Last Call For The Manchin On The Hill, Con't

West Virginia Democratic Sen. Joe Manchin only has to waste another four weeks with posturing over a deal that will never happen before the Senate's month long August recess and campaign season beginning Labor Day, and he'll have successfully, singlehandedly, killed Biden's Build Back Better plan completely, as intended.

Senate Democrats are redoubling their efforts to finalize a new spending package that could lower health-care costs and combat climate change, hoping to hammer out a long-elusive deal with Sen. Joe Manchin III (D-W.Va.) and bring it to the chamber floor later this month.

A new sense of optimism — and urgency — has set in among party lawmakers nearly seven months after their last attempt to pass a sweeping bill ended in stunning defeat. Piece by piece, Democratic leaders in recent days have started reconstructing their economic ambitions as they race to deliver on a staple element of President Biden’s agenda before the midterm elections in November.

So far, top Democrats have worked out with Manchin new agreements that would cut drug costs for seniors, improve the financial health of Medicare and close a tax loophole that benefits the wealthy. They even have advanced talks around addressing the challenges posed by a faster-warming planet, raising the prospect that they can secure a limited initiative to penalize methane emissions.

Those early agreements have set the stage for Senate Democrats to make an upbeat return to the Capitol on Monday. Manchin is expected to have his next private meeting with Senate Majority Leader Charles E. Schumer (D-N.Y.) early in the week, according to two people familiar with the matter, who spoke on the condition of anonymity to describe the deliberations. They are set to discuss climate as Democrats try to bring one of their thorniest fights with the moderate West Virginian to an end.

Plenty remains unresolved, including the fate of a key program that lowers insurance costs for millions of Americans, raising the prospect that the latest round of talks could collapse much as they did before. Adding to the challenge, Republicans have intensified their opposition in recent days, hoping to apply enough political pressure on Manchin that he walks away from the talks again.

“To my friend Joe Manchin from West Virginia, whose vote is going to be necessary for this, I would remind him Joe Biden’s popularity in that state is as low as it is in Wyoming, only 17 percent.,” Sen. John Barrasso (R-Wyo.), leader of the Senate Republican Conference, said during an interview on “Fox News Sunday.” He added that Manchin “shouldn’t walk the plank for Joe Biden” politically.

Even if Manchin and members of his party manage to strike a deal, it is guaranteed to be far smaller than Democrats’ original, roughly $2 trillion package, known as the Build Back Better Act, which the senator scuttled last year. The cuts might have been unthinkable earlier in the debate, but many Democrats have come to acknowledge them as the costs of compromise — and feel more hopeful than ever that there is now a pathway to achieve it.

“We’re making real progress, we’re picking up steam, and the central reason is we’re focused on cutting costs and addressing these real pocket book issues on the minds of Americans,” said Sen. Ron Wyden (D-Ore.), chairman of the tax-focused Finance Committee.

“I’m not saying it’s all done, it’s all over and the like,” Wyden later added, “but I do feel more confident about the progress that has been made.”

 

So when President Manchin and Senate Majority Leader McConnell finally destroy this bill over the next few weeks, remember that I told you wrecking any meaningful economic progress to help the Democrats in 2022 was Manchin's goal all along.

He just has to yank the football away one last time, and he can then do whatever he wants after that, switch parties, retire, run again, either way he'll get what he wants.

He's a lot better at this game than people realize.

 

 

Playing Near Gasoline WIth An Open Flame

The Biden administration is trying to find a sweet spot between keeping Russian sanctions on oil and causing a massive jump in oil prices to $200 a barrel or more, and one wrong move could blow up the global economy completely.

Relief at the gas pump coupled with this past week’s news that businesses continue to hire at a blistering clip have tempered many economists’ fears that America is heading into a downturn.

But while President Biden’s top aides are celebrating those economic developments, they are also worried the economy could be in for another serious shock later this year, one that could send the country into a debilitating recession.

White House officials fear a new round of European penalties aimed at curbing the flow of Russian oil by year-end could send energy prices soaring anew, slamming already beleaguered consumers and plunging the United States and other economies into a severe contraction. That chain of events could exacerbate what is already a severe food crisis plaguing countries across the world.

To prevent that outcome, U.S. officials have latched on to a never-before-tried plan aimed at depressing global oil prices — one that would complement European sanctions and allow critical flows of Russian crude onto global markets to continue but at a steeply discounted price.

Europe, which continues to guzzle more than two million barrels of Russian oil each day, is set to enact a ban on those imports at the end of the year, along with other steps meant to complicate Russia’s efforts to export fuel globally. While Mr. Biden pushed Europe to cut off Russian oil as punishment for its invasion of Ukraine, some forecasters, along with top economic aides to the president, now fear that such policies could result in huge quantities of Russian oil — which accounts for just under a tenth of the world’s supply — suddenly taken off the global market.

Analysts have calculated that such a depletion in supply could send oil prices soaring to $200 per barrel or more, translating to Americans paying $7 a gallon for gasoline. Global growth could slam into reverse as consumers and businesses pull back spending in response to higher fuel prices and as central banks, which are already raising interest rates in an effort to tame inflation, are forced to make borrowing costs even more expensive.

The potential for another oil shock to puncture the global economy, and perhaps Mr. Biden’s re-election prospects, has driven the administration’s attempts to persuade government and business leaders around the world to sign on to a global price cap on Russian oil.

It is a novel and untested effort to force Russia to sell its oil to the world at a steep discount. Administration officials and Mr. Biden say the goal is twofold: to starve Moscow’s oil-rich war machine of funding and to relieve pressure on energy consumers around the world who are facing rising fuel prices.

To transport its oil to market, Russia draws on financing, ships and, crucially, insurance from Britain, Europe and the United States. The European penalties, as currently constructed, would not only cut Russia off from most of the European oil market but also from those other Western supports for its shipments. If strictly enforced, those measures could leave Moscow with no means of transporting its oil, at least temporarily.

The Biden administration’s proposal would not affect the European ban, but it would ease some of the other restrictions — but only if the transported Russian oil is sold for no more than a price set by the United States and its allies. That would allow Moscow to continue moving oil to the rest of the world. The oil now flowing to France or Germany would go elsewhere — Central America, Africa or even China and India — and Russia would have to sell it at a discount.

Some economists and oil industry experts are skeptical that the plan will work, either as a way to reduce revenues for the Kremlin or to push down prices at the pump. They warn the plan could mostly enrich oil refiners and could be ripe for evasion by Russia and its allies. Moscow could refuse to sell at the capped price.

Treasury Secretary Janet L. Yellen plans to push for more support for the cap when she meets with fellow finance ministers from the Group of 20 nations — including Russia’s — in Asia in the next week. The American delegation will have no contact with the Russians, a Treasury official said.

But even some skeptics say that the price cap could, if nothing else, keep enough Russian oil pumping to avoid a recession-triggering price spike.

Administration officials say privately that there are signs in oil markets that even in its infant stages, the cap proposal is already helping to reassure traders that the world could avoid abruptly losing millions barrels of Russian oil per day at the year’s end.

 

And I see we're conducting war with the Rational Actor Theory again, where the White House assumes that Putin is in this for the money. If oil overheats, the argument goes, oil would collapse economies, a global recession would occur, and oil would drop back to $20 again. Putin will then go along with the price cap because not doing so would hurt him far more than the West.

That's a hell of a bet, that Putin will be an active participant in his own punishment.

If it fails, we're looking at a nightmare just as elections are coming up here.

We'll see.

Sunday Long Read: Out Of Africa

The Guardian's Eve Fairbanks gives us our Sunday Long Read this week, as she details her experiences with Black farmers in post-apartheid South Africa, and if you think Black farmers in America are being driven out of business in favor of white farmers, remember that South Africa has all but perfected that move.

The tiny plane banked and headed north. It was a sunny morning in 2015, and the pilot and I were flying out of a Johannesburg airfield towards the Zimbabwe border. Having lived in South Africa for six years, I wanted to see from the air a problem I had often thought about: a problem proposed by the end of apartheid, when black people had to enter into and possess a world that white people believed they had created.

Two decades earlier, in 1994, Nelson Mandela had been inaugurated as the country’s first black president. He’d gripped the hand of FW de Klerk – its last white president – and said in Afrikaans, his former jailers’ language: “Wat is verby, is verby!” (“What is past, is past”). These words had expressed the hope for the country’s transition: that with the right attitudes – repentance from white people and forgiveness from people of colour – the damage that segregation had done could be left in the past.

And some parts of South Africa did look miraculously transformed. Apartheid was the most rigid form of legalised racial segregation history has ever known. Now, on the new high-speed train that connects Johannesburg with its airport, white men stood and yielded their seats to black women who were doing business deals on their iPhones.

But it also felt like a dread was hanging over the country. In one newspaper, I read a letter written by a black South African who warned that the country’s level of dissatisfaction would soon “make the burning of Mississippi” – the unrest in the Jim Crow-era American South – “look like a little bonfire”. And I noticed how much of the past was still present. Many roads were still named after Afrikaner heroes, and mine dumps still divided mostly white-dominated neighbourhoods from the ones black people lived in. But the view from the plane was the most graphic manifestation of this division. From the air, Johannesburg’s dense suburban developments gave way to equestrian estates, then to the folds of the Magaliesberg mountains. And then, beyond the mountains, farmland began. And suddenly I saw it. It was so stark.

Apartheid leaders had tried to carve South Africa into multiple countries: a “white” country and a handful of black “homelands”, which they insisted were completely different, sovereign nations. Politically, that was always a farce. The homelands had puppet rulers and no local economies; they commanded little loyalty among their so-called citizens. Most of their residents still commuted to white areas to work.

No foreign country ever recognised the demarcation between white and black South Africa as real. And yet over time what began as an absurdist proposition had become real.

As segregation deepened throughout the 20th century, much of the fertile, rain-washed land had been given to white people, while the barren peaks and hot, dry, malaria-ridden lowlands were given to black tribal leaders. From our little plane, the borders between white and black landscapes were clearly visible: green was white South Africa and dust brown was black South Africa. Different patterns of habitation had emerged: in black South Africa, regularly placed little metal-roofed homes dotted the dun-colored earth. White-owned areas were large sweeps of unbroken pasture or cropland.

Intensive farming had been a pride and a fixation for white South Africans. The degree to which they made the land yield harvest was supposed to be their justification for keeping it. The apartheid government not only stripped black South Africans of the right to privately buy land, but poured massive amounts of money into assistance programmes for white farmers. From the air, the country looked as if a child had cut up travel-magazine pictures of some pastoral English fantasy and spliced them with pictures of the Sahel desert to make a collage.

I was curious to hear from black farmers what it was like to take over formerly white-owned farms. The intense association between whiteness and hi-tech agriculture posed a sharp challenge to black South Africans. Finally able to possess the land they had so long been denied, they felt driven to prove they could farm just as well or better. Land reform was one of the flagship policies that Mandela’s political party, the African National Congress (ANC), instituted after apartheid’s end. It set up a process to buy whites out of their farms and pass them to black people.

The ambitious goal was set to transfer at least 30% of South Africa’s white-owned agricultural land to black people. From 10,000ft up, though, I saw how challenging it would be. When I zoomed in on the lives of the people trying to make it work, I saw that it might be impossible.

 

South Africa learned a lot from Jim Crow America, and just as a new Jim Crow is sweeping across the US right now, South Africa is discovering that the structural racism in the country makes it far easier to have a new era of de facto apartheid.

 

We're headed there ourselves.