While the bipartisan infrastructure bill finally saw the light of day, another piece of legalization has been stuck in Congress. We're talking about the BBB (Build Back Better) bill, which has divided the Democratic party. Joe Manchin, the Democratic Senator from West Virginia, is against the bill. When is he due for reelection and why does he oppose the BBB bill?
The Democratic party was never on the same page when it came to the BBB bill. The progressives see it as crucial legalization and even held up the infrastructure bill in hopes that the BBB would be tied to the infrastructure bill.
Joe Manchin isn't coming up for reelection until 2025.
Manchin will come up for reelection when his current term ends on January 3, 2025. He assumed the current office on November 15, 2010, and won the general election again in 2018. Before joining the Senate, he served as the governor of West Virginia between 2004 and 2010.
Manchin graduated from West Virginia University in 1970 with a degree in business administration. Initially, he joined family-run businesses and then made a career in politics.
Why is Joe Manchin against Biden’s BBB bill?
Manchin was always against the BBB bill and wanted it trimmed down—something which the progressives in the Democratic party have vehemently opposed. Manchin has his own set of arguments for why he's opposed to the BBB bill.
Manchin thinks that the bill is inflationary and he doesn't support the massive price tag. The U.S. debt has already spiked over the last few years. Successive stimulus packages have taken a toll on the government's finances. Now that the stimulus package has ended, the infrastructure bill would add to the pressure on the federal budget deficit.
The BBB bill might be inflationary.
The BBB bill carries an even bigger price tag. Here, it's worth noting that the massive fiscal spending is inflationary in nature. The U.S. inflation is already running at a multi-decade high, which prompted the Federal Reserve to increase the pace of tapering.
The U.S. Central Bank will end the monthly bond purchases in the first quarter of 2022, which is much ahead of the original schedule. It will embark on rate hikes, and the dot plot called for as many as three rate hikes in 2022.
How's the financial system's long-term stability?
Many economists have been worried about the long-term stability of the U.S. financial system amid the rapidly rising federal debt. Last year, the country crossed the grim milestone where the national debt surpassed the GDP. The debt-to-GDP ratio is set to spike more this year irrespective of the BBB bill.
Speaking with Fox News, Manchin said, “I cannot vote to continue with this piece of legislation.” He added, “This is a no on this legislation.” The progressives in the Democratic party are visibly disappointed and feel cheated for decoupling the BBB bill from the infrastructure bill. Manchin’s opposition to the BBB bill is also a blow to President Biden who vowed a massive spending package in his election campaign.
As the IMF also recently pointed out, government debt has risen significantly over the last year as governments opened their coffers for stimulus while tax revenues fell due to the COVID-19 pandemic.