sounds get next sunday morning. e midterm elections, democrats revive a tax and spending package and hope voters will reward them if it passes. last week saw a surprise development in the protracted build back better saga. west virginia senator joe manchin, who seemed opposed to a sweeping package, reversed course, and joined his fellow democrats to support an economic bill including hundreds of billions of dollars in tax increases for some corporations and the wealthy aimed at fighting inflation, cutting healthcare costs, and combatting climate change. we'll talk with him and get the gop perspective on the bill from pennsylvania republican senator

pat toomey. all this as we had more dreary economic news. the fed raised interest rates again, and the economy tshank fr the second straight quarter. inflation is at a 40 year high, but the job market remains strong and gas prices have dropped. the president's take -- >> that doesn't sound like a recession to me. thank you very much. >> we'll see what minneapolis federal reserve president neel the "face the nation" political panel and the tracker poll are back. we'll have an skiestimate on wh the race for control of the house sits and political analysis. it is all ahead on "face the nation." good morning and welcome to "face the nation." margaret is off this week. we have got a lot to get to today, and we begin with the news that president biden is

experiencing a rebound case of covid. most likely due to his taking the drug paxlovid. his return to isolation, but took to twitter yesterday. >> hey, folks. joe biden here. tested positive this morning. going to be working home for the next couple of days. and feeling fine. everything's good. >> though the president said that the rebound cases do happen with a small minority of folks, the actual number is difficult to track and estimates vary on just how many paxlovid users are afco.west virniaator joemanchin. he's been negotiating with chuck schumer on the inflation reduction act and the final agreement was made in a zoom call. democrats say the bill would reduce the deficit by $300 billion, revenue would come from a minimum corporate tax rate, expanded irs tax enforcement and by tightening the so-called carried interest loophole that benefits some investment managers. the bill would also make the

largest investment in fighting climate change in u.s. history. nearly $370 billion will go to new tax credits for renewable forms of electricity, electric vehicles and grants to automakers to increase efficiency. on healthcare, the bill would keep the affordable care act premiums from increasing and cap out of pocket prescription drug costs for medicare recipients at $2,000 per year. medicare will also be able to directly negotiate prices with drug companies, reducing costs. we go now to west virginia democrat joe manchin. senator, welcome. i hope you're feeling better from the covid. let me start with -- >> i am, john. thanks for having me.ieit. let me start with something you to said back in 2010 in a debate when you were running for senate. here's what you said. >> i don't think during a time of recession you mess with any of the taxes or increase any taxes. >> so that's become your republican colleagues' favorite

quote to roll out now that you made this agreement with chuck schumer that has a tax piece to it. why did you change your mind? >> john, i didn't change my mind. i never changed at all. this is fighting inflation. this is all about the absolute horrible position the people are in now because of the inflation costs. whether gasoline, whether food pricing, whether it is energy prizing and it is around energy mostly driving the high inflation. this is going to take care of that because this aggressively producing more energy to get more supply, to get the prices down. that's what we're doing. but we didn't raise taxes, john. the taxes were corporate tax in america in 2017, before the republican tax cut, was 35%. they cut it to 21%. 14% reduction. all the people that i know are paying 21% or more. all the larger corporations, but the largest corporations of a billion dollars of value or more don't even want to pay the minimum of 15%.

it is basically closing -- this is a fairness in closing the loophole. i'm not raising any taxes. i never thought the people weren't paying at least 21 and i went -- >> let me ask you, on the raising -- okay, so, i understand what you're saying about closing loopholes, but the republican criticism, which attaches to what you said in 2010, is when you increase taxes, by closing loopholes, you hurt supply. and during inflation, you want a lot of supply. and so even though this might not be a tax increase relative to previous rates, the taxes for certain companies will go up, which will make them produce more so the theory goes and that will hurt inflation. >> let me just say this, john, in the last two years there have been massive record profits across the board by these largest corporations, massive profits and it is the lowest capital expenditure in the last two years. that didn't drive it. what they all told me is we want security, we want to have some type of a pathway forward in

permitting and regulations. they're strangling us. this is what we're doing, we're streamlining the regulations people have to live within. basically accelerating how we get things to market, how quick we can produce things, how quick we can produce more energy and how we can develop more technology and using that for our benefit. we're talking about also batteries for electric cars, if you want to get a discount on electric car by buying an ev, the battery better be made in america. better be sourced in north america. better be processed. >> your republican colleagues think you and chuck schumer did something underhanded, by essentially it looked like there wouldn't be anything big passed and you changed course, worked out something with schumer. senator cornyn, the republican from texas said that unveiling this agreement between you and senator schumer was a declaration of particular warfare. >> it is such a shame, john cornyn is a good friend of mine, such a good man. and for the politics to be so

toxic right now, first of all, i never thought this would come to fruition. i never spoke with anybody about any of my colleagues because they were frustrated that nothing happened for so long. on the other, i could never get to build back better, $3.5 trillion spending bill th. everything my republicans talked about, reducing the amount of debt that we have, we're paying down $300 billion first time in 25 years, they have got to like that. and next of all, they wanted more energy, i want more energy, we're going to be producing more energy. there is an agreement that we're going to be drilling and doing more we can to bring more energy to the market, that reduces prices, they like that. and there is going to be a streamlining of permitting, john, they got to like that. i'm hoping they cool off, take a good look at the bill. theirrgumt is, this matters because you're working with the republicans on other pieces of legislation and susan collins, one of those republicans you're working with, says that this break of trust, which is what they're calling it, you made certain

representations they would say to republicans and broke your trust, she said, susan collins said it is a very unfortunate move that destroys the many bipartisan efforts that are under way. in other words, whether it is on election reform, or same sex marriage, that the well has been poisoned. >> here is the thing, i think susan collins is, you know, my very dear friend. we worked almost on everything together. but the thing of it, i never told anybody that i wasn't going to do something. if i had a chance to fix the energy policy of the united states of america, and i didn' do it, shame on me. if i had the chance to reduce the amount of inflation of people in west virginia and across the country are enduring right now, shame on me. i never thought they would come to an agreement and basically recognizing with this administration working, with president biden's administration and working with chuck schumer and all of them who were going a different direction and were very upset with me for so long that they would ever sit down,

but i guess this thing is has become truly horrible for the -- for families across america. so now to have a piece of legislation that we have energy, and we have investments, for new energy, but basically that's a responsibility, you can walk and chew gum, you have a balanced approach. this is solutions americans want. we were able to provide these solutions, let's not make them political, john. >> you and senator schumer have a deal. a lot of democrats who used to be very angry with you are now saying nice things about you. senator kyrsten sinema, have you talked to senator sinema whose vote is still unknown on these bills? and where do you think she'll go? because if she doesn't vote for it, it doesn't happen. >> yeah. senator sinema is a dear friend of mine, we work very close together on so many pieces of legislation. and she is so involved in this legislation. when you think about it, she's the one that really negotiated and worked very hard on getting medicare, allowing them to negotiate for lower drug prices, saving $288 billion.

that's tremendous. which i support her completely on that. she's always been adamant about we're not going to raise taxes and i agree with her wholeheartedly, very, very carefully evaluations that we wouldn't raise any taxes. >> have you tried to -- >> the last scrub that was done -- no, we don't -- i never lobby my colleagues on that. i just basically put the facts out, try to answer questions, i'm always trying to negotiate with them, if they want, and i try to, and sometimes we don't get there, they get frustrated but we're always looking at the next opportunity to improve the quality of life in america and that's what we're doing. >> finally, senator, a vote around a bill this week that would provide healthcare to millions of veterans exposed to toxic fumes in burn pits during their deployments. republicans who had previously voted for it voted against it. pat toomey, republican from pennsylvania, who will be on, who you worked with expetensive in your career, is worried that adds to the deficit. that's something you care about.

does pat toomey have a point here? >> pat toomey is going to get an amendment. he'll have a vote on that. pat, come on, let's go. let's put it out there, put the facts out there. pat is a good man, good friend of mine, i'm sorry he won't be running again, he's leaving the senate, he's been a quality valued member of the senate and represented pennsylvania extremely well. he's been a friend. we're going to work through this. i haven't seen the amendment. i'll be briefed tomorrow morning on it and everything. but pat's going to get his amendment and let's see where it goes. >> on that, senator joe manchin, thank you for being with us. "face the nation" will be back in a moment. stay with us. so your camera cae in the dark with night sight fix your photos with magic eraser photograph all skin tones accurately with real tone and last up to 72 hours with extreme battery saver it's all you want in a phone. google pixel 6a switch it up, and get the all new google pixel 6a.

so, you're 45. that's the perfect age to see some old friends, explore new worlds, and to start screening for colon cancer. yep. with colon cancer rising in adults under 50, the american cancer society recommends starting to screen earlier, at age 45. i'm cologuard, a noninvasive way to screen at home, on your schedule. and i find 92% of colon cancers. i'm for people 45+ at average risk for colon cancer, not high risk. false positive aative remay. ask your provider if cologuard is right for you. we go now to republican senator pat toomey of pennsylvania. he's in zionsville this morning, good morning, senator. >> good morning, john. >> let's start with what the democrats are calling the inflation reduction act. you and other republicans are not a fan. what is your principle critique? >> well, it is going to make inflation worse, actually. so they have got a big corporate

tax increase that is going to probably make this recession that we're in worse, all of this spending is unnecessary, it is going to exacerbate inflation, it is not going to reduce the defiit, and what did senator manchin get for this? i'm a big fan of senator joe manchin. we are friends, as he said. i like joe very much. i think he's gotten taken to the cleaners. he's agreeing to all this bad policy and in return for which he's been promised there is going to be some kind of pro energy infrastructure bill sometime in the future. but, first of all, i thought we did that in the infrastructure bill. secondly, what is the text? but most importantly, why isn't that in this bill and the answer is because democrats don't support it. so this is going to do a lot of harm and there is not going to be a corresponding benefit. >> a lot in there. let me focus on inflation, which everyone else is focused on. the committee for responsible budget, which has been a fan of yours in the past, and even in the present, said this, though reconciliation was designed for

deficit reduction, this would be the first time in many years it was actually used for that purpose. with inflation at a 40-year high and debt approaching record levels this would be a welcomed improvement to the status quo. they and others who looked at this say it will affect the -- it will affect the deficit, lower the deficit in this legislation. >> yeah, so, here's why we won't. because they use the same gimmick that senator manchin said he was opposed to in the past. they claim the revenue over a ten-year window from their big tax increase, and their price controls, and then the expenditure they acknowledged, they pretend is only going to be for three years. that's the subsidies for wealthy americans. that's an obvious political payoff. the last time they had to do this they said it would be for two years. it is about to expyre and they can't have it expire before an election, so they're extending it, but only for three -- they have no intention of ever ending the obamacare subsidies over a ten-year window, that wipes out

the purported deficit reduction. >> but so you're assuming bad faith in the future, but in this case, they extended it and they found pay fors so it would be deficit -- so it would decrease the deficit in this moment. it is plausible, given what is in front of us today, it could happen again. based on what is before us, it is possible to happen? >> there are also counting huge amounts of additional tax revenue from giving more taxes -- money to the irs, which the cbo does not agree with, they're also not taking into account how much our economy will slow down from this big corporate tax increase that will mostly hurt manufacturing and domestic investment. these numbers are very, very dubious. >> quickly on that question of production, i mentioned to senator manchin the idea of supply goes down when you tax these companies, he said it is a matter of fairness that these

breaks that they have will represent from a previous tax cut and this is a matter of fairness in america. >> so look at -- what is the source of this tax increase? it is very simple. when we made our tax reform in 2017, what we did is we said if a business takes its profit, and invests it back in its business in the form of capital investment, new equipment, new plan, expanding their capacity, then we said you will be able to deduct the cost of that in the year in which you incur the cost. the democrats are saying, we got to bring that to an end despite the huge surge in capital expenditure that you brought us and instead they're going to say you only get to recognize a small fraction of that, they're going to raise the cost of investing in a business. >> let me ask you about the legislation this week, the packed act, which i know you want to talk about, it is providing healthcare to millions of veterans who were exposed to toxins. 123 republicans in the house voted for this, 34 senate republicans voted for it, same bill, this week the bill didn't

change, but the republican votes did. why? >> no, the republican votes didn't change on the substance of the bill. republicans have said we want an amendment to change the provision that has nothing to do with veterans healthcare. the republicans support this. the democrats added a provision that has nothing to do with veterans healthcare. and it is designed to change government accounting rules so they can have a ha$400 billion spending spree. my amendment will not reduce veteran spend big a time. >> they did get 134 republican votes and you have plenty of republicans still voting for it, it seems like making this seem like a democratic gimmick obscures what is your real point and your life-long interest, which is this is about budgeting. and whether the rules should e tight now or whether as those who defend this bill say allow congress to work in the future to be fiscally responsible. isn't that a more accurate way

to think about what you're offering? >> well, loet's be careful here you mischaracterized this when speaking with senator manchin. we're expecting the new expenditures will increase the deficit and we accept that as a price we have to pay for people who served the country. what i'm objecting to is a budgetary gimmick, a slight of hand in accounting rules that will allow totall unrelated spending of $400 billion over the next ten years, that's what we think shouldn't be in this bill, never should have been. >> there is a debate about that. they think it can be fixed later. let me ask you this, i read your amendment language which your language doesn't just deal with this other thing. it actually caps annual expenditures for the toxic fund and after ten years a s it goes away. >> what it caps is how the

government accounts for the transfers. there is no cap on the amount of money that goes over, there is no cap on the total program. look, if an honest democrat is evaluating this will if my amendment passes, not a dime changed in spending on veterans programs. what changes is how the government accounts for it. >> i understand, but the accounting change, as you know, is a result -- the reason they put it in that other bucket is that it doesn't subject it to the normal triage of budgeting and therg values at stake here are more important than leaving it to the normal cut and thrust of budgeting. i would ask you this, but it is worth protecting is their argument. it is about priorities. budgets are a way that people talk about priorities in a government. this week, many of the republicans who switched their vote voted for semiconductors. in 2017, republicans lifted the caps on discretionary spending. we also had a situation where lots of spending gets done in defense, you have been consistent with deficit reduction. but lots of other republicans when they think it is in their

interests say let's lift the caps, let's not be so fastidious about the budget. why is it important to be fastidious to veterans but not chip manufacturers? >> once again you're completely mischaracterizing this. we are all accepting that there are no changes to the projected spending path for all veterans programs the existing veterans programs and the new ones under the packed act. what we're objecting to is an accounting g ing gimmick, and m republicans think we should loosen up the budget rules so democrats can go on a spending spree on things that have nothing to do with veterans healthcare. >> democrats have to be in charge in the future when that spending happens, and they may very well not be. but thank you, senator, for wou restriction on republicans as well. >> and you have the last word. senator toomey, thank you. we'll be right back with more "face the nation." stay with us. oo... meta portal with smart sound.

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we turn to the president of the minneapolis federal reserve, neel kashkari. good morning, neel. >> good morning, john. thank you for having me. >> thank you for being here. okay, everybody wants to know, inflation still hot, what does it look like to you? >> it is very concerning. you know, we keep getting inflation readings, new data that comes in and as recently as this past week, and we keep getting surprised. it is higher than we expect. and it is not just a few categories. it is spreading out more broadly across the economy. and that's why the federal reserve is acting with such urgency to get it under control and bring it back down. >> wages within that, what does the wage picture look like in two different ways? we measure it on its own and relative to inflation. >> for most americans, the wages are going up. but they're not going up as fast

as inflation. real wages, real incomes are going down. that's why families are finding it increasingly hard to make ends meet when they go to the grocery store, when they buy necessities, they're not able to buy as much because they're getting a real wage cut because inflation is growing so quickly. typically we think about wage driven inflation. wages grow quickly and then that leads to higher prices in a se self-fulfilling spiral. that is not yet happening. high prices and wages are now trying to catch up to those high prices. those high prices are being driven by supply chains and the war in ukraine among other factors. and so we need to get the economy back into balance before this really does become a wage-driven inflation story. >> let me ask you about a figure that people may not know as much about. everybody knows about the consumer price index on inflation. the economic cost index came out this week, and some economists look at that as a signal for inflation. tell me what you saw in the economic cost index this week.

>> well, we have a lot of different measures, for example, of wages, of what is happening to wages and eci as i call it is one measure that is a robust measure of what is happening to wages and what is happening to benefits. and wages continue to climb. on one level, it is a good thing. we want americans to be making more esre climbing such that the economy shows it is overheating, that tells me that the federal reserve has more work to do to bring inflation down, to bring the economy into balance. just at its basic level, inflation is when demand is outstripping supply. we know supply is low because of supply chains, because of the war in ukraine, because of covid. we hope that supply would come on line more quickly, that hasn't happened, so we have to get demand down into balance. i hope we get some help on the supply side, but that doesn't change the fact that the federal reserve has its job to do, and we are committed to doing it. >> we have 30 seconds left. help on the supply side, what does that mean?

>> well, i talked to a lot of global businesses who are trying to get their supply chains sorted out so they can meet their customers' needs and make sure there are products on the shelves. there are some signs it is getting better, but it is taking longer than they thought and i thought. that means we cannot wait until supply fully heals. we have to do our part with monetary policy. >> we're going to take a commercial and be back to continue this conversation with neel kashkari. stay with us. ruby's a1c is down with rybelsus®. my a1c wasn't at goal, now i'm down with rybelsus®. mom's a1c is down with rybelsus®. (♪ ♪) in a clinical study, once-daily rybelsus® significantly lowered a1c better than a leading branded pill. rybelsus® isn't for people with type 1 diabetes. don't take rybelsus® if you or your family ever had medullary thyroid cancer, or have multiple endocrine neoplasia syndrome type 2, or if allergic to it. stop rybelsus® and get medical help right away if you get a lump or swelling in your neck,

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genesys, we're behind every customer smile. now, welcome back to "face the nation." we continue our conversation with minneapolis federal reserve's neel kashkari. neel, let's pick up where you left off on the question of supply. when i was talking with two senators earlier, there was this debate about whether taxation on companies that don't pay a minimum level of taxation will have their supply hurt. so, in other words, you tax them, supply goes down, that hurts within inflation. what is your assessment of that? >> you know, over the long-term, that's probably true on the margin. people say that about raising interest rates. why raise interest rates, that will make it more expensive for firms to invest and that is going to not help with the supply side. that's