On the menu today: West Virginia senator Joe Manchin, the Democrat most hated by the progressive grassroots of his party, chooses to save the Biden agenda and give his party a major legislative win before the midterm elections; all projections suggest that inflation will rage for the rest of the year; and the Biden administration considers releasing the world’s most notorious arms dealer.
Manchin Makes a Deal
Maybe Joe Manchin’s recent Covid infection made him want to reach a deal?
After a year of closed-door negotiations that seemed to go around in circles, Manchin surprised Washington by announcing yesterday that he had agreed in principle to a somewhat-smaller version of “Build Back Better,” now shamelessly called the “Inflation Reduction Act.” As our Caroline Downey summarizes:
While $369 billion of the plan would be allocated to energy and climate initiatives, $64 billion would go to extending expiring federal subsidies for people buying health insurance, the Associated Press reported. . . . Included in the package revealed Wednesday, however, is a 15 percent corporate minimum tax, AP noted, which Schumer and Manchin claimed will curb the skyrocketing size of the federal debt by collecting $739 billion in government revenue over ten years.
It was just twelve days ago that Manchin told a West Virginia radio host on air that he couldn’t even contemplate a deal until he saw the inflation numbers for July. The July inflation numbers don’t get released until August 10. One early forecast suggests that the July numbers will show a small increase, to 9.2 percent; David Payne of Kiplinger’s wrote earlier this month that, “The inflation rate is likely to stay close to 9 percent the rest of the year, then decline gradually after that, ending 2023 at about 3 percent. Rent increases alone will keep inflation rates elevated for some time to come.”
So, no, Joe Manchin did not stumble across some new bit of economic data about inflation that changed his mind on whether to move ahead with a deal.
Our Charlie Cooke saw this coming; in the middle of the month, Charlie laid out his fears that Manchin was about to go wobbly:
[Manchin] has worked on a package that would make that inflation worse. By most reports, the “deal” that Senators Manchin and Schumer were negotiating consisted of a large tax increase on corporations — which, because it will lead to increased prices, is inflationary — and a series of tax credits (read: subsidies) for energy companies, child-care providers, and Obamacare recipients — which, because they will leave their recipients with more disposable income and thereby increase demand, are inflationary. If Manchin is balking now on tax increases, that sense of hesitation should extend to the rest.
The current draft of the legislation provides another $45.6 billion to the Internal Revenue Service for additional enforcement. The current IRS budget is $13.7 billion per year.
This bill will be introduced using reconciliation, which means it cannot be filibustered. If all 50 Democrats stick together, it will pass the Senate.
In theory, the slightly smaller Build Back Better — I’m not calling a big spending bill that will worsen inflation the “Inflation Reduction Act” — could still fall apart. Manchin is on board, but it’s not clear that Arizona senator Kyrsten Sinema will concur; her spokeswoman said Sinema is still reviewing the text. Some House Democrats could balk; the version of the legislation that Manchin assented to does not include eliminating the cap on state and local tax (SALT) deductions, a high priority for Democrats from places such as New York and New Jersey. But House Democrats’ failing to get a majority to pass a version of one of their top priorities would be an enormous self-inflicted wound.
Barring some major Democratic defection, there’s likely to be one more big spending surge and a round of tax hikes thrown into this already-inflationary economy before the midterm elections. You just can’t save a majority party that isn’t willing to save itself. Alas, we’re all forced to live under the tax code they rewrite and in the economy they reshape.
Yet Another Terrible Deal from the Biden Team
I realize the U.S. must get Brittney Griner and Paul Whelan back, but Viktor Bout walking around as a free man in Russia will be a moral abomination:
After months of internal debate, the Biden administration has offered to exchange Viktor Bout, a convicted Russian arms trafficker serving a 25-year US prison sentence, as part of a potential deal to secure the release of two Americans held by Russia, Brittney Griner and Paul Whelan, according to people briefed on the matter.
These sources told CNN that the plan to trade Bout for Whelan and Griner received the backing of President Joe Biden after being under discussion since earlier this year. Biden’s support for the swap overrides opposition from the Department of Justice, which is generally against prisoner trades.
Bout was, at one point, the most notorious arms dealer in the world — the “merchant of death” who profited from massacres and was the inspiration for tons of Hollywood’s evil arms-dealer characters.
Douglas Farah, a biographer of Bout, argues that the Biden administration should make the trade. I’ll credit Farah for not airbrushing or downplaying Bout’s lifetime of abominable crimes:
Bout provided tons of guns and ammunition to some of the most vicious warlords in the world and empowered them to carry out unspeakable atrocities. He is responsible for enabling murderous groups to kidnap and train thousands of child soldiers; use rape as a systematic method of terror and control; torture through the mass amputations of arms, legs, ears and lips; slaughter civilians, and help the Taliban take power in Afghanistan. Griner may have been carrying vape cartridges that were banned in Russia but not in much of the world. . . .
I covered the wars and victims of Bout’s weapons trade in Sierra Leone, Liberia and Democratic Republic of Congo as a correspondent for the Washington Post. The Nicolas Cage movie “Lord of War” was loosely based on Bout, and I co-wrote with Stephen Braun a non-fiction account of the savagery he enabled. There are no words to describe the human toll of Bout’s activities on thousands of people, from the armless child amputees in refugee camps to the scorched rural hamlets burned to the ground by marauding children traumatized into killing their own families.
Farah explains why he thinks making the trade is worthwhile:
Bout is a spent force who will be out of jail in a few years anyway. His business depended on personal relationships and trust among the parties. After being out of the business for more than a decade, Bout has neither of those left in the shadowy world in which he once operated. Second, Bout needed access to a global network stretching from Afghanistan to Europe, Africa and South America. That network has morphed through several generations of new actors, markets and gatekeepers. Bout has no currency in that world now.
That may be compelling reasoning, but this looks to me like a straight-up case of paying the Dane-Geld. Releasing Bout demonstrates that the U.S. can never keep a Russian national in jail, no matter how diabolical or notorious his actions, because the Russians can always snatch some U.S. citizen and use our folks as bargaining chip. If you give Vladimir Putin something he wants in exchange for a trumped-up charge against an American citizen, you’re going to get more trumped-up charges against American citizens. You are outright declaring to the Russians that this is an effective form of leverage against us. It generates a happy ending for Brittney Griner and Paul Whelan, but it makes more traumatizing detentions for other Americans more likely. And it’s not just Russia. Every rogue state and tin-pot dictator around the globe will be absorbing the lesson: Detaining Americans is how you make the Americans do things they don’t want to do.
ADDENDUM: I’m sending this off to the editors shortly before the new GDP numbers are released at 8:30 a.m., but the official numbers almost seem moot at this point. Biden, his team, Paul Krugman, and the Associated Press have all insisted that two consecutive quarters of GDP decline do NOT make a recession — even though lots of people, including Biden’s advisers, have used that general definition for decades. Republicans will call this the “Biden recession” even if the numbers surprise us and show something above zero — and let’s face it, getting above zero is not a sign that the economy is good. I told you on Monday that this was going to be “It’s not a recession, I swear!” week.