Congressional Update: Build Back Better-Lite?

Lawmakers departed Washington Friday with a recess scheduled for this week and Democrats reeling from a lack of progress on voting rights and filibuster reform.

As for the latest on the stalled Build Back Better (BBB) Act – Democrats’ $1.75 trillion climate change, tax, health care, and education package – President Biden said that Congress “can break the package up, get as much as we can now and come back and fight for the rest later.”

President Biden pointed to the climate and clean energy provisions in particular as a starting point.

In the past, Sen. Joe Manchin (D-WV) has shown an openness to engage on climate provisions, which generally include expanded clean energy tax credits for wind, solar, nuclear, hydropower, and carbon capture.

That said, Sen. Manchin has set a very high bar for passing even pieces of the BBB, noting that he wants to see inflation, COVID, and the national debt dealt with first, adding that any future negotiations on BBB-lite will be “starting from scratch.”

After recess, much of February will focus on Senate Democratic leadership trying to find compromise with Sens. Manchin and Kyrsten Sinema (D-AZ) and working to pass some version of a climate/social safety net bill before the President’s March 1 State of the Union address.

Keep in mind, however, that March 1 is more of an aspirational goal rather than an actual deadline, i.e., there is no government shutdown-type situation that would force action by March 1.

Democrats remain divided over a myriad of tax issues, including the child tax credit, the State and Local Tax (SALT) deduction, and – importantly – how to pay for any climate-focused package.

The climate provisions in the House-passed BBB cost approximately $550 billion. Democrats will likely continue to seek a deficit-neutral bill, which necessitates offsets.

As such, though Sen. Manchin has said negotiations would be starting from scratch, the current pay-fors in the House-passed BBB comprise the most likely pay-fors in a revised bill, but no decisions have been made.

From a political standpoint, the White House and Democratic Congressional leaders will continue searching for compromise with razor-thin majorities and pushing for a legislative win ahead of the State of the Union and looming November midterms.

Bottom line: Even a slimmed down version of BBB faces an uphill climb.

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