By Jeff Stein Tyler Pager
By Jeff Stein
June 5, 2022 at 6:00 a.m. EDT
A breakthrough seemed close. It was mid-December, and President Biden had been negotiating for months with Sen. Joseph Manchin III over Biden’s sweeping plan to reconfigure the American economy. House Democrats had already approved $2 trillion for Biden’s “Build Back Better” agenda, and pressure was mounting to push the measure through the more narrowly divided Senate.
But first Biden had to overcome resistance from Manchin (D-W.Va.), the Senate’s most conservative Democrat.
On Dec. 14, the pair seemed to make progress. Manchin had offered to support a $1.8 trillion package, a step toward the White House position, while Biden agreed to jettison a budget gimmick that Manchin believed disguised the true cost of the plan. The tenor of their conversations was “peachy,” according to one person briefed on the talks, and the two sides agreed to put out a statement saying they would continue talking.
And then, incredibly, it all fell apart.
The statement drafted by White House aides two days later named Manchin as the focus of negotiations. White House aides sent a draft of the statement to Manchin’s office ahead of its release. Manchin’s chief of staff responded by asking the White House legislative director either to remove the senator’s name or to add Sen. Kyrsten Sinema (D-Ariz.).
The White House issued the statement anyway. The president had personally signed off on it. But Manchin exploded, texting a senior Biden aide that the decision was “unconscionable and extremely dangerous” at a time when liberal activists were targeting Manchin’s family with protests.
Three days later, Manchin declared his opposition to the legislation on Fox News. The negotiations never recovered, and Build Back Better — encompassing years of Democratic policy aspirations to reduce child poverty, transform the nation’s housing system, enact new early education programs, tax the rich, and more — was effectively dead.
After his Fox News interview, Manchin turned his phone off, which meant he missed a call from Biden, who left a frustrated voice mail. When the pair connected, the conversation was heated and tense. For several weeks, Biden and Manchin did not speak again. In private, the president criticized Manchin to aides, expressing doubt about his intentions.
Manchin’s $1.8 trillion spending offer appears no longer to be on the table
As lawmakers return this week to Capitol Hill, talks have been rekindled between Manchin and Senate Majority Leader Charles E. Schumer (D-N.Y.) over a proposal likely to be far less substantial than the nearly $2 trillion deal Manchin and the White House seemed to be moving toward sealing last year. With Republicans hoping to win control of Congress in this fall’s elections, Biden may never have a better chance to leave a lasting policy legacy.
But the breakdown last year remains baffling to many close to both Manchin and senior White House officials. Biden aides are still in disbelief that Manchin abandoned months of painstaking negotiations, seemingly in an instant, over what they regarded as an innocent statement that they did not believe would offend the senator. They are left wrestling with the question of how legislation of such historic dimensions appears to have been doomed by a simple miscommunication over a news release. Manchin’s allies do not understand why the White House would have done anything to needlessly provoke the key vote for their legislative aspirations and believe the administration had already ignored his demands for weeks.
The evidence suggests the breakdown was months in the making, driven by ideological and political rifts between Manchin and Biden that mirror deeper fissures in the Democratic Party. Among the unresolved policy disputes was a battle over an expanded tax credit for parents that the White House viewed as a signature antipoverty program — but that Manchin opposed as too generous and expensive.
“The White House did not know this was a red line for Manchin,” said one person in direct communication with both Manchin and senior White House officials, referring to the Dec. 16 statement. The person spoke on the condition of anonymity to reflect private conversations. “There was a complete misunderstanding of the situation. They really thought they were still all in the sandbox. That’s the tragedy of this.”
This account of how the negotiations fell apart is based on interviews with approximately three dozen White House officials, lawmakers, congressional aides and outside allies, many of whom spoke on the condition of anonymity to describe private conversations.
It includes new details of how Biden’s legislative agenda collapsed, the breakdown in trust that precipitated it and the ongoing efforts to revive parts of it this spring, which are now giving Democrats more optimism than they have had in months that something from their plans can be salvaged.
How the breach with Manchin emerged
Manchin’s relationship with Biden got off to a rocky start not long after the president’s inauguration.
In March 2021, Biden persuaded Manchin to support a $1.9 trillion stimulus plan that some economists now argue exacerbated the inflationary pressures hitting the country. During negotiations over the measure, Manchin had raised concerns about the amount of state and local aid in the plan. But while Democrats agreed to some of Manchin’s requests — lowering the amount of pandemic unemployment benefits, for instance — they stuck with their plan to approve $350 billion in state and local aid. Some economists believe that was excessive, and many states last year reported large budget surpluses.
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Manchin’s concerns about the administration’s economic stewardship deepened over the summer as inflation looked like more of a threat. He consulted occasionally with Larry Summers, the Democratic former treasury secretary, who has been fiercely critical of the White House’s stimulus plan. At a previously reported July 14 lunch of Democratic senators that Biden attended, Manchin said that he was concerned about inflation and that West Virginians were already seeing much higher prices. The next week, Biden publicly downplayed the threat of inflation, telling reporters most of the price increases are “expected to be temporary.”
But in August and September, inflation appeared to be plateauing. Summers publicly supported Build Back Better, arguing it would do little to exacerbate high prices because it included new tax hikes and most of its spending programs represented long-term changes to the U.S. economy. As the party worked to pass a $1 trillion bipartisan infrastructure law, the president invited Manchin and Schumer in October to the first official meeting of his presidency at his private Wilmington residence to hammer out an agreement over Build Back Better.
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The Oct. 24 breakfast started soon after the president returned from church. With senior staff in attendance, Biden, Manchin and Schumer spent roughly three hours developing a “framework” estimated to cost roughly $1.75 trillion — far below the $3.5 trillion the White House had agreed on with the rest of the party — and later agreed to exclude some top liberal priorities, such as a national paid leave program and a central climate program.
The breakfast left White House officials feeling optimistic. Biden told at least two Democratic lawmakers that they had an agreement to extend the expanded Child Tax Credit for one year. The stimulus had only expanded the credit — the centerpiece of the president’s plan to fight child poverty — for one year.
Yet Manchin’s concerns about key parts of the legislation had deepened. Accounts differ over whether Manchin had in fact agreed to extend the child benefit. In November, after the federal government reported that inflation was again surging, Manchin’s misgivings grew, and he told other lawmakers that he was hearing that families were using the extra money on drugs. White House aides pointed to academic research to the contrary, but Manchin’s unease remained.
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Manchin also began arguing that Democrats were hiding the true cost of Biden’s plan by scheduling various programs to expire — though they fully intended to make them permanent later. Manchin crusaded publicly and privately against this budget strategy, saying it could substantially add to the federal deficit.
In a Nov. 1 statement, Manchin derided the bill as relying on “shell games” and “budget gimmicks.” He called the strategy a “recipe for economic crisis.” “None of us should ever misrepresent to the American people what the real cost of legislation is,” Manchin wrote. On Nov. 29, Manchin told Fox News: “Don’t do it for one year, three years or four years, or whatever. That’s just disingenuine [sic].”
Other Democrats believed Manchin had signaled his willingness to support some temporary spending programs as part of a broader agreement, two people familiar with the matter said. But Manchin’s concerns about the budget structure of the plan were intensifying. On Nov. 19, the House approved a roughly $2 trillion version, with every Republican voting against it, that relied on the temporary funding mechanisms Manchin had publicly opposed.
Complicating matters, scores of Democratic lawmakers — each with effective veto power over the legislation because of the party’s narrow margins in Congress — kept demanding the inclusion of their priorities in ways incompatible with Manchin’s demands. Paid leave, stripped out of the White House framework, was reintroduced in the House, for example. Manchin’s allies say he was frustrated by the feeling that a concession in his direction, once agreed to, could later be rescinded. White House allies felt that Manchin’s positions could be shifting and contradictory, making it hard to produce an offer that met his exact specifications. The impasse appeared insurmountable.
Then, on Dec. 14, progress suddenly appeared to be at hand.
A fateful week in December
Biden agreed to resolve Manchin’s complaints about the temporary programs, a move the West Virginia senator’s allies found encouraging. Striking a conciliatory tone, the president told Manchin that he was doing the right thing in withholding his support if he did not believe the measure was good for West Virginia, according to two people familiar with the conversation. Manchin gave the White House the $1.8 trillion written offer, another positive sign.
The administration didn’t immediately accept Manchin’s offer, though: Not only was it light on policy details, but it excluded the expanded Child Tax Credit and included tax hikes Sinema had opposed. The administration knew that a deal without the child benefit would enrage a large group of Democratic senators, while risking a spike in child poverty.
Biden’s aides did not reject Manchin’s offer outright, either, viewing it as a starting point for further talks. White House officials and Manchin aides agreed that the administration would put out a statement saying negotiations would continue at a later date. But the next day came and went with no White House statement.
Manchin’s team was on alert. That night, Manchin confided to a friend that he believed the White House was “up to something.”
When White House officials finally sent a draft of the statement to Manchin’s office, it mentioned Manchin personally and cited the prior commitments he had made in Build Back Better negotiations. Manchin’s office asked the White House to take out the reference to his prior commitments, which Biden aides did.
But the White House ignored Manchin’s request either to leave him out of the statement or to add Sinema. By then, Sinema had largely resolved her differences with the White House, and Manchin was the key obstacle.
“I had a productive call with Speaker Pelosi and Majority Leader Schumer earlier today. I briefed them on the most recent discussions that my staff and I have held with Senator Manchin about Build Back Better,” the statement read. “In these discussions, Senator Manchin has reiterated his support for Build Back Better funding at the level of the framework plan I announced in September.”
Asked if Biden was aware of Manchin’s request not to be named in the statement, White House spokesman Andrew Bates said, “We do not comment on private conversations with lawmakers.”
It is not clear to many in the White House why the statement became such an issue. Manchin himself had spoken publicly for months about his struggles to reach a deal with the administration. The statement did not directly criticize Manchin, or blame him for the delay. The White House was not warned that naming Manchin as an obstacle to a deal was a red line for the senator, according to one person familiar with the matter. One senior Democrat, upon learning of Manchin’s reaction to the statement, said he incorrectly assumed at first that the White House must have issued a different statement to have provoked his ire.
“It was not like this was the biggest insult in the world,” said Dean Baker, a White House ally who works at the Center for Economic and Policy Research, a left-leaning think tank. “The idea you would have done something good for the country, but instead will not do it because you think someone in the White House may have insulted you is kind of crazy.”
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Still, the decision proved disastrous. Once the White House statement was released, Manchin “was just explosive. The anger — you could not believe the intensity,” said one person who spoke with him around that time.
Shortly afterward, Manchin texted Steve Ricchetti, one of the president’s top aides: “Steve, the statement you all put out tonight targeting me and my family was unconscionable and extremely dangerous. There will be no further negotiations,” two people familiar with the contents of the message said. Manchin allies say his reaction was in part driven by the number of credible threats at the time to his and his family’s safety.
Senior White House officials assumed Manchin’s fury would abate and negotiations eventually would resume. But three days later, Manchin tanked the president’s top domestic priority on Fox News: “When you have these things coming at you the way they are right now … I cannot vote to continue with this piece of legislation,” he said. “I’ve done everything humanly possible.”
The White House responded with a blistering new statement accusing Manchin of “a sudden and inexplicable reversal in his position, and a breach of his commitments.” Biden and senior White House staff also signed off on this statement, though it was attributed to White House spokeswoman Jen Psaki.
Manchin’s anger did not quickly abate.
Manchin “was having these discussions with the White House, and trying to move ahead, and he felt like they put out a release speaking for him and trying to back him into a corner. It really upset him,” said Hoppy Kercheval, a West Virginia radio host and political commentator who has known Manchin for about 40 years. “He gets worked up and wears his emotions on his sleeve. And he boiled over on that one.”
The White House tries to repair the damage
After Manchin’s Fox News appearance, Biden called Manchin’s cellphone. But Manchin had already turned it off. The president left a voice mail expressing his frustration with Manchin’s decision to end negotiations, two people familiar with the matter said.
When Manchin and Biden finally spoke later in December, Biden expressed disbelief that Manchin could jettison months of painstaking negotiations. Manchin reiterated that he believed the White House had put his family’s safety at risk.
The president suggested a cooling-off period, mentioning his mother’s admonitions about the passions of the Irish and the Italians. (Biden is of Irish descent, while Manchin is Italian.) For weeks afterward, the president and Manchin did not speak directly.
Since then, White House officials have struggled to repair the damage. White House Chief of Staff Ron Klain apologized to Manchin directly for any misunderstandings, and Manchin accepted the apology. White House officials have made clear that they are open to a significantly smaller bill that leaves out most of their initial priorities, recognizing a deal must be made on Manchin’s terms. In a shift from the fall, many Democratic lawmakers now privately recognize that their priorities will have to be jettisoned to secure Manchin’s vote. The White House has stopped providing public updates on the status of negotiations.
Senior White House aides continue to talk with Manchin. In recent weeks, Manchin has spoken to Ricchetti and dined in Paris with White House senior climate adviser John F. Kerry. (The dinner was previously reported by CNN.) More recently, Manchin also asked analysts at the Wharton School of the University of Pennsylvania to model an approximately $1 trillion spending package devoted primarily to spurring domestic energy production and reducing the federal deficit.
Still, Manchin has made clear that he is not open to revisiting the kind of package under discussion last fall.
“In his mind, everything that had got them where they were was unwound when the White House went over his red lines,” one person familiar with the dynamic said.
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Sam Runyon, a spokeswoman for Manchin, said in a statement: “Last year, Senator Manchin made his concerns about rising inflation, geopolitical uncertainty, and the ongoing pandemic crystal clear to West Virginians and the White House. Right now, he remains committed to addressing inflation by paying down our national debt, reducing the cost of prescription drugs for hard-working Americans, and shoring up our national energy security, while addressing climate change.”
Bates, the White House spokesman, said in a statement: “The President and Senator Manchin are longtime friends who share fundamental values about standing up for middle class families and a fair tax code. They deal with each other in good faith and have worked together to achieve record job creation and a manufacturing resurgence. The President is eager to pass a reconciliation bill that takes on inflation and lowers many of the biggest costs Americans face.”
When the White House this spring privately sent Manchin a proposal that attempted to reflect his goal to increase domestic energy production, the senator did not accept it. Manchin did not offer a counterproposal, either, opting instead to try to negotiate with Senate Republicans toward a bipartisan deal aimed at addressing the energy crisis caused by the war in Ukraine. Those talks appear to have stalled out amid progress between Manchin and Schumer over a deal focused on climate and energy, taxes and prescription drugs.
The more limited package now under discussion reflects the reckoning in Democratic circles prompted by last year’s failure. Some Democratic lawmakers believe the party tried to do too much at once, rather than narrowing their priorities. Though their proposals are individually popular with the American people, Democrats believe, the sheer breadth of the ambitions they tried cramming into one bill hurt the party overall. Republicans are expected to retake at least one chamber of Congress in this fall’s midterm elections.
“The way the negotiation unfolded, the American people had no idea what was in the bill and no idea what the Democratic Party was fighting for. We did not project the coherence the American people needed us to project to get this across the finish line,” Sen. Michael F. Bennet (D-Colo.), a lead advocate of the enhanced Child Tax Credit, said in an interview.
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Their disappointment is bitter. Last year, Democrats believed they were on the brink of ushering in changes on the order of Franklin D. Roosevelt’s New Deal. They have only a few months to avoid facing voters without having enacted a single permanent new policy, outside of last year’s bipartisan infrastructure bill.
“This has really been devastating for morale internally in the administration,” said one White House official, who spoke on the condition of anonymity because he was not authorized to discuss the matter. “While everyone is proud of the work we did on the rescue plan and infrastructure bill, everyone thought of Build Back Better as the legislation that would be a watershed for our nation’s economy.”