Biden Throws in the Towel on Spending Bill This Year

Biden Throws in the Towel on Spending Bill This Year

U.S. President Joe Biden awards Medals of Honor in Washington
EVELYN HOCKSTEIN
By Yuval Rosenberg and Michael Rainey
Friday, December 17, 2021
It looks like we’re headed for a miserable end to another challenging year. Covid cases are surging, with hospitalizations up 20% nationally over the last two weeks. New York State on Friday reporting a record number of new cases, over 21,000, surpassing the previous high set in January. As colder weather arrived and holiday gatherings ramped up, the rate of positive tests in New York City recently doubled in just three days. One expert tells CNN that a "viral blizzard" is about to hit the country.

On the fiscal front, Democrats appear to be limping toward the new year, with the fate of their economic agenda again plunged into uncertainty. Catch up on the latest below — and stay safe out there.

Biden Throws in the Towel on Spending Bill This Year

The White House and Democratic leaders have been pushing hard to pass the Build Back Better bill that contains much of President Joe Biden’s social and economic agenda before the end of the year, but the president admitted Thursday evening that the goal was no longer within reach.

"It takes time to finalize these agreements, prepare the legislative changes, and finish all the parliamentary and procedural steps needed to enable a Senate vote," Biden said in a statement. "We will advance this work together over the days and weeks ahead; Leader Schumer and I are determined to see the bill successfully on the floor as early as possible."

No one knows when "as early as possible" will be, but if or when that date arrives, it’s now clear that it will certainly be after the new year.

On Friday, Senate Majority Leader Chuck Schumer (D-NY) confirmed the delay, saying that Biden "requested more time to continue his negotiations, and so we will keep working with him, hand in hand, to bring this bill over the finish line and deliver on these much-needed provisions."

Plenty of obstacles ahead: The bill has hit a number of roadblocks recently, including a ruling by the Senate parliamentarian Thursday that a provision granting citizenship to millions of undocumented immigrants is beyond the permissible scope of a budget reconciliation bill and must be removed.

A big increase in the cap on the state and local tax deduction — which the House version of the bill raised from $10,000 a year to $80,000 a year, providing upper-income households with a substantial tax windfall — is also a problematic issue that needs to be nailed down before the bill can move forward. While Budget Committee chair Sen. Bernie Sanders (I-VT) and others want to put an income cap on the deduction, any changes could weaken support for the bill among lawmakers from blue states who have lobbied for the cap increase.

Of course, the biggest problem for Democrats lies in the resistance to both the size and scope of the bill from Sen. Joe Manchin of West Virginia, a key vote in a Senate divided 50-50 who has been playing Scrooge on Democrats’ year-end spending plans.

What does Manchin want? Among other things, Manchin has expressed concerns about the provision in the bill that extends the enhanced, refundable tax credit for just one year, a move that Manchin says hides the true cost of the program. Arguing that Democrats really want to run the program permanently, Manchin is insisting that the bill include a 10-year extension, which would cost roughly $1.5 trillion — or nearly 90% of the current bill’s total cost of roughly $1.7 trillion.

Given the significance of the proposed change, it’s not clear whether Manchin is trying to reform the bill or to delay or kill it altogether. Does he want to cut most of the other programs included in the bill, in order to keep it under his self-proclaimed limit of $1.75 trillion over 10 years? Or does he want to make the programs much smaller in order to accommodate all of them?

As Politico’s Burgess Everett puts it, "Senate Democrats don't know if the bill needs to be completely revamped to win Sen. Joe Manchin’s support. They don’t know when it’s going to come to the Senate floor for a vote. They don’t know how close Biden is to a deal with Manchin. They don't know how to keep the child tax credit from expiring at the end of the year."

The uncertainty and growing frustration among lawmakers became increasingly visible this week. "The situation points out that a 50-50 Senate is really problematic, I’ve used the word sucks," said Sen. Mazie Hirono (D-HI). "It definitely enables one or two people to hold things up, so yes, I’m frustrated."

The impasse has led some to conclude that Biden’s bill is in deep trouble, with Republicans gleefully claiming it will never pass. "I think Build Back Better is dead forever, and let me tell you why: because Joe Manchin has said he's not going to vote for a bill that will add to the deficit," Sen. Lindsey Graham (R-SC) told Fox News.

On the other hand, Manchin has yet to walk away from the legislation, leading some to think that he ultimately wants to make a deal, even if it’s delayed for a few weeks or months. "If he were going to say no, he would have said no by now," Sen. Chris Coons (D-DL) said.

A change in focus: Democrats will set the Build Back Better Act aside until 2022 and use the little time left in the year to focus on confirming some of Biden’s stalled nominees and possibly taking up a voting rights bill that has little chance of passing given Republican opposition and Democratic reluctance to circumvent the filibuster.

Democrats will also look for a way to address the enhanced child tax credit, which expires at the end of the year, likely eliminating payments in January. White House Press Secretary Jen Psaki said Friday that lawmakers may seek to double the payments in February to make up for the loss of payments in the first month of the year, assuming that the Build Back Better bill passes in the next few weeks and includes an extension of the child tax credit.

The bottom line: With the Senate leaving town for the holidays, the Build Back Better Act remains a work in progress with an uncertain future in the new year.

Quote of the Day: A White House Economist Defends Bidenomics

"I think the key fact is that clearly prices are highly elevated, and that's a real concern of our administration. … But here's the part that gets lost: The elevated inflation cannot be looked at in isolation as the only thing that has come out of the work of our administration because that would be not just objectively and politically unfair, it would be a real mistake in terms of learning from our actions and their economic impact. The poverty rate in 2020 was lower than the poverty rate in 2019."

Jared Bernstein, a member of the White House Council of Economic Advisers, in a Politico interview about the Build Back Better Act and how the Biden administration is responding to inflation

Number of the Day: $1 Billion

The Environmental Protection Agency announced Friday that it will use $1 billion from the recently enacted bipartisan infrastructure bill the clear a backlog of 49 previously unfunded Superfund hazardous waste cleanup sites and speed the cleanup at dozens of other sites across the country. The new law provides $3.5 billion for cleanup at such sites.

Chart of the Day

The Kaiser Family Foundation details the partisan divide over Covid booster shots:

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