Sen. Joe Manchin (D-W.Va.) sharply criticized a proposal to force banks to report more account information to the IRS, making it much more likely that Democrats will have to drop a plan that could raise hundreds of billions of dollars for their social spending bill.
Manchin said in an interview with the Economic Club of Washington, D.C., that he had already told President Joe Biden that he was against that idea.
“Do you understand how messed up that is?” Manchin said he told the president. “This cannot happen. It’s screwed up.”
“I think that one’s going to be gone,” Manchin added.
Banks not resting easy: The banking industry, which has been lobbying to kill the reporting proposal, isn’t letting down its guard, however.
“This is one comment, and this is not over till it’s over," said Paul Merski, the Independent Community Bankers of America’s executive vice president for congressional relations, who also noted that "a lot of the community bankers in West Virginia have been pressing Manchin on this.”
The potential fallout: If the reporting requirements really are out, it will make it that much harder for Democrats to raise the kind of revenue offsets they need for a big social spending package — even as the price tag for that measure has come down considerably.
Democrats have been on the defensive over the reporting proposal for weeks now, with both the banking industry and Republicans calling it an unfair intrusion into people’s everyday finances.
Treasury Secretary Janet Yellen and key Democratic lawmakers have stressed that the proposal would only give the IRS the total amount of money going in and out of an account in a given year — not a peek at individual transactions.
Democrats also lifted the threshold for the amount of withdrawals and deposits needed to trigger the reporting, from $600 to $10,000, in a sign that rank-and-file members had some doubts about the idea.
Wyden vows ‘strong’ enforcement: Asked about Manchin’s comments, Senate Finance Chair Ron Wyden (D-Ore.), a proponent of the reporting requirement, told reporters: “We are going to have a strong provision to ensure that we have real tax enforcement. … We’ve got a lot of wealthy tax cheats.”
However, he didn’t say whether that enforcement mechanism would be the reporting requirement or something else.
Neal’s view: House Ways and Means Chair Richard Neal (D-Mass.) took credit for helping to raise the threshold on the bank reporting provision, but added: “If Senator Manchin was going to go over the goal line with us, I think that we should be listening to some of what he has to say on it.”
Industry vows to keep up the pressure: Not surprisingly, banking advocates welcomed Manchin’s comments.
"We share Senator Manchin’s view that the bank reporting proposal is ‘screwed up,’ and we are encouraged that an increasing number of lawmakers are responding to their constituents by opposing this misguided fishing expedition," Blair Bernstein, a spokesperson for the American Bankers Association, said in a statement.
Manchin and another key centrist, Sen. Kyrsten Sinema (D-Ariz.), have influenced a lot of the Democrats’ internal debates over how to craft their big tax-and-spend package. But financial services groups also say they’re not going to view Manchin’s Tuesday comments as a death knell for the bank reporting proposal.
"The Treasury has been very active in advancing this," Merski said, while pointing to further support for the proposal from Sen. Elizabeth Warren (D-Mass.). "So … we’re very cautious that this is still a live proposal.”