Senator Joe Manchin (D-WV) Finally on board with a Budget Adjustment Bill. But just because the Democratic leadership and President Biden have removed their biggest obstacle, that doesn’t mean there aren’t others.
This week, Manchin announced that it will support the Inflation Cut Act of 2022, which includes Big reforms in climate, healthcare and tax policy. It is noteworthy because it has been the most vocal in Rebuilding Better, the previous incarnation of legislation addressing these issues.
But there are still some outstanding issues that could affect the provisions of the law or jeopardize its chances of passing it in full. Ensuring that Democrats adequately support him is a major concern in both the House and Senate. The narrow time frame in which lawmakers have to pass the law before the recess is also a challenge.
The bill’s future hinges on three big questions:
1) Will Senator Kirsten Senema support it?
Besides Manchin, Senator Kirsten Senema (Democrat from the ground up) has been the other big senator on Building Better, and has yet to say her position on the Inflation Cut Act.
Previously, it opposed closing the loophole for the carry-over tax – a key clause in the inflation-reduction law – and will likely be a sticking point again.
Closing the loophole will force money managers to pay the same tax rate on their compensation as other professions do. Currently, their income can be taxed at a lower rate of up to 23.8 percent, while income is taxed at up to 37 percent. Eliminating the vulnerability was a major goal for Manchin. And this new proposal is also an important part of the way the law works to reduce the deficit, which is another matter that Manchin is deeply concerned about. If Sinema’s position does not change, that will put her in direct opposition to Manchin.
Cinema spokeswoman Hannah Hurley told Bloomberg The senator was still reviewing the bill and would wait to see what the Senate review of Parliament would produce. Meanwhile, Manchin has repeatedly said he is interested in keeping the interest clause on the bill.
Previously, increases in corporate and individual tax rates were stripped of the “Build Back Better” bill in the House due to opposition from Cinema.
2) What about the moderate parliament?
House Democratic Moderates are another faction that might be disappointed with this iteration of the bill.
Previously, several moderate members including Rep. Josh Gottheimer (D-NJ) called for the full state and local tax deduction (SALT) – Which currently has a maximum limit of $10,000 – Added back to the invoice. In the past, there was no cap on this deduction, which meant that people could pay lower federal income taxes because they were able to subtract their larger state and local taxes from their federal bill.
The benefit benefited primarily homeowners and other Americans, who are usually more affluent, who have higher tax burdens at the state and local levels, leading many Democrats to oppose his return. These Democrats argued that it was primarily a tax break for the wealthy. As Manchin noted in a statement on Wednesday, he also opposes the inclusion of this provision and it is not included in the bill as is.
On Thursday, some members who previously pushed for the SALT discount, including Representatives Tom Suzzi and Tom Malinowski, pointed out They would still support the legislation despite this omission. Other moderates, such as Gottheimer, have not yet taken an explicit stance.
The vast majority of moderates’ support is ultimately crucial to the law’s passage in the House, where Democrats have only a slim majority. After the recess, the party is likely to get a margin of just three votes in the House.
Meanwhile, progressives sounded broadly optimistic about the bill even though it was much narrower than Democrats had hoped for its passage. “If we can get that done, and I think we can, I think there is a real deal here,” Rep. Pramila Jayapal (Washington State), chair of the Congressional Progressive Caucus, He said in an interview with CNN on Thursday.
3) Can the vote get away again?
Another uncertainty that plagues the bill is simply the logistics. Since the Senate is due to bypass town on August 5 for lawmakers’ annual summer recess, that leaves only a week for Democrats to pass the bill before they head out.
That’s not long, and it’s further complicated by the recent spike in Covid-19 cases in Congress, which means members cannot be in the Capitol in person to cast their votes.
In the past week, several lawmakers have tested positive for Covid-19, including Manchin and Senator Dick Durbin (D-IL), who announced his results Thursday. Durbin will likely return to Hill in time to vote on this legislation, but other lawmakers will likely also have tested positive.
This is a problem for Democrats because they need every vote from their 50-person caucus, as well as a vote for Vice President Kamala Harris, in order to reach the simple majority threshold needed to pass a bill via budget compromise. Since Republicans are not expected to support this legislation, the entire party group must be present in person.
The reconciliation process is the other issue. Between now and the vote, Democrats will have to wait for the senator’s decision, which will determine whether the items in the bill are sufficiently tied to taxes and spending to be considered part of the budget compromise. According to BloombergThe review is expected next week since the invoice is over 700 pages long. If they fail to secure parliamentary approval for certain measures, Democrats will have to amend their bill and possibly remove some provisions. If they succeed, they can move the bill into the chamber, but they will also have to go through a lengthy process known as a “rama vote,” when senators are able to introduce amendments.
Democrats always have the option to either cancel or shorten the August recess if they need to, although lawmakers are usually loath to consider that option. If Democrats aren’t able to vote on the inflation-reduction bill before the holiday, and they don’t stay in office much longer, the vote on the bill could drop this fall. Any delay will also affect the timing of the House vote, which will likely happen in August if all goes according to plan next week.