Inflation Numbers Upend Reconciliation Negotiations

Last week Senator Joe Manchin (D-WV), a key figure in efforts by the Biden administration and Senate Democrats to get agreement on a budget reconciliation bill containing Democratic priorities including climate provisions, Medicare drug-pricing measures, and tax increases, announced he would only support a more limited economic package aimed at reducing the cost of drugs and extending subsidies for health care coverage.

Manchin said his decision was in reaction to a report the day before that showed inflation rising to 9.1%. In an interview with West Virginia media, Manchin said he told Senate Majority Leader Chuck Schumer that he wanted to wait until the July Consumer Price Index figure on inflation comes out on Aug. 10 and see how the Federal Reserve responds. Manchin said that the inflation number “was an alarming figure to me, higher than anything in 40-plus years. I said, ‘Oh my goodness, let’s wait now. This is a whole new page.’”

In response, the White House said they would support a bill focused on prescription drug pricing and extension of current health care insurance subsidies and would continue to work to include additional provisions. A further slimmed-down bill may be the only pathway available, as the authorization for the reconciliation bill expires on Sept. 30, and Congress will be in recess in August. Getting a reconciliation bill through the Senate can be a lengthy process as it requires congressional staff to meet with the Senate’s parliamentarian to show that each provision in the bill complies with Senate budget rules.