With help from Eli Okun and Garrett Ross
Last summer, Sen. JOE MANCHIN and Senate Majority Leader CHUCK SCHUMER signed a one-page agreement outlining the West Virginia Democrat’s red lines for a reconciliation bill.
The date on that agreement? July 28, 2021.
Today is July 28, 2022.
One year later to the day, we’ve finally reached the moment many thought would never come: A Manchin-approved reconciliation bill — one he and Schumer brokered in secret after many thought any hope of a sweeping deal was dead — is on the Senate’s doorstep, and it includes provisions for climate change, tax hikes on corporations and health care subsidies.
BBB is gone. So are the ambitions for a massive, multitrillion-dollar spending bill that included everything from universal pre-K to dental coverage via Medicare to paid family and medical leave.
In its place is the “Inflation Reduction Act of 2022” (which we have to imagine is surely a more politically useful name than “Build Back Better”). Its goal, per the joint Manchin-Schumer statement issued Wednesday evening: “fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40% by 2030,” all while reducing the deficit by $300 billion.
The bill includes:
- $64 billion for three years of subsidies for Affordable Care Act premiums (which will extend beyond the 2024 election).
HOW IT CAME TOGETHER — “On July 18, four days after Manchin and Schumer’s talks seemed to fizzle out with only a limited health care deal, Manchin reached out to Schumer to see if he was amenable to picking things back up,” write Burgess Everett and Marianne LeVine. “By Wednesday afternoon, they had a deal on a bill that includes energy and tax policy, a turnaround after the two deadlocked on Democrats’ marquee party-line agenda.”
It was “Washington’s best-kept secret,” Burgess and Marianne write.
Manchin himself was reluctant to pick up talks again, concerned that it would tee off yet another cycle of disappointment and ire from Democratic voters. “I didn’t know if it could come to fruition,” Manchin told Burgess and Marianne. “I really didn’t know, OK, so why talk about something, again, build people’s hopes up?”
On the morning of July 14, new inflation figures were released showing numbers far worse than many economic experts projected, prompting Manchin to reportedly walk away from the negotiating table, worrying about any deal’s inflationary effects.
A person close to Manchin told Playbook on Wednesday night that the West Virginian and the majority leader had “a tough conversation about Manchin being uncomfortable and … want[ing] to see more inflation data. He wasn’t convinced that all this was anti-inflationary.”
Last week, former Treasury Secretary LARRY SUMMERS, whose early warnings about inflation were largely ignored by the Biden administration but earned him widespread credibility on the topic, came on the “Playbook Deep Dive” podcast and responded to Manchin head-on: “I think he’s wrong about that.”
“I think the theory that all tax increases are inflationary is not a plausible or reasonable economic theory,” Summers told Ryan. “To suggest that it is inflationary is, I think, just wrong in the same way that it was just wrong to suggest that in the short run, investing in infrastructure would somehow be deflationary. … And when politicians of either stripe say different[ly], they are running opposite to what I believe the vast majority of economists think.” Listen to the interview on Apple Podcasts or Spotify
This week, Democratic senators called him in to talk to Manchin. “The two men spoke this week, and Manchin listened as Summers talked in detail about why Democrats’ proposed economic package — including its energy provisions — would not lead to higher prices,” report WaPo’s Tony Romm, Jeff Stein, Rachel Roubein and Maxine Joselow.
One other key bit on timing: Senate Minority Leader MITCH MCCONNELL had threatened to hold up the CHIPS+ bill if Dems continued to pursue a reconciliation package. The bill passed the Senate on Wednesday with 64 votes. Hours later, Manchin and Schumer announced this deal. Now, in the wake of the Manchin-Schumer deal, House GOP leadership has announced that they will whip votes in opposition to the CHIPS+ bill in their chamber.
Two bits of caution:
— Though Democrats on the Hill and at the White House are celebrating, there’s still the Sen. KYRSTEN SINEMA-sized hurdle they need to clear. She hasn’t publicly signed off just yet, and the bill includes some provisions she has previously told leadership were no-gos for her, like taxing carried interest.
— How will moderate House Dems of the JOSH GOTTHEIMER variety react to the exclusion of the SALT deductions they sought to restore, which were make-or-break for them in last year’s talks?
Good Thursday morning. Thanks for reading Playbook. Drop us a line: Rachael Bade, Eugene Daniels, Ryan Lizza.
TOP-ED — “Where Do Trump’s Donations Go?” by KARL ROVE in the WSJ: “He can’t spend his PACs’ millions on 2024 and isn’t using much in midterms.”
SETTING THE BAR — Ahead of today’s preliminary GDP reading for the second quarter, economists expect to see 0.4% growth reported, per Bloomberg’s Reade Pickert and Olivia Rockeman. If it bears out, that would narrowly avoid two consecutive quarters of GDP decline.
FED UP — As expected, the Fed on Wednesday hiked interest rates by another 0.75 percentage points for only the second time since the mid-’90s, trying to blunt the pain of inflation without tilting the economy too far down. More from Insider
— Fed Chair JEROME POWELL said he does not think the U.S. is currently in a recession. “There are too many areas of the economy that are performing too well,” he said at a press conference. “This is a very strong labor market. … It doesn’t make sense that the economy would be in a recession with this kind of thing happening.” More from CNBC
(LESS) PAIN AT THE PUMP — Though gas prices are still high, their considerable recent descent poses a political challenge for Republicans hoping to use them as a cudgel in the midterms — and is giving Democrats a sliver of hope, reports Ben Lefebvre this morning. “[G]asoline prices may have peaked too soon to remain the lethal campaign weapon for Republicans that they seemed to be a month ago. … It’s an open question, though, whether voters will give more weight to the declining fuel prices, or to the fact that they spiked so high to begin with.”
LOOK WHO’S TALKING — Former acting White House chief of staff MICK MULVANEY is testifying today before the House Jan. 6 committee, per CBS.
A COSTLY BACKFIRE — In April, Democratic Michigan state Sen. MALLORY MCMORROW became a nationwide viral sensation after giving a rousing speech rebutting a Republican colleague’s false description of her as a “groomer” in a fundraising email. Well, now that campaign finance reports are out, Adam Wren measured just how much that attack on McMorrow backfired.
Republican state Sen. LANA THEIS raised just $235 from individual donors in the days following her email attacking McMorrow. Meanwhile, McMorrow used her newfound political fame to raise more than $1 million, with contributions from more than 11,000 donors spread across all 50 states.
PHOTO OF THE DAY
2024 WATCH — The RNC will stop paying DONALD TRUMP’s legal bills as soon as he announces he’s running for president, part of the party’s presidential neutrality policy but also a tool they hope will stop Trump from announcing before the midterms, ABC’s Jonathan Karl and Soo Rin Kim report.
— As Democrats figure out their primary schedule, Nevada’s bid to leapfrog New Hampshire is getting a leg up from major Asian American and Latino groups, Axios’ Alexi McCammond reports. Latino Victory Fund is joining the Asian American Action Fund, the Congressional Asian Pacific American Caucus’ chair and the Congressional Hispanic Caucus’ Bold PAC in backing Nevada.
BATTLE FOR THE SENATE — Decision Desk shifted its overall rating of the Senate landscape to say Democrats are now favored to hold the chamber, thanks to better generic-ballot polls and good signs for the party in Georgia and Pennsylvania. They give Dems a 57% chance of winning. In the past couple of days, FiveThirtyEight’s model has also nudged Democrats for the first time above 50% odds of keeping control (though they still judge it a toss-up).
MOVING FORWARD — ANDREW YANG, CHRISTINE TODD WHITMAN and DAVID JOLLY, along with dozens of other Democratic and Republican officials, are launching a new political party called Forward, Reuters’ Tim Reid scooped. The centrist party aims to become a viable third-party alternative. Their WaPo op-ed
ENDORSEMENT WATCH — Former VP MIKE PENCE backed REBECCA KLEEFISCH in the Wisconsin GOP gubernatorial primary, once again setting up a proxy clash with Trump, who’s supporting TIM MICHELS. More from the Milwaukee Journal Sentinel
JUST POSTED — “Swing Voters, Struggling With Their Options, Scramble Traditional Political Coalitions,” by NYT’s Katie Glueck
SURPRISE SETBACK — Senate Dems had been hoping to pass legislation this week to help veterans exposed to toxic burn pits, but the bill hit an unexpected obstacle Wednesday as it mustered only 55, not the necessary 60, votes on a procedural motion. Republicans objected at the last moment over technical concerns about the significant expansion of veterans benefits, saying they want amendment votes. That angered Senate Veterans’ Affairs Chair JON TESTER (D-Mont.), who called it “a sad day.” More from the Military Times
FOR THOSE KEEPING TRACK — “Pelosi’s husband dumps Nvidia stock as House eyes chip bill,” by Reuters’ Noel Randewich
AMERICA AND THE WORLD
TO RUSSIA, WITH AN OFFER — The U.S. has proposed a prisoner swap to bring BRITTNEY GRINER and PAUL WHELAN home from Russia in exchange for convicted Russian arms dealer VIKTOR BOUT, CNN’s Kylie Atwood, Evan Perez and Jennifer Hansler scooped. Secretary of State ANTONY BLINKEN announced that Biden had signed off on the proposal, which was sent to Moscow weeks ago. The decision came despite Justice Department objections.
Notable: The administration took a harder look at the prospect of a prisoner swap after the trade that brought TREVOR REED home didn’t receive Republican criticism they’d been bracing for, CNN reports.
Also notable: Blinken said he’ll talk this week with Russian Foreign Minister SERGEY LAVROV for the first time since the start of the war in Ukraine.
THE TAIWAN TRIP — The kerfuffle over Speaker NANCY PELOSI’s planned trip to Taiwan is a capstone of sorts for her decadeslong hawkishness on China, dating back to when Chinese officials ushered her out of Tiananmen Square as she unfurled a pro-democracy banner two years after the massacre, Andrew Desiderio reports this morning. “If you cannot stand up for human rights in China because of commercial interests, you lose all moral authority to speak out for it in any place,” Pelosi told him this week. Her strong China stance “has pitted her against presidents of both parties and at times aligned her with conservatives,” Andrew writes, and “Beijing has long viewed Pelosi as persona non grata.”
— AP’s Lisa Mascaro writes that “Pelosi’s decision will be a defining foreign policy and human rights moment for the U.S. and its highest-ranking lawmaker.”
— Some experts warn that China’s threats may not be so empty this time around, NBC’s Jennifer Jett, Dan De Luce and Rhoda Kwan report from Hong Kong.
— “[S]ome American officials suspect that what is really driving Mr. XI [JINPING] to lash out recently is a desire to divert attention from his own economic and pandemic problems at home or at least a need to demonstrate strength internationally,” reports NYT’s Peter Baker.
JUST POSTED — “Kim threatens to use nukes amid tensions with US, S. Korea,” by AP’s Hyung-Jin Kim
POLITICAL VIOLENCE WATCH — NICHOLAS ROSKE, the man accused of traveling to D.C. to try to assassinate Justice BRETT KAVANAUGH, wrote in online messages beforehand that “I could get at least one, which would change the votes for decades to come, and I am shooting for 3,” the FBI said, report CNN’s Holmes Lybrand and Tierney Sneed. Law enforcement says Roske’s searches on his phone included “how to be stealthy,” “assassin skills” and “most effective place to stab someone.”
JAN. 6 AND ITS AFTERMATH
EASTMAN LATEST — A filing Wednesday showed that the Justice Department got another warrant to access the contents of JOHN EASTMAN’s phone as part of its investigation, Kyle Cheney and Josh Gerstein report.
MORE FROM KUSHNER’S MEMOIR — Excerpts from JARED KUSHNER’s forthcoming book, “Breaking History,” tweeted out by NYT’s Ken Vogel shed light on the fateful night when Trump lost the 2020 election. Kushner recounts his call with RUPERT MURDOCH after Fox called Arizona for Biden: “Sorry, Jared, there is nothing I can do.” And he recalls Rove reassuring him that Trump would win regardless.
— Kushner alleges that former chief of staff JOHN KELLY once shoved his wife, IVANKA TRUMP, and calls him a “consistently duplicitous” bully who had a “Jekyll-and-Hyde” personality, per WaPo’s Ashley Parker. “To him, everything was a game of establishing dominance and control.” Kelly says the allegation (and others Kushner levels) isn’t true: “It is inconceivable that I would EVER shove a woman. Inconceivable.”
FOR YOUR RADAR — Trump announced in a 282-page letter he’d sent to CNN informing the network that he planned to sue for defamation over its coverage of his claims about the 2020 election. The Hill’s Brett Samuels notes: “[P]erhaps in a preview of how Trump’s lawsuit is likely to be received, dozens of lawsuits filed after the 2020 [election] alleging there was widespread fraud that tipped the scales in favor of Joe Biden were summarily dismissed because of a lack of evidence, in some cases by judges appointed by Trump.” Related: “DOJ, Georgia, New York: A guide to Trump’s legal threats,” by Betsy Woodruff Swan, Kyle Cheney and Josh Gerstein
SPORTS BLINK — “Trump Embraces LIV Golf, Backing a New Saudi Strategy,” by NYT’s Alan Blinder and Maggie Haberman
MONKEYPOX LATEST — HHS is planning to label monkeypox a public health emergency in the coming days, Erin Banco and Adam Cancryn report. That would give the agency more resources to respond to the outbreak, though the decision hasn’t been finalized yet.
THINK TANK FILES — The Atlantic Council is splitting up with the New American Engagement Initiative, a CHARLES KOCH-backed effort that had prompted questions from staff at the council about U.S. Russia policy and more, Hailey Fuchs and Betsy Woodruff Swan report.
I WANT YOU — “Lawmakers press Pentagon for answers as military recruiting crisis deepens,” by Lara Seligman, Paul McLeary and Lee Hudson
Clarence Thomas won’t teach his constitutional law seminar at GW this fall.
Stevie Van Zandt is getting in onJohn Fetterman’s New Jersey trolling of Mehmet Oz.
Pat Roberts stopped by the Senate, but doesn’t miss it much: “My sentence was commuted and I feel pretty good about it.”
Fun watch: Our POLITICO Europe colleagues put together a video on the behavioral and body-language similarities between politicians and apes.
IN MEMORIAM — “Christopher Shea, Washington Post editor, dies at 53,” WaPo: “His sister, Nancy O’Driscoll, said he had depression and died by suicide. … At The Post, he assigned and edited hundreds of pieces that reflected his voracious consumption of politics, social science and popular culture.”
— “Former Gov. Cuomo staffer killed after being ordered out of Lyft SUV in Dewey Beach, Del.,” by WJLA’s Kevin Lewis: Sid Wolf “worked as the associate director of federal affairs for former New York Gov. Andrew Cuomo (D) from July 2019 until Dec. 2021. In that role, Wolf advocated on behalf of New York state agencies before Congress.”
FIRST IN PLAYBOOK — The University of Chicago Institute of Politics is announcing its fall fellows: Indian journalist Rana Ayyub, former Senate secretary for the majority Laura Dove, former Rep. Luis Gutiérrez (D-Ill.), NBC News political analyst/The Dispatch editor and CEO Steve Hayes, former Sen. Doug Jones (D-Ala.) and author/criminal justice reform advocate Shaka Senghor.
— Ed Moreland is now VP for government affairs and external comms at Rockwell Automation. He most recently was VP of global government affairs at Harley-Davidson.
OUT AND ABOUT — Frank and Abby Foer and David Plotz hosted a party for Mark Leibovich’s new book, “Thank You for Your Servitude,” at the Foers’ home in Cleveland Park on Wednesday night. SPOTTED: Jeff Nussbaum, Dana Milbank, Dan Balz, Jake Tapper, Margaret Carlson, Katie Rogers, Annie Karni, Paul Farhi, Jonathan Chait, Al Hunt, Michael Kinsley, Susan Glasser and Peter Baker, Hanna Rosin, Nurith Aizenman, Robert Draper, Michael Schaffer, David Brooks, Zeke Emanuel, Jonathan Martin, Molly Ball, Elaine Godfrey, Daniel Stublen, Kevin Madden, Major Garrett, Kasie Hunt, Ben Terris, Remi Yamamoto, Judy Woodruff and Adrienne LaFrance.
NEW NOMINEES — The White House announced several new nominations, including Jessica Looman as wage and hour administrator at the Labor Department and Hugo Yue-Ho Yon as ambassador to the Maldives.
TRANSITION — Monica Trauzzi is joining Invariant as a director, focused on sustainability, climate and energy. She most recently was at the Nuclear Energy Institute, and is an E&E News alum.
WELCOME TO THE WORLD — Allegra Formento Bartscherer, director of marketing and member engagement at the Consumer Healthcare Products Association, and Zach Bartscherer, senior officer at the Pew Charitable Trusts, welcomed Kent Fitzgerald Bartscherer on July 21. He came in at 7 lbs, 11 oz and 19 inches, and joins big brother Conrad. Pic … Another pic
HAPPY BIRTHDAY: Rep. Liz Cheney (R-Wyo.) … Mark Meadows … WaPo’s Ruby Cramer and Beth Reinhard … CNN’s Kate Bolduan … Council on Foreign Relations’ Richard Haass … CBS’ Scott Pelley … Kathy Dedrick … NBC’s Courtney Kube … Huma Abedin … Josh Bell of Rep. Ron Estes’ (R-Kan.) office … Abigail Kane … Patrick Boland of Rep. Adam Schiff’s (D-Calif.) office … POLITICO’s Tanya Snyder, Annette Choi and Mandy Snapp … Kidron Lewis … Steve Deace … Kirsten Fedewa of Kirsten Fedewa & Associates … former A.G. Michael Mukasey … Stacey Finkel … former Sen. Bill Bradley (D-N.J.) … Sophie White
Did someone forward this email to you? Sign up here.
Send Playbookers tips to [email protected] or text us at 202-556-3307. Playbook couldn’t happen without our editor Mike Zapler, deputy editor Zack Stanton and producers Setota Hailemariam and Bethany Irvine.