasis in the original — Obama responded:
Well, first of all, he’s right. Normally, you don’t raise taxes in a recession — which is why we haven’t, and why we’ve instead cut taxes. So I guess what I’d say to Scott is, his economics are right — you don’t raise taxes in a recession. We haven’t raised taxes in a recession.
He continued, saying, “We have not proposed a tax hike for the wealthy that would take effect in the middle of a recession. Even the proposals that have come out of Congress … still wouldn’t kick in until after the recession was over.”
At the end of that year, Obama signed an agreement that extended all the Bush tax cuts, on the heels of the financial crisis.
Granted, the current slowdown in economic growth pales in comparison to the financial crisis — at least for now. But the Federal Reserve continues to raise interest rates, and markets believe that risks to the economy are rising. Yet with federal revenue already surging — and the economy teetering — Schumer would have his colleagues pass additional new tax hikes, giving them full ownership of any downturn ahead of the 2024 election.
Political Death Wish?
Forty years ago next spring, Britain’s Labour Party released a policy manifesto that one of its own MPs dubbed the longest suicide note in history. If press reports are accurate, the actions Democrats want to take in the coming weeks could replicate Labour’s 1983 feat.
As I previously noted, their proposed reconciliation legislation would force Democrats to vote against additional energy exploration, increasing their existing culpability for high gas prices in the short term. Given this latest development in the long-running Schumer-Manchin talks, taking the further step of raising taxes with the economy on the brink would mean they would own a recession in the longer term.
Lawmakers should ponder one further factor as they consider a vote to keep gas prices high and raise taxes. An analyst at the liberal Tax Policy Center believes President Biden cheated on his 2017 and 2018 taxes, abusing a loophole that his administration now wants to close. Biden put feathering his own nest ahead of “paying his fair share” and abiding by his supposed principles — so why on earth should any Democratic lawmaker cast a suicide vote to bail out this flailing president now?