Washington Watch: Biden’s social-spending bill ‘not dead yet’ as Joe Manchin could back parts of it, analysts say

“We think that the core health care
XLV,
-0.43%
and clean energy
ICLN,
+2.30%
provisions are the most survivable, and that clean energy could move on a health care vehicle.”

Another analyst offered a similar take.

“While Senator Manchin’s comments may have killed the BBB bill, it is probably more accurate to say that he declared the time of death for a bill that was not going to become law as constructed. That would seem to leave room for a revised bill that addresses Manchin’s concerns,” said Benjamin Salisbury, director of research at Height Capital Markets, in a Monday note.

Manchin on Sunday said during a Fox News interview that he could not back the $2 trillion Build Back Better Act, having previously said inflation is a bigger problem than the need for the package. Biden on Thursday had conceded his bill as currently proposed wouldn’t get the Senate’s OK before Christmas, as top Democrats had hoped.

There is now “a one-third chance that nothing passes,” Lucier said. But the Capital Alpha analyst sees a one-third chance that a bill costing less than $1 trillion passes, and a one-third chance that a measure costing up to $1.5 trillion gets approved.

While he’s upbeat on seeing a bill with health-care and clean-energy provisions, Lucier is downbeat on the prospects for other Build Back Better proposals, including an extension for an expanded child tax credit, tax credits for electric vehicles and SALT relief, which refers to lifting a cap on deductions for U.S. state and local taxes. The package’s health-care and clean-energy proposals have included reductions for Obamacare premiums, an expansion of Medicare to offer hearing benefits and rebates for whole-home efficiency upgrades.

Democrats in Washington have been aiming to enact the Build Back Better Act through a process known as budget reconciliation, which requires only a simple majority vote in the 50-50 Senate. Getting OKs for parts of the package bit by bit could mean relying on other legislative vehicles or acting in another federal fiscal year.

“Democrats could pass a portion of Biden’s agenda in the FY22 reconciliation bill in early 2022 and pass other pieces in a FY23 bill later in the year. They could also try to split off pieces that could win Republican support,” said Height’s Salisbury.

U.S. stocks 
SPX,
+0.59%

DJIA,
+0.87%
closed sharply lower on Monday, as investors react to fresh COVID-19 worries due to the omicron variant and Manchin’s “no” to Biden’s social-spending bill, but stock futures pointed to gains on Tuesday.

Goldman Sachs has cut its U.S. economic growth forecast, citing Manchin’s assertion that he won’t support the Build Back Better Act. In a similar vein, the chief economist for Moody’s Analytics, Mark Zandi, tweeted that the package’s detractors “worry about inflation, but without it, the worry is more likely to be growth.”

“There is still hope #BBB in some form will become law, but if so, it will surely be a shadow of what was being negotiated,” Zandi said.

Biden and Manchin spoke Sunday night after the senator had said he couldn’t support the president’s social-spending bill, and their talk could signal that they’ll keep negotiating, according to multiple published reports.

Senate Majority Leader Chuck Schumer said in a letter to his Democratic colleagues that they would have a caucus meeting on Tuesday evening. The New York Democrat also wrote that his chamber would vote on the Build Back Better Act in the new year, so lawmakers “make their position known on the Senate floor, not just on television.”

Now read: Biden pledges to deliver 500 million COVID-19 rapid tests to Americans

This is an updated version of a report first published on Dec. 20, 2021.