Democrats Outsmart Mitch McConnell With Surprise Reconciliation Deal

The Kentucky Republican said the Senate wouldn't pass a computer chip bill if Democrats pursued budget reconciliation, but it did and they are.

WASHINGTON — Senate Minority Leader Mitch McConnell (R-Ky.) said last month that he wouldn’t allow the Senate to pass a bipartisan bill on computer chips if Democrats tried to revive their “Build Back Better” agenda.

On Wednesday, the Senate approved the bipartisan tech manufacturing bill, and hours later Democrats announced a breakthrough on their big domestic policy legislation.

In other words, McConnell’s gambit failed.

Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) announced they’d agreed on the new bill Wednesday after Manchin had refused to support Build Back Better last year.

It was a significant breakthrough for Democrats, who have been frustrated that it seemed like the bulk of President Joe Biden’s domestic agenda was doomed. Though the new deal isn’t nearly as large as the initial Build Back Better legislation, it would still provide hundreds of billions of dollars for some of the party’s long-sought priorities.

The legislation, called the “Inflation Reduction Act,” consists of a handful of Build Back Better provisions that Manchin liked: It would require Medicare to pry lower prescription prices from drugmakers, impose a minimum tax on corporations and boost tax revenue through an investment in Internal Revenue Service enforcement.

Crucially, for Manchin, the bill would reduce the federal budget deficit $300 billion. Democrats had previously wanted to use every penny of increased tax revenue for new social spending but have given up on winning Manchin over. Manchin has said that shrinking the deficit could help with inflation; former Treasury Secretary Lawrence Summers also reportedly told Manchin this week that the other provisions in the measure aren’t inflationary.

“Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together,” Manchin said in a lengthy statement.

Schumer said the Senate could vote on the new bill as soon as next week, so long as the Senate parliamentarian says the bill’s components pass muster under the Senate’s special “budget reconciliation,” which would allow legislation to pass the Senate with only 50 votes instead of the usual 60 needed to avoid a filibuster.

McConnell had said in June that “there will be no bipartisan [chips bill] as long as Democrats are pursuing a partisan reconciliation bill.”

The statement seemed designed to prevent Republicans from supporting the chips bill — which plows $50 billion into the domestic semiconductor industry — and to scare Manchin away from reconciliation.

Last week, Manchin warned his colleagues that he would never support new spending or taxes amid high inflation, and talks between him and Schumer had reportedly broken down. Meanwhile, a slimmed-down chips bill chugged along through a series of procedural votes and cleared the Senate on Wednesday by a vote of 64 to 33, with 17 Republicans in support, including McConnell.

Then, after it passed, Manchin announced the breakthrough on reconciliation. The new bill still has a long way to go, since it’s unclear if it will win the needed support from Senate and House Democrats, though Manchin had been the largest obstacle.

McConnell does not seem pleased.

“Democrats have already crushed American families with historic inflation,” McConnell said in a Thursday evening tweet. “Now they want to pile on giant tax hikes that will hammer workers and kill many thousands of American jobs.”

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