A few days ago, West Virginia Democrat Senator Joe Manchin seemed to do an about-face and announced his support of a watered-down version of Joe Biden’s Build Back Better boondoggle bill. However, what is interesting isn’t Manchin’s flip, but that he is the author of the legislation and it includes a provision that would close a tax loophole on carried interest that will negatively impact hedge fund managers.
While Manchin has doubled down on ending the tax break, his doing so may put him at odds with his colleague from Arizona, Kyrsten Sinema, who has previously opposed closing the loophole on carried interest. Hedge fund managers have already weighed in opposing the tax code change and Sinema is accused by some on the left as benefiting from her previous opposition.
In the meantime, Kyrsten Sinema has not given any indication as to what she’ll decide and her fellow Democrats are stressing out over what Sinema will do. However, if her previous statements are any guide, it is likely Sinema is going to be the sole vote to sack Manchin’s deal and that could really anger her colleagues and supporters.
None-the-less, Biden appointed Joe Manhcin’s wife to a government job last year but it is abundantly clear Manchin knew his bill could be sacked when he made his agreement with Chuck Schumer. Both Senators and Joe Biden are long time Washington insiders and this agreement may be nothing more than a wink-and-nod event with the potential target of backlash resulting from the so-called Inflation Reduction Act’s demise as a way to also get rid of Kyrsten Sinema.
Regardless of the potential plots and sub-plots surrounding Manchin’s change-of-heart, Biden will be the one who has the most to lose if Manchin’s bill is defeated. That includes the renewable industries that will benefit from the money spent. Time to pop some more popcorn.