As the negotiations over President Joe Biden’s sweeping budget reconciliation bill drag on, Democrats are struggling to find a set of compromises that will satisfy congressional progressives while still securing the votes of intransigent senators Joe Manchin and Kyrsten Sinema. California Rep. Ro Khanna, a member of the Congressional Progressive Caucus, joins Ryan Grim to discuss the state of play. Then investigative reporter Daniel Boguslaw talks about his recent reporting for The Intercept on Manchin’s coal entanglements in West Virginia.
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Ryan Grim: At a critical Democratic meeting this week, Sen. Bernie Sanders continued to push his colleagues to go for the full, $3.5 trillion reconciliation package, arguing that trimming down significantly forced much of the agenda to be cast aside or mutilated beyond recognition.
Spending $700 billion to combat climate change over the next decade could legitimately move the country — and the world — in the right direction, making hitting some of the emissions targets within the realm of possibility. Knocking that down significantly removes that possibility.
But West Virginia Sen. Joe Manchin, also in the meeting, offered a counter-proposal: “How about zero?” he said, touching his thumb to his forefinger, making the universal sign for: Zip! Zilch! Nada!
That threat might be a bluff, because the bipartisan infrastructure bill Manchin wants includes billions upon billions in subsidies for West Virginia and for the fossil fuel industry. It’s hard to see him giving up on that.
After the meeting, I caught up with Bernie, along with a scrum of reporters, and he made the case that the test before the Senate was a test of democracy itself. The goal of the pharmaceutical industry has been to take down the entire reconciliation package as the best way to prevent the government from being able to negotiate lower drug prices. If they can do that, Sanders argued, then what is the point of elections?
Sen. Bernie Sanders: It’s beyond comprehension that there’s any member of the United States Congress who is not prepared to vote to make sure that we lower prescription drug costs. And again, I say this and you’re not going to write it. And that worries me. You have 1,500 paid lobbyists here from pharma — 1,500. They are spending hundreds of millions of dollars trying to make sure that they continue to make outrageous profits to charge us, by far, the highest prices in the world for prescription drugs. So this is not just an issue of the pharmaceutical industry. This is an issue of American democracy. And whether or not the United States Congress has the ability to stand up to incredibly powerful special interests like the pharmaceutical industry. Does that interest anybody here?
Reporters: Yes! [Yeah!]
BS: Is that an issue?
BS: OK. I would hope you would give some thought about it, guys, because lowering the cost of prescription drugs is very popular; obviously, it’s what the American people. But we are at a moment when you have over 80 percent of the American people in poll after poll after poll, they say: Lower the cost, have Medicare negotiate. The VA has been doing this for — I don’t know how many years but — many, many years. The VA is paying one-half of what Medicare pays for prescription drugs. Does it make sense to anybody in America? It doesn’t. Why are we not succeeding? Because you have an incredibly powerful, special interest who is incredibly greedy.
And this is an issue of not just lowering prescription drugs. It’s whether or not democracy can work. And if democracy cannot work, if we cannot take on the pharmaceutical industry, why do you go out to ask people to vote? Why do you ask them to participate in the political process? If we don’t have the power to take on a powerful special interest.
On Thursday night, President Biden held a town hall on CNN, laying out what was in and what was out.
President Joseph R. Biden: Look, [laughs]. When you’re in the United States Senate, and you’re president of the United States, and you have 50 Democrats, everyone is a president. [Laughter.] Every single one. So you’ve got to work things out!
RG: Democrats are now saying that a deal could be done as early as this coming week, though they said that about last week, too.
For an update on the state of play, we’re joined by Rep. Ro Khanna, a Democrat from California.
RG: Congressman Ro Khanna, thank you for joining me on Deconstructed.
Rep. Ro Khanna: Oh, it’s good to be on.
RG: And so you were at the White House earlier this week. And I was curious: What are those meetings like? I mean, the group that you went with is a number of progressives who are supportive of Biden’s plan. What’s the end goal of them of a meeting like that?
RK: I think the end goal is to get a sense of what the progressive priorities are, understand that there has to be compromise, and then to see where progressives are willing to compromise and what are places where we are very, very firm. And just to get a sense of what things matter.
So, in this case, it was very clear that climate was a big part of the conversation, making sure that we had all the programs — as many of the programs, that we didn’t cut key programs — was part of the conversation.
RG: And how many people are in the room? How detailed does Biden get in these meetings?
RK: He’s pretty detailed. It has actually surprised and impressed me. He’s got charts. And he will say: OK, for the child tax credit, here’s the amount of billions of dollars that we could have, and here are the trade-offs, and will go item by item, offering his thoughts, and that’s eliciting feedback.
RG: So I assume the Clean Electricity Performance Program, the CEPP, came up in the meeting. This is the thing that Manchin wants excluded from the final deal? How concerned are you about that? And what did Biden seem to think about how likely it was the U.S. could hit some of its necessary emissions targets without it?
RK: Oh, very concerned about that being excluded. And what many made clear to the president is that if it is excluded, there needs to be an alternative that will hit the 50 percent reduction by 2030. That alternative can’t just be: Let’s spend money on carbon-capture and nuclear, as some have suggested. There has to be either state block grants to hit those targets, or some fee on industrial facilities. I mean, there are a number of options that we’re exploring. But we left the meeting with a clear sense that there needed to be a robust alternative, if CEPP doesn’t make it.
RG: Is that possible within the $300 billion cap that it seems like the bill is drifting towards for climate?
RK: I don’t think that there is a $300 billion cap. My understanding is that the $300 billion is in solar, and investment tax credits, and production tax credits, but wholly apart from that, in my view, is the need to have a program that is an alternative to CEPP, if CEPP is not going to be in there. So I don’t think that we’re looking at that cap, at least from my understanding of the negotiations.
RG: Gotcha. So $300 billion directly for clean energy, but then there could be other money that goes towards utilities and other things. How would the block grants work? Is this sort of like if a state wants to take it up, then they have the opportunity to do so? And blue states are more likely to do so, and those are also some of the biggest power producing states, I suppose.
RK: Yeah, I mean, we’d have to flesh out the details. But that, just at the top level, that is the idea that West Virginia, some of the other states don’t have to participate, but other states that want to be aggressive in climate goals would then have the resources to provide incentives and even mandates, and that funding would be based on the state’s commitment to hitting those goals. So it would be a way of having a state-based approach, and you could probably have a dramatic reduction in emissions, even if several states don’t participate.
RG: It seems like there’s a gap between how much still has to be worked out and how much has to be filled in, and how much optimism there is that there’s going to be a deal like any minute.
Speaker Nancy Pelosi was saying on Friday: Deal is close. Leader Hoyer is saying they’re aiming to vote next week on both the bipartisan infrastructure bill and the reconciliation package. On Thursday night, though, you have Biden saying: Yeah, we have five or six things to work out. And the five or six things are like huge things! Does this all just come together over the next few days? I mean, where are you on the optimism spectrum?
RK: I’m hopeful, but my optimism is fueled by the President’s engagement, and the President’s confidence, and the Speaker’s confidence and the Majority Leader’s confidence — the fact that people are talking to each other. So I’m betting on that prevailing.
But I would say there are three broad areas that still have to be worked out. One is the Synema factor. I mean, the idea that you wouldn’t raise corporate tax rates and that you wouldn’t raise tax rates on the wealthy and could still pay for this is hard to imagine. I mean, the proposals of 7 percent minimum corporate tax — yes, I’m all for that. But are we not going to see massive lobbying against that, can we really adopt that? Or what is actually much harder to adopt is marking it to market. And my understanding is that’s one of the things Sinema has floated, that you have to be taxed before you realize capital gains.
So my concern is that her proposals are fine in the abstract, but if they actually start to become real, then you’ll see Manchin lobbying against that. And to do that in a week or two is hard, given that it took months for the Ways and Means Committee to come up with the tax proposals, and raising rates is actually the most straightforward. So that’s one big area that has to be reconciled.
Climate is another area that has to be reconciled. How do you get sufficient climate provisions that also can get Manchin’s vote?
And then the final area that I think has to be reconciled is the Medicare expansion on seniors for dental, vision, and hearing. Having programs outside of Medicare, I don’t think will cut it and that needs to have significant funding so that it’s actually effective in the first few years.
RG: One idea I’ve heard is that the way that you deal with the Sinema situation is that you isolate her by getting a deal with Manchin, and that the gamble would be that with two holdouts, she’s much more willing to play this game that she’s playing. But if she’s the very last holdout, then this thing where she only speaks to the White House, never speaks to the public, only speak to the press through anonymous lobbyists, and then floats brand-new policies at the last minute, that that game falls apart if she’s the very last holdout. Do you have a better idea than that? Or is that how you see this potentially unfolding?
RK: It seems to me that that could be one way. I mean, I know Richard Neal, the Ways and Means chairman met with her yesterday, the staff briefed her. So one way would be just to persuade her on the merits of raising the rates as a superior alternative to some of the things that she’s proposing — and an easier alternative. But if she doesn’t come around, then I suppose that’s the only way to isolate her and see if she really does vote no at the end of the day. But she’s shown to be so unpredictable that that’s a high-risk strategy.
RG: Right. Although, I don’t know what the lower risk ones are. The lowest risk is just to get her in the room and persuade her?
RK: Yeah. Or I don’t know if all the carrots and sticks have been used that Schumer may have and that the President has, if she’s really the lone holdout to finally say: Look, it’s time for you to come on board or x. But if we’ve done everything, and she’s still wavering, then sure: Have the vote and I do think that would be a lot of pressure on her. But it’s not a guaranteed outcome.
RG: Did anybody in the meeting with Biden bring up immigration?
RG: And what was his response, and what’s the sense of how expansive an immigration policy might be able to get into the package?
RK: His response is: “what the parliamentarian allows.” So the fact that he wants immigration is obvious. Some of us believe we should overrule the parliamentarian. I don’t think he will be for that, because he believes that would basically have Manchin or others walk, as they would see that as a backdoor of eliminating the filibuster. So he, in my view, wants immigration, but he’ll be fine or abide by whatever the parliamentarian decides.
RG: I’ve heard that the Senate has hope that there are other immigration provisions that they can get through reconciliation. Is that your understanding? Or have they given up on immigration?
RK: My understanding is that they’re still hopeful for some of the work permits, the work visas, some of the employment-based green cards, that those things may be seen as budget-related by this parliamentarian and be in reconciliation. So even if the broader immigration framework doesn’t pass, they’re still hopeful some of it will.
RG: And immigration, the Progressive Caucus put out five priorities that you wanted in. That was one. Climate was another. Lowering drug prices, and using that to expand public health care was another. And then affordable housing was one of them. How’s that looking? Because that seems to be, at once, kind of the biggest problem that people have month to month is the skyrocketing cost of housing, yet also seems to be the one that Democrats might be quickest to boot — well after, say, school construction, or things around education. Because education got the boot in the 2009 stimulus; kids can’t vote, so their priorities get booted. Do you expect affordable housing might survive this time? What have you been hearing about that?
RK: I do. Let me just say: On the children’s front, the fact that universal preschool is definitely going to be in I think is a very good decision and one that speaks to the moral necessity of helping kids have a fair start and the economic returns on that, even though that may not be the best politics, because kids can’t vote. So I’m pleased that that’s in there.
RG: Starting at age 3? Pre-K 3?
RK: Yeah. So every three-year-old basically gets to go to preschool, which is what it is in France, the école system there, it’s actually brilliant. In France, by the time you go to first grade, regardless of background, most of the kids are at a reasonably similar level because of their preschool. So it’s worked there, and if we could do anything similar here, that would be a major, major step.
In terms of housing, Ritchie Torres was very eloquent in the meeting. I don’t think he’d mind my sharing it. I mean, he talked about growing up in public housing, how that for him made all the difference in his life. I didn’t realize that President Biden himself had been in Section 8 housing at one point in his life, so there’s definitely an awareness of the struggles, the necessity of housing assistance. I anticipate it will be in there, but how robust and how much funding, that remains to be decided.
RG: And the fifth one, what you guys called “strengthening the care economy.” What’s included under that? Because of the child tax credit, I think that was not specifically included as a progressive priority, although obviously it is a significant one. What’s included under strengthening the care economy that is on the chopping block, and that you guys are fighting for?
RK: Well, the number of years of years of childcare and how much it will be covered and subsidized is a key issue. The child allowance — or the child tax credit — and how long that’ll be and how much of it will be refundable. I mean, my sense is right now the refundability part will be permanent, so everyone can get the child allowance, even if they’re very poor. But it’s questionable how many years.
But the way we look at that, it’s childcare, plus the child allowance, and then eldercare — the support for homecare workers being paid a decent wage and people being able to afford that.
RG: And for people that don’t don’t know what refundability means. Like you said, that means that even if you pay zero income taxes and you’re among the poorest of the poor, living in deep, deep poverty, you would still be eligible for the tax credit on a permanent basis, even if the child tax credit was only extended for a year. So you could extend it for a year, but if it remains refundable, it still has that poverty-reduction effect. Is that something that is a significant priority right now? And you think it’s possible that that refundability could be made permanent?
RK: Yes, I do. I think everyone who I’ve heard wants to have that refundability made permanent. So before the American Rescue Plan, if you were poor, if you made under $15,000-$20,000, ironically, you could not qualify for any assistance for your kids. And now, no matter how poor you are, you could qualify for up to $2,000 if it’s made refundable permanently, and then if we can get the extension made as many years then it’s up to $3,600. But at least the $2,000 per year will be there for every family, no matter how poor, if we make the refundability permanent. And I’m convinced we will.
RG: What about the paid family and medical leave provision? There’s been some criticism of the design of that policy for going through the private sector, and making it kludgy and cumbersome in a way that might make it hard for a lot of people to figure out how to even claim it. And then it could wind up being just a boondoggle for insurance companies that doesn’t filter down to benefit people, which then gives Democrats the worst of all political worlds. Was that discussed at the meeting? Is that something that’s putting it closer to elimination? Where is that provision? Biden said on Thursday night that it’s down to four weeks — from 12.
RK: So that’s still open to negotiation. I mean, I think a lot of people who have had kids have voiced the understandable point that four weeks is absolutely absurd for someone who’s experiencing pregnancy and given birth, and then has to have some time off to look after their newborn. So many progressives believe that it’s better to set the longer precedent and do it for less years than to have a short precedent for more years. But that’s an ongoing negotiation.
RG: So not just a member of Congress, but you’re a senior official within the Congressional Progressive Caucus, which is weighing in on this pretty heavily. How do you receive information about this? How do you learn what Sen. Kyrsten Sinema and Sen. Joe Manchin want out of this? How do you learn what the White House wants? Are you reading the same just news reports and tip sheets that everybody else is or —?
RK: Well some of it was directly for the president, although there’s not much in confidence, because anyone who watched the town hall last night probably got all of the information that he would have shared with us. But some of it is from reading the different reporters and their tweets, and some of it is from our leadership.
But we don’t have as much visibility into what Manchin and Sinema want, so what we usually engage in is: Here’s what we want. And then when there’s pushback to one of our ideas, then we say: OK, there’s where we could have some compromise, but here’s where it’s going way too far and we can’t compromise.
RG: And so if the White House and party leaders say: We have reached a deal, we have a framework with Sen. Kyrsten Sinema and Sen. Joe Manchin, and we’re working out the details, but we have a basic agreement, so therefore, we’re going to put the bipartisan infrastructure bill on the floor while we continue to work on this, how would you and your colleagues respond to that? Would that be enough of a good-faith gesture to move forward on that? Or when you think about Joe Manchin this week saying, “I’m comfortable with zero.” Does that make progressives say: No, no, we want to see the text?
RK: Ryan, you put your finger on, actually, the internal discussions that debates within the Progressive Caucus is: What is good enough? Is it good enough if we have the President’s word that Manchin and Sinema will vote for the reconciliation at this number with these provisions?
And some people say: No, we need Manchin and Sinema to be public. Others say: We need the iron-clad agreement. Others say: The president wouldn’t make that representation unless he really could follow through and no one’s gonna go and lie straight up to the president of the United States and put him in that position.
My sense is that we will be able to work that out to a reasonable level of confidence. I don’t think it’s the proceduralism that will get in the way. The question is: Can you get a deal in the first place where Manchin and Sinema are committed to a top-line number or to numbers that make up each bucket and that have robust climate provisions? It seems that getting that agreement is much harder than figuring out the procedure of how to move forward.
RG: I want to also ask you a couple questions about the National Defense Authorization Act, which you’re actively involved in negotiating. It’s moved through the House, but it has not gone through the conference committee yet, it has not become law. So there’s still some negotiations going on around it. You’ve been fighting for provisions within it that would restrict what the U.S. and Saudi Arabia are able to do in Yemen. What is the status of that? And do you believe that your amendment is going to prevail?
RK: Yes, and it’s an amendment that Jake Sullivan and Tony Blinken supported when they weren’t in the administration last year; Trump stripped it.
The amendment is very simple. It says if Saudi continues the bombing of Yemen, then we will stop supplying them with parts, including tires, so it will really ground the Saudi Offensive Air Force to a halt; it would force them to lift the blockade; it would force them to recognize that they’ve lost the war. And then you would be able to have internal negotiations for what the future of Yemen looks like. And the Houthis aren’t innocent actors — they have committed many human rights violations — but to suggest that the Saudi bombing continuing there is in any way conducive to peace, it’s just not understanding the reality on the ground.
So we passed my amendment. There is an amendment — Meeks’ amendment — [that] is well-intentioned on this, but I think he probably had to work with the administration to have an amendment that has more ability for waivers for the administration. He himself is supporting our amendment and hopes our amendment emerges in the conference. And so we’re working very, very hard to have our amendment emerge at the conference and to get the administration’s support behind it.
If it does, it literally would pressure the Saudis to end the war.
RG: So Meeks, who pushed the alternative amendment, is supporting yours. Who were the main obstacles at this point, then, to getting that into the final package?
RK: The Senate — the Republican ranking member and the Senate chair of Armed Services has to be on board, and then the administration has to publicly come out for our amendment. Those are the two places that we need support for it to be part of it.
Adam Smith, who is the House chair, is supportive of our amendment and would be fine with that language making it in in the final bill.
RG: Have they given any reason why they haven’t come out yet, either Jack Reed in the Senate or the White House?
RK: They’re still trying, I think — in the White House’s case to engage in negotiations. I know they’ve been taking different trips to Saudi Arabia. So my guess is they’re hoping to see if they can resolve it before that.
I don’t know on the Senate side. Now you also have the Senate Republicans and how much of an issue this is for them, so they may say that they don’t think that the Republicans would sign off on this amendment with the NDAA. Ultimately, in my view, this comes down to the administration supporting the amendment. If the administration is strongly for it, I believe the amendment would pass.
RG: And meanwhile, it is not getting any significant press coverage, but the U.S. is in the middle of planning to spend billions, upon billions, upon billions of dollars, modernizing its nuclear war capabilities, building an entire new fleet of nuclear ICBMs, and otherwise, just investing extraordinary amounts. It began under Obama, continued under Trump, but now it’s still ongoing. What on earth are we thinking of doing this? And is it too late to slow this down or stop it?
RK: I have been vocal on this for the past two years, as has Rep. John Garamendi. The idea that we should be modernizing the ICBMs makes no sense.
I mean, first of all, the ICBMs aren’t strategically as valuable as having nuclear capability on a submarine or an Air Force, because the ICBM is a sitting target. Second, those who have studied this, like Bill Perry, Sam Nunn, have said that ICBMs are the biggest risk for accidental war, because you can’t call back when you launch an ICBM. If you deploy an airplane or a submarine, you can still reverse course before the missile goes off.
So, for those reasons, we ought to be very skeptical about putting more money into new ICBMs. And the Minutemen currently are working, and there’s a clear view that you could actually maintain and approve them; there’s no need to upgrade them to this new missile system.
So we have tried through the Armed Services Committee, with the support of Adam Smith, to say: Let’s stop some of this funding. Let’s slow it down, at the very least, let’s study the issue, what is the rush?
We haven’t succeeded yet. But we are going to continue to try to stop this massive investment of $1 trillion dollars over the next 20-30 years on nuclear modernization.
RG: And also: Who are we going to nuke?
RK: Yeah, I mean, they claim it’s deterrence. But the ICBM Minutemen are perfectly capable —
RG: I think we have enough deterrence, if nuclear weapons are deterrence.w
RK: It’s not like they don’t work or they’re not functional. If you could say: OK, if there was some technical error, or they couldn’t be launched to something that you could make some argument, but they’re perfectly functional.
RG: Yes, I think the nuclear bombs that we dropped on Japan toward the end of World War II, those are deterrent enough. It’s not as if countries would look at that, look at Nagasaki and say: Well, if they haven’t improved their technology since then, sure. We will be able to withstand this. I mean, it’s bringing Armageddon down from the sky. Bringing it down in a slightly fancier way doesn’t seem to have any —
RK: Right. And that’s the thing. The burden should be on the people who want the new nuclear weapons to say why it is that they’re needed. What’s wrong with the Minutemen? Why can’t we continue to maintain them, even if you need to have some spending on enhancing them. To build new ICBMs makes no sense from a resource perspective, makes no sense from the perspective of triggering accidental nuclear war, and just is an unnecessary expense.
RG: Right. And hey, if you need to pay for this reconciliation package: There’s $1 trillion dollars!
RK: Yeah, I mean, that’s over 30 years, but you could at least get $100 billion, and every one adds up; $100 billion is significant in terms of you could probably get every person dental or hearing benefits in this country, ever senior.
RG: Congressman Khanna, thank you so much for joining me.
RK: Thank you. I just want to end by saying that I think the progressive movement should be very pleased, at the very least, how we’ve broken through with policies like paid family leave, childcare, universal preschool, benefits for seniors now being mainstream and something that we recognize our democracy needs, as opposed to being an outlier of all major democracies.
Now, I recognize that there may be a disappointment in the compromises we have to make and differences of opinion even on how far to compromise. But regardless of where you are on that scale, people should know that the only reason that these policies are finally being considered as mainstream and popular is because progressives have been fighting for that for the last 20 years, and Sen. Bernie Sanders and Sen. [Elizabeth] Warren and others fought for them in the presidential election. So the mobilization is making a difference.
RG: And it is interesting to think about the way that the terrain has changed. The conversation is being held on a kind of progressive turf. I was just looking back at what House Democrats ran on in 2006. And they came up with this agenda, kind of the epitome of Rahm Emanuel, the 6 for ’06, and six things there was: Allowing Medicare to negotiate drug prices, so they’ve been fighting for that for 15-plus years now, and then it was allowing students to write off a portion of the interest paid on their student debt, right? That was one of the six. That was the level of ambition that Democrats had that qualified as a thing that they would champion, and say to you: If you elect us, this is what we’re going to do for you, some of your interests on your student debt will be tax deductible.
So we’re in a completely different place today. You’re right.
RK: We’re in a different place. Even the mainstream! I mean, obviously, we have wonderful alternative media and independent media, with this podcast, with The Intercept. But finally, even mainstream media, now you look at people who are being asked and in the center of conversation, it’s a lot more progressive than even when I came to Congress five years ago.
So the progressive movement now is becoming the mainstream of the party. That doesn’t mean that we can let up in any way on energy; we are still now faced with this intense lobbying, and we see that they can just get one or two senators or one or two members of Congress to kill things, even if you have mainstream consensus. So we’ve gone from no longer being a fringe or an outlier; now we’re the mainstream, but we’re seeing that even the mainstream can be defeated with special interest. So it’s going to continue to take mobilization and lobbying. My only point is don’t have a defeatist view of: What’s the point of all this? There has been tremendous progress.
RG: Right. Medicare still can’t negotiate drug prices, but it’s much closer than it was 15 years. [Laughs.]
RK: Much closer. And this is why, if we could get this bill through the precedent of saying: OK, we’re a country that believes that paid family leave, in childcare, in universal preschool, in dental, vision and hearing for seniors, that’s that’s a pretty significant shift from the view that the era of big government is over.
RG: We’ll see. A couple big weeks ahead.
RK: We will see. We will see.
RG: Well, thank you again for joining me.
RK: Thank you, Ryan.
RG: That was Ro Khanna.
Joining us next is Daniel Boguslaw, who has a new story in the Intercept about the career of the man at the center of the negotiations, Sen. Joe Manchin.
RG: Daniel, welcome to Deconstructed.
Daniel Boguslaw: Hi. Thanks for having me.
RG: Sure. So you have a feature on Sen. Joe Manchin out in The Intercept today. I didn’t realize that a young Joe Manchin had met JFK back in 1960 as Kennedy was working in West Virginia, in order to win that state to prove that he could win over Protestant voters. Tell us a little bit about that.
DB: Yeah, I think that’s one piece that’s certainly been left out of anecdotes in national coverage these past few months.
Manchin’s family really served as sort of a conduit for Kennedy’s landslide win there which propelled him onwards to seize the presidency. He tells this anecdote in a press release around I believe the anniversary of Kennedy’s death, where basically the Kennedy clan came down to his family home in Farmington; he says he was working on his go-kart at the time and he got called upstairs to basically shake hands with the Kennedy family before they set off across the state trying to whip votes.
And it’s a really interesting parable to think about one of his first introductions to national politics. And the people who would shape his political career, one of the targets that his father had was to try to emulate this sort of political dynasty.
As I talk about in the piece, there are parts of that that were certainly emulated and other parts that were not.
RG: Yeah. And you say that A. James Manchin, who was Manchin’s father’s brother, so Manchin’s father was a local mayor, his uncle was a local state representative, and became the go-to Kennedy man in 1960. So tell us about A. James and Manchin’s father.
DB: Yeah. So A. James was the point man on the tour. He actually started off the whole dynasty. He was elected to the House of Delegates when he was only 21. And he had been friends with Arch A. Moore, Jr.; he was born into a political family, he’d become the governor of West Virginia, and if that name sounds familiar, it’s because he was the father of Shelley Moore Capito, who’s the other senator from West Virginia. And so that was one of their first connections and one of their first inroads into politics.
RG: Right. And they talk in West Virginia about the Moores and the Manchins.
RG: Those are the two kinds of overlapping families that kind of control politics — one one Republican, one Democrat, but that’s not really the point in West Virginia.
DB: Right. Right. They were kind of linked from the beginning. Moore was later convicted on all these felonies — tax fraud, extortion — but clearly that didn’t take a hit on his family, considering the success his daughter had.
RG: Right. So then Manchin himself goes into politics pretty young, as a state senator; after being elected to the State Senate, he quickly sets up his own coal company, Enersystems. You have some reporting on an interesting little saga of Enersystems from the late 80s and 90s that begins your tale of federal investigators circling people around Manchin’s for a 30-year stretch. What happened in the late ’80s, ’90s.
DB: Sure, so just to give a brief context, Enersystems basically started as a brokerage firm, where Manchin was just a middleman and that built up a lot of contacts, but he wasn’t sort of directly involved in the moving, and production, and sale of coal.
And that sort of changed right around ’89-’90. And basically I obtained documents showing that in 1992, there was a federal investigation into a mine called Peabody Coal’s Federal No. 2 mine, where essentially they were looking into trucks disappearing from the logs. So, basically, people involved in this mine were deleting trucks and trying to make those charges to the mine operators disappear so that they could turn around and sell that coal for a profit.
Now, when this investigation blew up, and people started actually getting charged, there was no mention in any of the reporting or any of any of these public documents about Manchin’s company Enersystems. What this affidavit that I obtained shows was that actually Enersystems was being looked into by an IRS special agent.
RG: And so this is a few years before Manchin then runs for governor in 1996. How did this case resolve?
DB: So ultimately, a number of people in this case were charged. The security guard at the mine who helped collaborate, the mine supervisor, and two of the people who were purchasing that coal were also charged.
When we reached out to one of the loaders who was also charged, a worker who aided in this crime, and asked him: How was it that this other company that was named in this affidavit wasn’t charged? He said: “Because they had connections and I didn’t.” And then he dropped off and didn’t want to answer more questions.
RG: And were they ultimately convicted, most of these — ?
DB: They were. They were.
RG: OK. So then Manchin lost the Democratic primary in 1996; Charlotte Pritt, who won the primary, kind of a populist FDR Democrat, she blames Manchin to this day, for losing in the general election, for flipping and supporting the Republican in the general election.
And people cite the ’96 Republican victory in the governor’s race, even amid Bill Clinton’s landslide win in the state, Jay Rockefeller won a Senate race in a landslide as a Democrat — even amid that, the Republican ends up winning and the state begins shifting toward Republicans.
So, four years later, Joe Manchin wins the secretary of state race; in 2004 he runs and wins the governor’s mansion, which he had sought eight years earlier. So then you write about another investigation while he was governor. Can you talk a little bit about that one?
So if you fast forward from 2004 to 2010, he’s put in his time as governor and now he’s setting his eyes, and he’s building to something bigger.
So it’s in 2010 that Robert Byrd dies in office. This is the longest serving U.S. Senator. He still holds that record. Similarly powerful West Virginia politician who’s built up all these connections, and he leaves this gaping void which Manchin is obviously extremely well-positioned to fill and it’s his intention to fill.
But because of the timing of his death, Manchin has to appoint an interim senator before the special election can take place. And so he appoints this low-level figure named Booth who who used to work for him as legal counsel as he awaits the special election, which he’ll go on to run in and win.
Right in this time period between that special election and Byrd’s death, all of a sudden this wide-sweeping federal probe starts to descend. This probe is initially focused on basically a contractor and his illegal manipulation of the bid system, to win bids to basically redecorate Manchin’s office, Manchin’s chief of staff’s office, as well as other rooms in the governor’s mansion. But it quickly expands to ensnare the highway department, the aviation department that operates the state’s aircraft, and really starts to expand outwards, touching all these different agencies within Manchin’s administration.
RG: And so what ends up happening with that investigation?
DB: So ultimately, the name of this contractor is released, but his sentencing gets pushed off until after that special election. And basically, he’s the only one charged. He’s charged with fabricating these false bids, and nothing else really comes with it.
RG: So prosecutors at the time said that his history of fraudulent behavior, and the fact that he only provided — what did they say? What he provided was of little use or “limited usefulness” was a reason that he ended up getting sentenced despite the fact that he’d done something like 100 wiretaps as part of this investigation.
You write that the judge was quite confused: Like, wait a minute, why are we sentencing this guy when he cooperated with this massive probe that West Virginia has been talking about for weeks or months now. And yet, he’s the only one who’s going down for it?
DB: Right. He recorded over 100 conversations, he leveled accusations of public corruption against at least two different state workers, and had been cooperating for years. And so the idea that there would be this massive investment of resources into this probe, which was also obviously extremely broad, and for anything to come of it was very confusing. But to really dig down and understand that is difficult because those records are sealed, and so we really only have bits and pieces and Clark Diehl, the informant in question, didn’t respond to our request for comment.
RG: And what did his own attorney say about why he thought he got the treatment that he got?
DB: So his lawyer’s line was: “The Attorney General changed, the United States Attorneys changed, governors and senators changed. And the United States prosecution of Alaska Senator Ted Stevens imploded.”
And that last part is funny, too, because that investigation, you know, also centered around illegal payments for renovations. But essentially the point is that all these things got shuffled up, there was no longer consistency, there was no longer a priority, so it just kind of went away.
RG: Right. And that’s the claim of his attorney. We can’t verify that, but that is what the attorney claimed at the time. You also talked about this interesting 2018 investigation that linked back to the Peabody coal mine. Could you talk a little bit about that one?
DB: Sure. So one of the places that this stolen coal was being shipped to were these docks that are throughout West Virginia, and host barges to help move coal throughout the state. And those docks were owned by someone named James Laurita. Now, at the time, charges weren’t brought against him. But it was notable that his docks were named in this affidavit that we obtained.
If you fast forward from ’92 all the way to 2018, this same character gets indicted on campaign finance charges, basically instructing members of his corporation to donate bonuses that they receive to a number of West Virginia politicians including Manchin. The reason that continuity is interesting is because another company that Laurita is an officer at operates the mine that was the number one supplier to Manchin’s Enersystems. So it again kind of broadens this strange web and these characters that keep coming back over and over again, and who seemed to be unable to disentangle themselves from constant investigation.
RG: And he also was, in the end, not convicted, right?
DB: That’s correct. Yeah. Right, so in 2018, that case ended in a mistrial. And the U.S. attorney at the time told me that it wasn’t an approved and efficient use of government resources to seek a retrial.
RG: And then the other thing you uncover is this instance during the time that Manchin was governor of a rate increase being granted to a power plant, a utility that was getting its electricity from this particular power plant, the state approved a rate increase from what something like $27/megawatt to something like $33-$34/megawatt so really whacking people’s electric bills.
What you’ve uncovered is that Manchin’s chief of staff was involved in lobbying for that rate increase, and also that the coal company — the plant that benefited from the rate increase — was the main buyer of coal from Manchin himself.
So can you talk a little bit about how this rate increase came about, and what Manchin’s alleged role in it is?
DB: Sure. So basically, this rate increase was critical for maintaining the financial viability of the Grant Town Power Plant, which was the largest purchaser of Enersystems coal. And basically what I learned was that Manchin instructed his Chief-of-staff Larry Puccio to meet with Mon Power lobbyists to aid in getting the public service commission to approve this rate increase and maintain the viability of this plant.
RG: Which then drives up the price of electricity for consumers, but makes the plant much more viable.
RG: So you did get a response from Sen. Manchin. I want to read that here. His spokesperson said: “Sen. Manchin has devoted most of his adult life to public service. At every stage he has been compliant with financial and ethical standards. He has never been the subject of a federal investigation.”
So Daniel, terrific reporting. Thank you for joining me on Deconstructed.
DB: Yeah. Thanks for having me.
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RG: That was Daniel Boguslaw, and that’s our show.
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