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Senator Joe Manchin (D-WV) has called for "fixing the tax code" and said doing so was the reason he voted to facilitate budget reconciliation for the Build Back Better Act (BBBA). A February 9 Politico report more directly suggested he wants whatever bill that can be resurrected amid the House-passed BBBA's demise to foremost be a tax bill, rather than a spending bill paid for with tax increases. "Rather than start with spending priorities and then evaluating how to pay for them, Manchin wants to start with tax reform as the goal of any party-line effort. He's also insisting that social programs go through typical committee consideration, which allows Republicans more input. And he doesn't just want it fully paid for; he wants it to significantly cut the deficit and put debt on a 'downward trajectory.' 'That's really what reconciliation is for: to get your financial house back in order. And that's the thing that can be done and should be done,' Manchin said."

Timing — The story said, "Most Democrats concede they could not revive a tax and spending bill before April, and the final deadline is Sept. 30, when Democrats' existing powers to push the defunct bill past a filibuster expire." Senator Sheldon Whitehouse (D-RI) said the August recess could be a de facto deadline, and Senator Jon Tester (D-MT) was quoted as saying there's a small chance a resurrected BBBA doesn't get done at all.

Tax rates — And while the House-passed BBBA eschewed tax rate increases due to opposition from Senator Kyrsten Sinema (D-AZ), Manchin continued to call for them during a West Virginia radio interview February 10. "We were all opposed to the 2017 tax cuts the way they finally came out … So, if we agree on that, can't we put [a bill] together that truly gets our economy back on track?" Asked whether he supports a tax increase, Manchin said, "I basically want corporations to pay 25% … you don't need a punishing, you need basically a competitive [system]. And all the people at the top end of the food chain should be paying too — they should be paying and they're not now in so many areas. You got corporations not paying, that should be a minimum of a 15% corporate tax — minimum of a 15% corporate tax that you pay in America." He also said he supports a capital gains rate increase to 28% and elimination of carried interest and unspecified "loopholes."

Inflation — The February 10 report of 12-month inflation rising to 7.5% raised concerns from Manchin and other Democrats. Senator Manchin released a statement February 10 saying, "For months, I have been ringing the alarm bell about inflation. Once again, we are witnessing that the threat of inflation is real. … As inflation and our $30 trillion in national debt continue a historic climb, only in Washington, DC do people seem to think that spending trillions more of taxpayers' money will cure our problems, let alone inflation … " Senator Sinema said, "Arizonans should be able to keep more of their hard-earned money in their pockets. That is why I work every day to ensure any government spending is targeted and thoughtful — because a lean, efficient government helps avoid price hikes."

Punchbowl News reported February 11 that Republicans are "convinced Democrats don't have a real plan to address" inflation, which is becoming an important dynamic in the midterm elections. "It's the biggest issue in the country, and I think their biggest liability going into the fall," Senate GOP leader Mitch McConnell (R-KY) said. On February 9, Senators including Mark Kelly (D-AZ), Maggie Hassan (D-NH), Catherine Cortez Masto (D-NV), and Raphael Warnock (D-GA) introduced a bill (S. 3609) to provide a federal gas tax holiday through the end of the year, which they said would provide "much-needed economic relief to families." The senators in that group are viewed as facing some of the most competitive Senate midterm re-election races. CNN reported that some are challenging the Administration to do more.

Health — In the Punchbowl report, Senators Warnock and Cortez Masto called for reducing the cost of prescription drugs to address rising consumer costs. Senate Budget Chairman Bernie Sanders (I-VT) and Senator Amy Klobuchar (D-MN) are pushing for a standalone measure to cut prescription prices as the BBBA remains stalled, and introduced a bill (S. 3615) February 9 to cap costs for covered drugs under Medicare parts B and D. In Culpeper, VA, February 10, President Biden talked about those who have gained coverage through the ACA and said, "And we want to go further: lowering prescription drug prices; get a cap on the amount people pay on Medicare, pay for prescription drugs; and to bring more clarity and fewer surprises when you get your bills if you've been hospitalized."

Tax - Senators Hassan, Tim Scott (R-SC), Mark Warner (D-VA), Shelly Moore Capito (R-WV) and Ben Cardin (D-MD) February 10 introduced the Employee Retention Tax Credit Reinstatement Act (S. 3625). Reps. Carol Miller (R-WV), Kevin Hern (R-OK), Stephanie Murphy (D-FL) and Terri Sewell (D-AL) introduced the House bill (H.R. 6161) in December. The ERTC was terminated as of September 30 under the infrastructure bill enacted in November; the bills would reinstate it through the end of 2021.

Congress — House Ways & Means Committee member Jason Smith (R-MO) announced he is running for re-election — there is a high-profile Senate race to replace Roy Blunt (R-MO), which Smith is forgoing — and will vie for the top GOP spot on Ways & Means. The Ways & Means race also currently includes Reps. Vern Buchanan (R-FL) and Adrian Smith (R-NE).

Government funding — The Senate is expected to take up the House-passed continuing resolution to extend funding through March 11 next week, ahead of a Senate recess the week following. Top appropriators February 9 signaled a deal on topline spending numbers for an omnibus appropriations bill to fund the government through the remainder of FY2022 but haven't announced details.

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