A Budget Deal Could Still Happen. But Few Would Be Smiling, at Least on the Inside.

Details are starting to emerge about what the 50th critical vote, otherwise known as Senator Joe Manchin, wants axed or changed in the Biden budget. Two areas in particular will be the focus of negotiations over the next weeks: Climate Change and the Child Tax Credit. On each issue, Manchin recently has drawn some lines in the sand, and negotiators are scrambling to find common ground.

Climate Change

Manchin’s primary objection to the climate budget concerns something called the CEPP—the Clean Energy Performance Program—which is a $150 billion provision that would incentivize the transition by utilities to clean energy such as wind, solar and nuclear power…but importantly also includes penalties for non-transition. On Friday, Manchin, through private conversations with key negotiators, made it clear that he completely opposes the CEPP, at least in its current form, and would not support it in the final bill.

A spokesperson for Manchin, Sam Runyon, emphasized that Manchin has “concerns about using taxpayer dollars to pay private companies to do things they’re already doing.” Runyon added, “He continues to support efforts to combat climate change while protecting American energy independence and ensuring our energy reliability.” (Note that it isn’t at all clear that utilities are moving towards clean energy on their own.)

So what could this mean for the climate change agenda? The CEPP is considered critical to the Biden Administration’s goal of achieving 100 percent carbon-free power by 2035, which already is a very ambitious goal. It does this by making money payments to utilities that increase their share of power from clean energy sources by four percent per year while penalizing those that don’t. Manchin represents a historical “coal” state, however, and has big personal investments in fossil fuel companies. Last year he was paid out half a million in dividends from his son’s energy company. He is also regularly lobbied by and accepts big campaign checks from the fossil fuel industry, which doesn’t like the CEPP at all in part because it defines “clean energy” as having no more than 0.10 metric tons of CO2 equivalent per megawatt hour—a level difficult for the biggest polluters to achieve.

Negotiations are underway to see if the CEPP somehow can be salvaged—perhaps by raising the threshold for what is considered “clean” emissions so that more utilities can qualify, or by including in the calculus fossil fuel burning plants that are equipped with carbon capture technology that keeps emissions from entering the atmosphere. If the CEPP can’t be saved, aides are scrambling to find other ways for the plan to meet its carbon reduction goals through admittedly less effective and less direct methods, such as carbon credits. This alternative has a lot of skeptics. Indeed, some experts have warned that if CEPP is cut entirely from the package, emissions would be 250 to 700 million metric tons higher per year by 2030, eliminating more than a third of total emissions reductions that could otherwise have occurred.

Child Tax Credits

The outlook for another priority of the Biden White House, the child tax credits, also is somewhat murky after Manchin signaled that he wants strict income caps and work requirements for recipients. 

The American Rescue Plan passed earlier this year had raised the child tax credit from $2,000 per year to $3,600 per year, meaning qualifying families received around $140 more per month per child even if they paid no income tax in the prior year. This amount, which might seem modest in isolation but in aggregate is a rather expensive item in the budget, has been transformational for many families struggling to feed and provide shelter for their kids. Half of all children formerly living in poverty were lifted out of it by the credit. Critics like Manchin, however, who has railed against an “entitlement culture,” have pointed out that many people who really don’t need the money are nonetheless receiving it. He and others also believe the subsidy, offered without conditions, disincentivizes adults from working.

Manchin wants to place a $60,000 income per family limit on the credits, meaning that, as progressive critics point out, two working parents earning just over $30,000 each would no longer qualify. In addition, the work requirement, in the form of proof of a W2 filing, would take away the credits from many of the families that are most down on their luck.

The income cap and work requirements are particularly galling to Manchin’s critics, who note that the senator is a multi-millionaire who is out of largely touch with the needs of poor families and that his home state of West Virginia has a childhood poverty rate of 20 percent, more than twice the national average of 9 percent.

How Should We View These Developments?

While progressive outrage grows over the proposed cuts and limitations on their core agenda, with 96 percent of their caucus in the Senate ready to spend $3.5 trillion but two holdout senators unwilling to agree even to the $1.9 to $2.1 trillion compromise floated by the White House, there are concerns that the entire Biden agenda could derail over their differences. But at least with Manchin, bright lines are never completely so. Not long ago, he came out firmly against the Voting Rights Act only to get on board with a similar Freedom to Vote Act that had the full support of activists like Stacey Abrams. It is possible, perhaps even likely, that a similar set of cobbled-together compromises will emerge both on climate change and the social safety measures like the child tax credit.

There are two things, however, of which we shouldn’t lose sight.

First, decisions about what is or isn’t in the budget package, who qualifies and who does not, affect not just the political fortunes of the White House and the Democrats but also millions of poor families, to say nothing of the billions of humans who will be hardest hit by global warming. For that reason, setbacks in the negotiation process today can feel dispiriting and maddening as we look to the future.

Second, and in some ways by contrast, if Democrats don’t achieve everything they want in 2021, there is the possibility of a stronger Senate majority in 2023 after the midterm elections, one that doesn’t grant Joe Manchin and Kyrsten Sinema veto power over key legislation. But to get there, and importantly to hold their frail majority in the House, Democrats need to deliver something to the voters who entrusted them with both Congress and the White House—or much of the base won’t bother to vote in 2022 out of sheer cynicism and disappointment.

For this reason, it seems likely that a deal of some kind will be reached. No one will be totally happy with it, but Democrats will still put on their brave faces and call it a massive win for the country and for the Biden agenda. Even as Manchin began taking a sledgehammer to the budget, House Progressive Caucus leader Pramila Jayapal sounded a positive tone. She told CBS News on Friday, “It is, as you know, a bit of a messy process. I don't think we’re in disarray. I don’t think we’re in drift. I think we’re about delivering, and that will happen. We will get it done.”