Democrats divided over how to deal with rising inflation

Democrats’ efforts to combat inflation are stuck in limbo because of internal divisions over a range of proposals aimed at lowering the cost of gas, health care and child care. 

The latest idea that some Democrats are rallying around is a proposed tax on the windfall profits of major oil companies that would raise an estimated $45 billion to be returned to consumers in the form of energy rebates. 

Senate Majority Leader Charles Schumer (D-N.Y.) highlighted oil companies’ profits on the Senate floor Thursday and announced that oil and gas company executives will be called to testify about why they are buying back stocks instead of keeping prices lower for average Americans. 

“It is nothing short of repugnant for oil companies to be touting what are truly dizzying profit margins, while soaking American families with these exorbitant prices,” Schumer said. 

But Senate Energy and Natural Resources Committee Chairman Joe Manchin (W.Va.), the biggest swing vote in the Democratic caucus, isn’t yet sold on the idea, and Republicans say they think there’s little chance he’d vote “yes.” 

Manchin told The Hill Thursday that he wants to have a hearing on the idea to “find out the facts.”

Other key Democrats, such as Senate Environment and Public Works Committee Chairman Tom Carper (Del.) and Senate Commerce Committee Chairwoman Maria Cantwell (Wash.), haven’t taken a position on the proposal either.

Even if the measure, which is sponsored by Sen. Sheldon Whitehouse (D-R.I.), got the support of all 50 members of the Democratic caucus, it has no chance of getting 10 Republicans to overcome a filibuster, and there’s been no serious talk of putting it in a budget reconciliation package to circumvent GOP opposition. 

Sen. Lisa Murkowski (Alaska), a Republican on the Energy and Natural Resources Committee, predicted not a single Republican would vote for the move and questioned whether even Manchin would back it. 

“I can’t see any Republican supporting it. I don’t see that it gets any traction and for lots of good reasons. If you want to send a positive signal to producers that they might want to be doing more, the worst thing you can do is threaten them with a windfall tax,” she said. 

Manchin told The Hill that he’s more interested in spurring oil producers to bring more product to market. 

“I just want people to produce the products we need to get us through this crisis,” he said. 

Another proposal to soften the impact of rising gas prices — suspending the 18.4 cent per gallon federal gas tax until next January — has also divided Democratic senators.

The idea is spearheaded by two vulnerable Democrats facing tough reelection races, Sens. Mark Kelly (Ariz.) and Maggie Hassan (N.H.), but it’s getting pushback from colleagues who are worried about cutting off a key source of revenue for the Highway Trust Fund. 

“We have for as long as I can remember … embraced the principle that those who use roads, highways and bridges have an opportunity to help pay for them. We are not even coming close to paying for the roads, highways and bridges that we need,” Carper told The Hill last week. 

Other members of the Democratic caucus such as Sen. Angus King (I-Maine) haven’t taken a position yet on the gas tax holiday but wonder aloud how to replace lost revenue to fund highways and bridges after Congress passed a $1 trillion bipartisan infrastructure package last year. 

Democrats also remain divided over the core elements of President Biden’s Build Back Better agenda, which the White House argues would help fight inflation by lowering families’ costs. 

Biden told lawmakers during his first State of the Union address: “I have a better plan to fight inflation. Lower your costs, not your wages.” 

The president called on Congress to make permanent the subsidies for health care premiums Congress enacted last year through the American Rescue Plan and enact proposals to fight climate change that he said would cut energy costs for families by an average of $500 a year. 

He also called for federal subsidies to cut the cost of child care and access to pre-kindergarten for every 3- and 4-year-old. 

“All of these will lower costs,” Biden declared. 

But Manchin walked away from the speech unconvinced. 

“I’ve never found out that you can lower costs by spending more,” he said. 

The following day, Manchin sketched out a proposal to build a package around tax reform, prescription drug reform and a group of measures to combat climate change. He left out expanded child care, home health care for seniors and the disabled, the child tax credit and other social spending initiatives. 

Manchin also proposed setting aside half the revenue raised from tax reform and prescription drug reform to reduce the deficit and fight inflation. 

More liberal Democrats would be happy to spend that money to fight inflation if it means spending it on programs to reduce families’ costs, but there’s not much appetite for paying down the debt when they have a list of higher social spending priorities.

Senate Democrats acknowledge their internal divisions over how to combat inflation, but they argue that at least they’re putting forward ideas and criticize Republicans for just complaining about rising prices from the sidelines.

“While many on the other side of the aisle have spent a lot of time giving floor speeches and presenting floor charts about rising costs, where are their actual proposals? We don’t hear what they do to solve the problems,” Schumer said last month.

“Republicans should step up and say what their plan is to fight inflation, not just pointing fingers,” he added.

Senate Minority Leader Mitch McConnell (R-Ky.) has told colleagues he won’t release a legislative agenda before the midterm elections outlining what Republicans would do if they won back control of the Senate. 

Republicans have since responded by calling for more access to oil and gas drilling on public lands, reauthorizing the Keystone XL pipeline and other proposals to spur domestic energy production and reduce fuel costs. 

“We’re producing 1.4 million barrels [of oil] less a day than we were right before the pandemic,” Sen. John Barrasso (R-Wyo.) told reporters Tuesday. 

One inflation-fighting idea that Democrats are completely unified behind is the proposal negotiated last year to reduce the cost of many prescription drugs. The deal would cap out-of-pocket drug expenses for seniors at $2,000 and set a cap on the price of insulin at $35 a month. 

It would also give the government limited authority under Medicare to negotiate lower prices for the 10 most expensive drugs. 

Democrats, however, haven’t decided whether they will stick with that deal or try to craft something more expansive to give the federal government more power to drive down drug costs. 

Manchin this month proposed modeling Medicare and Medicaid prescription drug programs on the Department of Veterans Affairs. 

“The organization that does the best job is the VA, the veterans administration gets some of the lowest prices. Maybe we should look at them,” he told reporters after Biden’s speech. 

The prescription drug proposal remains stalled as Democrats debate whether it should be broadened and the strategy for passing it. 

At last week’s Senate Democratic retreat, members discussed moving the proposal under regular order in an attempt to secure 10 Republican votes to get past a filibuster.

The other option would be to move it under the special budget reconciliation rules, which allow the majority party to pass major legislation with 51 votes. But the problem with this path is there’s no consensus among Democrats about what else to include in the reconciliation package. 

Progressives such as Senate Health, Education, Labor and Pensions Committee Chairwoman Patty Murray (D-Wash.) say they’re not giving up on including legislation to expand access to child care in the reconciliation bill. 

“I still think that child care is one of the most critical things we can do to help people lower their costs and take a barrier away so they can go back to work and help our economy,” she said. 

This story was updated at 6:59 p.m. on March 21.