House Passes Build Back Better, It’s On to the Senate

Democrats initially hoped to pass the bill Thursday night, but an eight-and-a-half-hour speech by House Minority Leader Kevin McCarthy (R., Calif.) slamming the legislation prompted Democrats to postpone the vote until later Friday morning. Republicans in both the House and Senate have united against the bill, arguing that it would exacerbate rising inflation and slow the economy’s growth.

“This is the single most reckless and irresponsible spending in the history of this country,” Mr. McCarthy said in his floor speech, which stretched past 5 a.m.

Some centrist Senate Democrats haven’t committed to supporting the House legislation, and Sen. Joe Manchin (D., W.Va.) has called for removing a proposed paid-leave program. Other Democrats are seeking changes to the House plan for raising the $10,000 cap on the deduction for state and local taxes, warning that the proposed $80,000 cap with no income limit offers unnecessary tax cuts for high-income households. A measure giving temporary legal protections to immigrants in the U.S. illegally may face parliamentary problems that could force Democrats to strip it from the bill.

Many of the bill’s measures are funded only temporarily, though, a step Democrats took to keep down the package’s sticker price. For example, the expanded child tax credit would last only through 2022, neither indefinitely, as some had sought, nor for four more years, as Mr. Biden proposed.

Modifications Coming Up 

The protection for immigrants is nearly certain to be removed.

Second, Democrats seek changes to State and Local Taxes (SALT).  On the surface, that means a revision but only if republicans stay united.

If the SALT deduction is lowered, there is a chance the Bill will actually become revenue neutral. But that also assumes all of the temporary measures really are temporary. Some might be, but it is difficult in practice to kill entitlements once offered.

Manchin has demanded that Democrats cut four weeks of paid leave provided in the House bill.

He is likely to demand other unknown modifications and he could easily kill the whole thing if he wanted to.

In the end, I expect the Senate to approve something, but with at least a few modifications.

Then What?

After the Senate makes amendmendments, the bill goes back to the House. AOC and the progressive caucus will piss and moan about the changes.

Democrats and Republicans from high tax states like New York will also moan.

But in the end, all the Democrats and perhaps a few Republicans from New York will vote for the bill.

When Biden signs it, many of those pissing and moaning will turn to bragging about getting it done.

Thanks for Tuning In!

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