Legislative Update

Negotiations among Congressional Democrats over the size and scope of the package of social spending and climate action measures which constitute a large part of the Biden Administration’s Build Back Better agenda.  If they can strike a deal this week, House Speaker Nancy Pelosi (D-California) has said that she will bring the companion $1.2 trillion infrastructure bill to the floor before the president leaves for Rome later this week.

The social spending package, which Democratic leadership plans to pass via the reconciliation process, a parliamentary maneuver which will allow the bill to avoid a Senate filibuster, initially came in at $3.5 trillion.  Two key Senate moderates, Joe Manchin (D-West Virginia) and Kyrsten Sinema (D-Arizona) objected to the cost and to a number of provisions in the legislation.  In an equally divided Senate (50 Democrats, 50 Republicans) where the Democrats hold a majority only by virtue of vice president’s tie-breaking vote, Democrats could not afford to lose one vote in their caucus given the unanimous opposition to the spending package among Republicans.  This has given Senators Manchin and Sinema considerable leverage. As a result, the bill is being reduced in cost and a number of provisions are being eliminated or reduced in cost and/or duration.

Senator Manchin has expressed hesitation about creating new entitlements, balked at a number of the climate action measures, and has publicly stated that he would support a bill in the $1.5 trillion range.  Senator Sinema has expressed similar concerns and has also expressed her opposition to provisions in the package raising the corporate tax rate to 25 or 26 percent and reinstituting the pre-Trump top individual tax rate of 35 percent.

In an unusual occurrence for American presidents, President Biden hosted Senator Manchin and Senate Majority Leader Chuck Schumer (D-New York) at his private residence in Delaware to discuss the bill.  It is not clear what if any progress resulted.

In the House, the impasse created by moderate opposition to a $3.5 trillion top line cost resulted in progressive Democrats vowing not to vote to support the companion $1.2 trillion infrastructure bill until moderates supported the reconciliation bill. Unlike the reconciliation package, the infrastructure bill was crafted by a bipartisan group and passed the Senate in August. Without the votes of the progressive Democrats, who hold 95 seats in the House, the infrastructure measure would be unlikely to pass. A House vote on the bill scheduled for September 27 was postponed as a result.

Should Democrats reach consensus, the reconciliation bill will be reduced from $3.5 trillion to a figure between $1.5 and $2 trillion and the bipartisan $1.2 trillion infrastructure bill will likely pass the House. Senators Manchin and Sinema continue to hold the cards.