Increased Taxes and Free Money Causing Fits for Democrats

Increased Taxes and Free Money Causing Fits for Democrats

( – As congressional Democrats race to agree to a framework for their partisan semi-socialist “human” infrastructure proposal, Moderates and Progressives put their best poker faces on for the media. Democratic leaders want a deal by the end of the week. Despite all the smiling faces, some are hinting that trouble is ahead. The Left is angry that Centrists are coercing them into conceding one thing after another to get the bill down from $3.5 trillion to between $1.5 and $2 trillion.

Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) are signaling they will do something to help Democrats pass a bill, but will the Left like their ideas? Recent polls show that President Joe Biden’s political capital is eroding with Independents who don’t believe the Left’s policies solve today’s economic challenges and cultural struggles.

On Wednesday, October 20, the sticky issues of corporate and wealth taxes and reducing the child tax credit opened new wounds. Democrats are scrambling, time is running out, and it’s questionable if Manchin or Sinema will strike a deal with Progressives who appear reluctant to give up any of their agenda.

Razor-Thin Majorities Threaten Prospects

While Conservatives watch from a distance, the left and center of the Democratic Party are putting on a friendly face. Yet, strikingly, the signs point to a coming eruption between the two factions. The problem is severalfold:

  1. The Democrats waited too long to begin the reconciliation process. The $3.5 trillion proposal is one of the largest in US history. It’s tough to negotiate divisive issues while being squeezed for time.
  2. The Left is pushing to pass a plan it promised its voters, but Moderates never agreed to such extreme measures with their constituents.
  3. Biden lost his political capital as his approval ratings continue to tank. Moderate Democrats may not want to be attached to the president in the midterm elections next year. Voting for left-wing legislation may complicate vulnerable Democrats’ chances with voters at home.
  4. House Democrats can only lose three votes, and Moderates are starting to flex their views in the negotiations with the Left. Progressives are angry that Moderates are forcing them to swallow a poison pill.

Taxes and Free Money

What’s the latest problem for the party? It’s more of the same. How much money should the government take from those who earned it to give to those who are less fortunate? Sinema is holding the line on her demands that taxes not rise on corporations or force drug companies to lower drug prices under the threat of blackmail. Without the tax increases or reductions in government payments for drugs, the Democrats lose a significant revenue stream to pay for their massive social and climate spending proposals.

On Wednesday, some Democrats on the House Ways and Means Committee expressed deep frustration and anger at the prospects of gutting their tax increases on corporations or the wealthy. They say that Sinema is the only thing holding them back from raising tax rates they’ve demanded for years.

Leading House Democrats say they may not get enough progressive votes if a bill doesn’t include tax raises. That could spell doom for the bill.

The other challenge is satisfying Manchin. He’s not agreeable to any social spending unless the price comes down to $1.5 trillion. To get the price tag down, the White House proposes reducing the $300 monthly per child tax payment from indefinitely to one year. Progressives say that’s a non-starter for them and will not accept that deal.

So, here’s the question, what will Progressives accept? They appear to be unwilling to negotiate and continue to toe the all-or-nothing line. However, Manchin and Sinema both signal they will work with the party.

Who Could the Winners Be In All This Craziness?

In the midst of this mess, the winner could be the GOP. Suppose Democrats ultimately agree to eliminate their tax increases, cap social benefits to one year, and other short-term accounting gimmicks to satisfy Manchin and Sinema. In that case, all they worked for could disappear after 2022 if the GOP wins the House or Senate. Progressives know this, which is why they are fighting to hold on to their fading dreams.

Anything can still happen. Manchin and Sinema could cave to their previous positions. In an evenly divided Senate, they would need to get on board and sacrifice something. That could happen despite Manchin hailing from deep-red West Virginia and Sinema from purple Arizona. So far, it appears they aren’t backing down, but suggest they will work with the Left if the Progressives work with them.

So far, that’s not going as well as the public image might suggest. What happens over the next few days or weeks will set the future course for America under Joe Biden. Either way, in approximately one year, voters will have their official say. Let’s just hope it’s not too late for America when we do.

Don Purdum, Independent Political Analyst

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