Manchin-Schumer Shock Deal Began in Basement, Unfolded in Secret

Laura Litvan
·5 min read
7

(Bloomberg) -- It looked to most Democrats in Washington two weeks ago that Senator Joe Manchin had slammed the brakes on President Joe Biden’s tax and climate agenda.

Most Read from Bloomberg

He told a radio host in his home state of West Virginia that he wanted to wait, that inflation was too high and the economy too shaky. In September he’d reassess.

That was Friday, July 15. The following Monday, he was back in Washington and back -- once again -- at the table with Majority Leader Chuck Schumer trying to extract from the ashes a deal that had been killed and revived multiple times over the past year.

That day’s meeting, held in a windowless office in the basement of the Capitol, was the first in a series of secretive discussions between the two lawmakers. It was convened just hours after Manchin’s staff shocked Schumer’s office by offering a new proposal Manchin might agree to pass before the Senate leaves for its August break, according to a person familiar with their discussions.

The resulting agreement -- completed by video and phone after Manchin tested positive for Covid-19 this week -- if it passes the House and Senate would give Democrats an accomplishment to run on in the midterm elections and would be Schumer’s biggest victory during two years of frequent struggles managing a 50-50 Senate.

While Manchin dealt primarily with Schumer, other senators also weighed in, including Delaware’s Chris Coons, a close Biden ally; Mark Warner of Virginia; and Ron Wyden of Oregon.

John Hickenlooper of Colorado said he reached out frequently to Manchin about continuing the talks, despite attacks on Manchin from some fellow lawmakers, including Senator Bernie Sanders of Vermont.

Knowing that Manchin respected economists at the Penn Wharton Budget Model, his staff had those experts assess the package taking shape last week and, when they said it wouldn’t boost inflation, provided that to Manchin.

“I was listening to every single thing that Joe said that he had a real problem with, and I was trying to address it,” Hickenlooper said.

The same Monday that Manchin re-engaged with Schumer, Coons met with Manchin one-on-one in Manchin’s office for some 45 minutes, urging him to keep at the talks with Schumer.

Coons also sought outside help. According to an aide, Coons last weekend ran into former Treasury Secretary Lawrence Summers at the Aspen Security forum in Colorado.

Like Manchin, Summers had been raising warnings about inflation. Coons was aware that Manchin wanted to speak with Summers about the economic package, and urged the economist to get in touch with the West Virginia senator and impress upon him that the package under discussion wasn’t inflationary.

The Washington Post, citing people familiar with the details, reported that the two men spoke this week. A spokeswoman for Summers declined to comment, as did a spokeswoman for Manchin.

Summers, in a series of tweets, pronounced the new Schumer-Manchin accord a “great budget deal.”

Schumer and Manchin this week were in frequent contact as they tried to nail down a final pact, finalizing the deal virtually Wednesday afternoon with Schumer in his Capitol office and Manchin back home in West Virginia, according to the person familiar. They then made the surprise announcement of an agreement on a $369 billion tax, energy and climate plan.

Both then briefed the White House before Schumer met personally with House Speaker Nancy Pelosi. The White House called Manchin to express support shortly before Manchin first announced the deal in a public statement.

Republicans slammed the package.

“Democrats have already crushed American families with historic inflation,” Senate Minority Leader Mitch McConnell tweeted after the deal came out. “Now they want to pile on giant tax hikes that will hammer workers and kill many thousands of American jobs. First they killed your family’s budget. Now they want to kill your job too.”

Before Manchin’s and Schumer’s announcement Wednesday afternoon, most Democrats in Washington thought any hopes for a deal were dead, for now, if not permanently.

In a July 15 radio interview, Manchin said he’d told Schumer that he would only agree to legislation dealing with prescription drug prices and extending Affordable Care Act subsidies, before a congressional recess.

Anything more would have to wait until September after the inflation numbers for July that are reported in August and the Federal Reserve acted. On Wednesday, the central bank announced another 75 basis-point increase in interest rates.

After Manchin balked, Schumer pivoted to a bill that would simply allow Medicare to negotiate prescription drug prices and to extend Obamacare subsidies that needed to be addressed in August.

Biden appeared to concede defeat, releasing a statement while he was in Saudi Arabia that the Senate should move forward with a much more constrained bill with the drug pricing and health care elements of his agenda and that he would take executive action to try to accomplish some of his climate goals.

Asked at a news conference if he thought Manchin had been negotiating in good faith, Biden responded, “I didn’t negotiate with Joe Manchin. I have no idea.”

Manchin said Thursday he kept Biden at bay for fear of leaving the president politically exposed.

“I was not going to bring the president in,” Manchin told West Virginia radio host Hoppy Kercheval. “I did not think it was fair to bring him in” because the deal “could have gone sideways.”

Most Read from Bloomberg Businessweek

?2022 Bloomberg L.P.

  • Up next
  • Up next
  • Up next
  • Up next
  • Up next
  • Up next
  • Up next