Calling the notion “screwed up,” key Democratic swing vote Sen. Joe Manchin said Tuesday that the controversial IRS bank reporting proposal will not be included in the final draft of President Biden’s massive social spending bill.
Manchin’s comments came during an Economic Club of Washington, D.C. event, two days after he met with the president in Delaware.
“I said, ‘Do you understand how messed up that is to think that Uncle Sam’s going to be watching,’” the West Virginian senator said of what he told Biden.
“I told him…this cannot happen, this is screwed up.”
Staffers at the meeting were reportedly looking at each other back and forth, Manchin said, before revealing Biden said, “I think Joe’s right on that.”
“So I think this one’s gonna be gone,” Manchin added.
The proposal in question, which has largely been criticized by Republicans who say it is an invasion of privacy, would require banks to provide data to the Internal Revenue Service on accounts with gross annual inflows and outflows at $10,000 or more.
Originally, that threshold was set at $600, prompting massive criticism from lawmakers, states and private banks.
Late last month, Nebraska state Treasurer John Murante said his state is leading the charge in objecting to the proposal that would compel banks to report private customers’ accounts with at least $600 of transactions to the IRS.
“My message is really simple. The people of Nebraska entrusted me to protect the privacy of these accounts and I am not going to comply with this. If the Biden administration sues me, we will take it all the way to the Supreme Court. We are going to fight every step of the way,” Murante told Fox Business.
Last week, the threshold was bumped to $10,000. The proposal allows for exemptions from the inflow and outflows including income from W2 wages and federal programs like Social Security.
Still, banks are asking the White House to drop the proposal. On Wednesday, nearly 100 banks and financial industry organizations wrote to Biden asking him to ditch the rule, citing a “reasonable right to privacy.”
“…our members, and the American people, believe that they have a reasonable right to privacy and this overly broad proposal to report gross annual inflows and outflows from nearly every account is disconnected from its purported narrow purpose of focusing government scrutiny on Americans with actual income above $400,000,” the letter read.
On Monday, Biden said his talk with Manchin “went well” and there are “a few more things to work out,” but that he wants to reach a deal before he departs for Rome to participate in G20 meetings.
The meeting comes amid ongoing negotiations between moderate and progressive democrats over the hotly debated budget reconciliation package. For weeks, progressives backed by Biden and House Speaker Nancy Pelosi pushed for a $3.5 trillion package while moderates, including Manchin and Sen. Kyrsten Sinema (D-Ariz.) vowed to vote against that price tag.
Manchin has indicated his support for a $1.5 trillion price tag, less than half of the initial proposal. While progressives have still argued for $3.5 trillion, with Sen. Bernie Sanders (I-Vt.) calling it a compromise, Pelosi and Biden have conceded that the bill’s final form will most likely not be $3.5 trillion.
During Tuesday’s event, Manchin was also pressed on raising the debt ceiling, another budgetary crisis Democrats are facing in the coming weeks.
The West Virginian senator started by noting the debt ceiling could be raised through the 14th Amendment.
“The debt limit should be the 14th Amendment. The president has the right to make that decision. We have the right to override if we think he went too far. That to me is the simplest,” Manchin said.
He continued saying that if his party is unable to get Republicans on board, then Republicans must use reconciliation to raise it without GOP support.
Democrats have been hesitant to use reconciliation for raising the debt ceiling as they are using it to pass the massive social spending bill, however, a second reconciliation bill would not affect the first.
Amid the Democratic back and forth, a MotherJones report revealed last week that Manchin was allegedly considering leaving the Democratic party to leverage his position in negotiations.
Shortly after the report emerged, the senator was pressed by reporters on the Hill off camera on its allegations. While initially he did not deny the claims and said he had “no control” over the rumors, Manchin called the report “bulls–t.”
On Tuesday, Manchin said he is asked about switching parties “every day” and joked that his life “would be much easier” if he switched.
“[But is that the purpose of being involved in public service?” He asked. “You think that having a D, or an I, or an R is going to change who I am?”
“I don’t think the R’s would be any more happier with me than the D’s right now…I don’t know where in the hell I belong,” Manchin continued.