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Manchin says he's ready to talk. Can Democrats sell him on a new 'Build Back Better'?

The pivotal centrist Democrat has been elusive on President Biden's top domestic priority. He says he's willing to restart negotiations — "from scratch."
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WASHINGTON — Democrats are working to resuscitate President Joe Biden’s top domestic priority after it flatlined last month amid opposition from Sen. Joe Manchin, D-W.Va., a pivotal vote with the power to make or break the ambitious bill.

The path to a deal revolves around the elusive question of what the West Virginia centrist can support that will be acceptable to the rest of the party. The White House and Senate Democratic leaders have struggled for months to solve that puzzle, and it remains an open question as to whether they still can.

Sen. Brian Schatz, D-Hawaii, said the time has come to make “major decisions” and pass a climate and social policy bill after a freeze in discussions amid a tense Senate debate on voting rights.

“We have to have some private conversations and find the deal space. We have been using our egos and our brains to overcomplicate this matter. We have to find out what has 50 votes and then enact that,” Schatz, a member of the Democratic leadership, said in an interview.

On Thursday, Manchin indicated openness to reviving negotiations.

“We’ll be talking to everybody who wants to talk,” he told reporters before leaving the Capitol. “We’ll just be starting from scratch.”

Senate Finance Chair Ron Wyden laid out a path forward that he believes can meet Manchin’s demands and become law: Focus the legislation on climate and clean energy funding, expanded Affordable Care Act funding, universal pre-K, prescription drug savings and new tax revenues to finance it.

Wyden said Democrats have yet to settle on a final spending level but are listening closely to Manchin’s demands. “He wants to deal with inflation,” Wyden said, arguing that the bill includes cost containment policies. He said Manchin “feels very strongly” that new programs be set up and funded for 10 full years. “We are going to try as hard as we can to make these permanent.”

Democrats are also discussing sweetening the deal for Manchin by adding deficit-reduction provisions, said one source familiar with the talks, to address his outspoken concerns about debt and inflation.

A clean energy foundation

Prominent Democrats have cited clean energy policy as the foundation of a revised bill. But Manchin, who has close personal, political, and financial ties to fossil fuel interests in his state, has been hard to read on the issue. As late as December, top Democrats were confident he was on board with about $550 billion in new climate measures, mostly tax breaks encouraging green technology that Manchin had helped negotiate and that he reportedly included as part of a since-pulled December offer.

Even after breaking off Build Back Better talks, Manchin told reporters early this month that “the climate thing is one that we probably can come to agreement on much easier than anything else.” But he also has expressed skepticism about the Democratic approach at other points and told reporters this week that he would start from a “clean slate” on climate policy in any new conversations.

“Sen. Manchin and I agreed on the foundation of this climate package seven years ago in the back seat of a truck in West Virginia,” Wyden said.

Democrats are suggesting new approaches to prevent another collapse in talks. Sen. John Hickenlooper, D-Colo., said the party should “listen harder” to colleagues' demands.

Even if there is movement, it may not be easy to see in the coming weeks. White House Chief of Staff Ron Klain told The Wall Street Journal that any negotiations with Manchin would be private. Previous leaks were a source of consternation for the senator.

“It'd be good to have the principal players in the same room and try to come out with the resolution before they leave that room,” Sen. Ben Cardin, D-Md., said.

Manchin’s red lines leave Democrats with difficult questions about other provisions such as expanded Medicare benefits for hearing aids and affordable housing credits, which have strong support among core party constituencies. His preferred revenue raisers, such as a higher corporate tax rate, may clash with those of Sen. Kyrsten Sinema, D-Ariz., whose objections to rate hikes largely dictated the financing of the House-passed bill, which Manchin said he could not support.

Can the child tax credit survive?

Democrats may be reluctant to publicize which items they'd drop for fear of upsetting key allies and interest groups unless Manchin agrees to a deal first. Another obstacle is that Congress is facing a Feb. 18 deadline to fund the government, a delicate bipartisan negotiation that a public breakthrough in Build Back Better talks could complicate by firing up Republican opposition.

One casualty of a revised bill may be the monthly child tax credit payments, at least in the recent form that expired this month. Democratic leaders aren’t ready to give up but it will be very difficult to extend the costly policy in a way that satisfies Manchin.

“The child tax credit is a tangible benefit for families right now when they're dealing with omicron and extra expenses, so we're going to fight like hell for it,” Wyden said.

A permanent extension of the enhanced child payments would cost about $1.6 trillion over the next decade, according to the Congressional Budget Office. Even the initial $3.5 trillion Build Back Better plan opted for a five-year extension to make room for other priorities. The House bill included just a one-year extension but would have made a key anti-poverty feature — refundable tax credits — permanent. Making things harder for supporters of the credit supporters, however, is that full refundability is a feature that Manchin has been especially skeptical toward.

Nonetheless, Senate Democrats are still exploring smaller iterations of the Child Tax Credit with more modest credits, narrower income ranges, and even a W-2 requirement to satisfy Manchin’s concerns about people who don’t work receiving benefits.

The fate of an expanded state and local tax — or SALT — deduction is also unclear as Reps. Tom Suozzi, D-N.Y., Josh Gottheimer, D-N.J., and Mikie Sherrill, D-N.J., restated their demand in a Thursday statement: “No SALT, no deal.”

Speaker Nancy Pelosi is resistant to the idea of splitting up the bill and voting on it in pieces, noting that the filibuster-proof reconciliation process may not be practical on a second bill.

“What the president calls chunks, I would hope would be a major bill going forward. It may be more limited. But it is still significant,” she told reporters on Thursday. “Remember this: This is a reconciliation bill, so when people say let's divide it up, they don't understand the process.”

She said Democrats may have to “rename” the bill.