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December 17, 2021

What to expect in Washington (December 17)

Following a call with Democratic congressional leaders December 16, President Biden said his discussions with Senator Joe Manchin (D-WV) regarding the Build Back Better Act (H.R. 5376) budget reconciliation bill will continue and a Senate vote could be weeks away. "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," the President said. "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."

The statement came hours after news broke, around the time of a Senate Democratic lunch meeting, that Senate Majority Leader Chuck Schumer (D-NY) had decided to delay consideration of the bill until next year after previously saying he wanted a vote before the holiday break. There have been persistent challenges to a Senate vote on the BBBA next week: the "Byrd bath" tests of reconciliation compliance with the Parliamentarian are ongoing; Senator Manchin has yet to back the bill and is at an impasse with President Biden over the length of the extension of the expanded Child Tax Credit (CTC) with monthly payments and associated cost over the 10-year budget window; and an approach to state and local tax (SALT) deduction cap relief has not been decided.

"Several administration officials said privately this week that they now expect the legislation, which passed the House earlier this year, to slip into next year, perhaps into the spring," the New York Times reported.

Some expressed disappointment in the delay. "We missed an opportunity," Senate Majority Whip Dick Durbin (D-IL) said in a Washington Post story. Others see the delay in Senate action as appropriate. "I don't think it's going to be before Christmas, but it shouldn't be — it should be when we're ready," Sen. Mark Kelly (D-Ariz.) told reporters, adding he thought it might be "one of the first things after the holiday."

"While many Democrats expect the process for negotiating the bill to last into next year, top Democrats haven't put a new timeline on the legislation," the Wall Street Journal reported.

Punchbowl News suggested that the next backstops for the BBBA could be the as-yet-unscheduled State of the Union address or the expiration of government funding on February 18. "[If] you look at the House and Senate calendars, there are several Tuesdays in mid-January or early February that would make good candidates for that [SOTU] speech. Setting that date and then ramping up pressure on senators to have a deal in place before Biden heads to the Hill for his big speech is a good tactic," the report said.

CTC — Senator Manchin has long expressed concerns that the one-year expanded CTC extension in the BBBA hides the true cost of the bill because it is assumed the provision would be renewed in the future. Manchin wants to keep the bill to $1.75 trillion. A 10-year extension of the expanded CTC would cost more than $1 trillion on its own, and Senator Manchin said prior to the Senate Democratic lunch meeting that "he supports it being put in place for 10 years and paying for it," Punchbowl reported. The report also said, "Sen. Elizabeth Warren (D-Mass.) said the Democratic Caucus lunch was 'intense.' Other Democrats said there is a lot of frustration with Manchin and Sen. Kyrsten Sinema (D-Ariz.)."

The potential lapse of the monthly CTC payments is a concern of Congress, even independent of the BBBA. Finance Committee Chairman Ron Wyden (D-OR), who has said the expansion needs to be addressed by December 28 to avoid interruption to payments, unsuccessfully sought Senate consent for a program extension. House Speaker Nancy Pelosi (D-CA) said it's unclear such a standalone bill can pass the Senate — a view the White House agrees with — and appears inclined to use the potential lapse to urge action on the broader BBBA. "I don't want to let anybody off the hook on the BBB to say 'well, we covered that one thing, so now the pressure is off,'" she said December 15. "I think that that is really important leverage in the discussion on BBB, that the children and their families will suffer without that payment … And so, we're just still optimistic about BBB passing, and perhaps even if it were after the 1st of the year, which I hope it is not, that it could be retroactive, if it's early enough … "

Nominations — With voting rights legislation and the BBBA stalled, the Senate's business prior to a holiday break may be limited to votes on nominations. Senator Schumer late December 15 filed cloture on more than 20 nominations, mostly judges and ambassadors, including former congressman, White House Chief of Staff, and Chicago Mayor Rahm Emanuel to be Ambassador to Japan. "We're going to work until they're all confirmed by this chamber," Senator Schumer said. An agreement to expedite consideration of the votes could be reached and the Senate could complete its business for the year as soon as today.

Today, December 17 (12:00 p.m.) is the EY Webcast, "Tax in the time of COVID-19: update on legislative, economic, regulatory and IRS developments." Register .

Note - What to expect in Washington will not be published for the next two weeks, but Alerts will be issued as events warrant.


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