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December 6, 2021

What to expect in Washington (December 6)

Senate consideration of the Build Back Better Act (H.R. 5376) budget reconciliation bill isn’t planned until at least next week, the week of December 13. Majority Leader Chuck Schumer (D-NY) has said discussions with the parliamentarian over whether the bill complies with reconciliation rules is expected to continue through this week. However, there are intensifying doubts that the bill can be completed before year’s end. The two most closely watched senators on the reconciliation effort, Senators Kyrsten Sinema (D-AZ) and Joe Manchin (D-WV), haven’t explicitly backed the bill and both think consideration will continue into 2022. Senator Manchin is seeking to pare down provisions on paid family leave, a methane fee on emissions from energy producers, an enhanced EV credit for cars manufactured by unionized shops, and a Medicare expansion to cover hearing aid costs. Manchin also wants changes to tax provisions.

A December 5 New York Times story on Rep. Stephanie Murphy (D-FL), one of the House moderates who forced postponement of the House BBBA vote (from November 5 to November 19) until CBO numbers were released, said, “The larger bill now awaits action in the Senate, where it will likely be changed in ways that necessitate yet another House vote before it can go to Mr. Biden for his signature. Final passage of that legislation, coupled with looming votes on a sprawling defense policy bill and raising the limit on the nation’s ability to borrow, could potentially place Ms. Murphy in the spotlight once again.”

The Wall Street Journal (WSJ) reported December 5, “The House-passed bill is expected to be altered to fit the procedural tactic that Senate Democrats are using to pass the legislation with just a simple majority, known as reconciliation. Senators will debate with the parliamentarian on what provisions can comply, according to aides, putting some immigration- and drug-pricing-related provisions in peril. It isn’t clear when that process will be complete.”

A Hill Newspaper story this morning, “Democrats see Christmas goal slipping away,” said disagreements holding up the bill include the “fight over lifting the cap on state and local tax (SALT) deductions,” and that work to clear items through the Parliamentarian’s office has become a “choke point.” The report said, “Senate Democratic aides say passage of the bill in January is looking more realistic than before Christmas.”

There are concerns about leaving behind deadline items that are addressed in the BBBA and would lapse otherwise. House Ways & Means Committee member Suzan DelBene (D-WA) was quoted in Punchbowl News: “Our members stood united in passing the Build Back Better Act last month and now it is time for the Senate to act before the expanded Child Tax Credit payments expire at the end of December. American families cannot afford to lose this critical middle-class tax cut, which has cut child poverty in half and helped millions of families afford childcare, pay their bills, and put food on the table.”

There are also upcoming Medicare cuts set to take effect at the beginning of 2021. Barring Congressional action, a 2% Medicare sequester cut – which was delayed via pandemic legislation – will go back into effect on January 1, 2021 and pending 4% PAYGO cuts (which have never been allowed to take effect) will also be triggered two weeks following the start of the next Congress. Punchbowl reported that the Medicare cuts could be addressed in the NDAA.

Debt limit – The WSJ story said: “Congress is expected to focus this week on the defense policy bill known as the National Defense Authorization Act, or NDAA, which was held up in the Senate last week over provisions regarding Russia and China. Instead of the Senate passing its own bill, a compromise bill—negotiated by leadership in the House and Senate—is expected to come to the House for a vote as early as this week.”

As the story noted, there has been some talk of addressing the federal debt limit in the NDAA, which House Republican leader Kevin McCarthy (R-CA) has downplayed. Asked about adding the debt limit to the NDAA December 3, Rep. McCarthy said, “I don’t think it would pass. Democrats can’t pass the NDAA on their own.” House Majority Leader Steny Hoyer (D-MD) doesn’t disagree. He said in The Hill that while including the debt limit on the NDAA has been discussed among Senate leaders, “We don’t think it’s the best option because we’re not sure we can do it.”

Asked about previous efforts to tame spending in conjunction with a debt limit increase, which include the 2011 “Supercommittee,” McCarthy said it is different this time because the debt limit must be addressed at the same time Democrats “want to pass the largest bill in the history of America.”

Congress – Hearings in the tax-writing committees this week include:

  • Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth hearing on “Promoting Competition, Growth, and Privacy Protection in the Technology Sector” on Tuesday, December 7 (at 9:30 a.m.);
  • Ways & Means Social Security Subcommittee hearing, “The Fierce Urgency of Now – Social Security 2100: A Sacred Trust,” on December 7 (at 1 p.m.);
  • Ways & Means Oversight Subcommittee hearing on “The Pandora Papers and Hidden Wealth” on Wednesday, December 8 (at 10:00 a.m.).

Former Senator and presidential candidate Bob Dole passed away at age 98. Senator Dole was chairman of the Senate Finance Committee in the early 1980s, prior to the ’86 Act, by which time he was in leadership. He is beside President Reagan in photos of the bill signing. Senator Dole was a frequent visitor to the Capitol even after his retirement, and his wife Elizabeth Dole was a senator from North Carolina until 2009.

Inflation – A story in the Sunday Washington Post discussed the role inflation concerns could play in the 2022 congressional midterm elections, at least in California. “Economists disagree about how big a role the trillions in relief and stimulus approved by Washington over the course of the pandemic have had on inflation, which is on its highest trajectory in decades. Prices jumped more than 6 percent in October compared with last year. This is happening, in part, because the economy is snapping back from a historic shock after the coronavirus pandemic…” the story said. “The White House and congressional Democrats argue that the infrastructure bill and a massive social spending bill now pending on Capitol Hill would actually drive down inflation over time by helping companies transport materials more efficiently by sea, air and roads, a view some economists support. But that argument hasn’t won over every voter.”

The next inflation report, the Consumer Price Index for November 2021, is scheduled to be released on Friday, December 10, 2021 at 8:30 a.m.


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For additional information concerning this Alert, please contact:
Washington Council Ernst & Young
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