Joe Manchin — The Most Powerful Person in Washington?

by Greg Valliere, AGF Management Ltd.

POLITICO AND OTHERS HAVE PROCLAIMED that Joe Manchin is the most powerful person in Washington (we’d put Joe Biden and Jerome Powell higher, not to mention Elizabeth MacDonough, the Senate parliamentarian; more about her later).

MANCHIN’S POWER BEGINS WITH THE NUMBERS: The Senate is deadlocked, 50-50, which means Vice President Kamala Harris will break all ties. But that assumes every Democrat, including Manchin, votes with the party. Will he?

MANCHIN, 73, IS A MODERATE FROM WEST VIRGINIA, where Democrats are increasingly scarce. He has made it clear that he could side with Republicans on several issues — he opposes scrapping the filibuster, he is reluctant to vote for a big minimum wage hike, and while he is leaning toward supporting the $1.9 trillion Biden stimulus bill, he opposes sending checks to families earning $100,000 or more.

THE BIGGEST DISPUTE involves the minimum wage hike, which is adamantly opposed by small businesses, which obviously are struggling. Manchin might oppose any minimum wage hike that’s not moderate (well under $15 per hour) or phased in over several years.

THE COVID AID BILL thus could be scaled back; we still think that lower income thresholds for government checks will lower the final pricetag to something closer to $1.5 trillion than $1.9 trillion. Once this bill passes, the Democrats will move on to tax hikes and a massive green/infrastructure bill. This is where Manchin will be particularly important.

WE THINK HE WILL HOLD OUT AGAINST big tax hikes and will strongly oppose a green agenda; Manchin urged Biden yesterday to reconsider his killing of the Keystone Pipeline. Manchin is a strong advocate of fossil fuels, and may not cooperate with Democrats on a huge new green bill. And, importantly for the markets, he may not support a major tax hike.

THE MINIMUM WAGE BATTLE may hinge on Elizabeth MacDonough, the non-partisan Senate parliamentarian, who will have to decide whether a wage hike may violate the “Byrd rule,” which mandates what can be in a budget reconciliation bill.

IT’S POSSIBLE THAT MacDONOUGH may rule that a minimum wage hike is not germane to this bill — making her, for the next month at least, one of the most powerful people in Washington.

* * * * *

REPUBLICANS WERE INCREDULOUS YESTERDAY over the inept performance by Donald Trump’s attorneys, who made a very weak case that the impeachment trial is unconstitutional. There was an additional GOP defector yesterday — and there may be one or two more in the coming days — but odds of acquittal are still around 80%, barring some explosive new evidence.

IN PRIVATE, EVEN REPUBLICANS WHO WILL VOTE for acquittal are exasperated by Trump; how much embarrassment can they endure? There’s a growing sentiment that he’s an albatross — incapable of helping the GOP in suburbs, among women and independents. His support within the party will gradually erode, as Republicans conclude that Trump’s base alone cannot win a general election.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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This post was first published at the AGF Perspectives Blog.