Build Back Better Act’s Proposed Tax Changes on Indefinite Hold

A few days before Christmas, West Virginia Democratic Senator Joe Manchin announced on both Fox News Sunday and his website that he would not support the Build Back Better Act (BBBA), President Biden’s broad economic legislation that was intended to use a series of proposed tax hikes to offset new spending on items such as universal preschool, paid family leave, child nutrition assistance, Medicare and Medicaid expansion and clean energy measures.  Manchin cited several factors for his opposition, including the bill’s structure, high inflation, the national debt, the spread of the COVID-19 Omicron variant, and geopolitical uncertainty.

President Biden and other congressional leaders had already halved the size of the original proposal, but they did so by including pieces of as many of the original subjects as possible, just funding them for shorter periods of time.  The idea was that the programs would be popular and future legislatures would renew them accordingly.  Manchin believes this skewed the true cost of the bill and insists that in order to get his vote, the bill needs to focus benefits according to economic need and be funded for a longer period of time.

Going into the new year, the future of the bill is very uncertain.  Senate Majority Leader Chuck Schumer expressed his desire to put the bill to vote in early 2022, saying every member would have the opportunity to make his position known on the Senate floor.  Many of the legislators, including Schumer, have promised to keep trying to pass some version of the bill, perhaps a watered-down version that focuses on fewer programs as Manchin suggested.  Alternatively, the Democrats have indicated that they are open to potentially passing some parts of the bill as standalone items if necessary. Manchin indicated that he would not support a less expensive reconciliation bill anytime soon, saying he would prefer it go through Senate committee, which could take months, and that he preferred the standard legislative process, which would require the improbable support of at least ten Republicans.

As an alternative to legislative action, some in Washington are suggesting that the President consider what parts of his domestic agenda in the BBBA might be accomplished through executive action.  Pramila Jayapal, a Democrat, represents Washington’s 7th Congressional District in the U.S. House and is chair of the Congressional Progressive Caucus (CPC). Rep. Jayapal, in a recent opinion piece in the Washington Post discussed this strategy, which has since been discussed by other members of Congress on morning news shows and other public appearances.

Last spring, Rep, Jayapal and others in the CPC called for one comprehensive bill to address the president’s agenda. Seeking greater bipartisanship and to satisfy more conservative Democrats, the President supported the division of his agenda into two separate acts, the Infrastructure Investment and Jobs Act, passed and signed into law on November 15, 2021, and the Build Back Better Act.  The CPC twice refused to pass the Infrastructure bill until a framework agreement was reached regarding the BBBA.

The CPC and many other Democrats will continue to work toward legislation that remains as close as possible to the framework that might be supported and passed. The CPC has announced that it will also release a plan for executive actions by the President that might address parts of his domestic agenda in the BBBA.

The dual legislative and executive action efforts will receive a great deal of attention over the next few months. BMSS will keep you apprised of developments as they arise.