WASHINGTON — U.S. Treasury Secretary Janet Yellen said the Biden administration can and should still move ahead with important legislation that will help lower costs for American consumers, despite the blow to a wider fiscal package from Democratic Sen. Joe Manchin of West Virginia.
While Manchin has, for now, rejected several tax and climate provisions that President Joe Biden and his party’s leadership in Congress have been pitching to him, the holdout senator has said he would back a prescription drug pricing package tied to a two-year extension of Affordable Care Act subsidies.
“Those are very important initiatives to hold costs down and address a high cost of living for American families,” Yellen told reporters as she exited a gathering for finance ministers from the Group of 20 leading economies in Bali, Indonesia.
Yellen’s remarks follow a bruising day in Washington for what remains of the Biden administration’s tax, spending and climate agenda. On Friday, Manchin, who last year blocked the proposed $2 trillion Build Back Better bill, said he wouldn’t agree to go forward with an economic package that includes tax and climate provisions before an August congressional recess.
That leaves Democrats in a position of accepting an even smaller plan shorn of nearly all of their long-term ambitions from a year ago, or getting nothing at all.
Manchin’s stand also damages the outlook for Yellen’s biggest accomplishment as Treasury secretary, an agreement backed by almost 140 governments last year to reshape the way multinational corporations are taxed around the world.
Implementing that deal in the U.S. requires that both components — a 15% minimum tax and a new formula for redistributing some of the taxes on the biggest multinationals — be approved by Congress. As those prospects fall, other countries are likely to pause as well, possibly crippling the project.
But Yellen sounded undeterred, saying officials at the G-20 meeting still signaled their support for the plan.
“I think there’s huge political momentum to move forward and other countries are moving forward,” she said. “Whether we go first or second or later, the incentive exists for the United States to join this agreement, and we will push forward with every opportunity we have.”
She said she expected the European Union to overcome “in the not-very-distant future” Hungary’s veto of a directive that would implement the minimum tax across the trading bloc.
Yellen also spoke briefly about the rising worries in Europe that Russia may shut off a key natural gas pipeline known as Nordstream 1.
“It would be a serious blow to Europe and, I think, have a significant impact on their economy if those flows were to cease,” she said, though she stopped short of predicting it would trip Europe into recession.
Yellen spent much of her time at the G-20 meeting ripping the Russian government for its February invasion of Ukraine.
“We and other countries were unequivocal in condemning their shameful actions,” she said.
