As inflation concerns rise, Senators Manchin (D-WV) and Sinema (D-AZ) will not commit to voting for the Build Back Better (BBB) Act before Christmas – Senate Majority Leader Schumer’s target timeline.
What the White House Is Saying
- Federal Reserve: risk of higher inflation has increased. At a Senate Banking Committee hearing on November 30, Federal Reserve Chairman Jerome Powell said the risk of higher inflation has increased because of supply chain issues spurred by the pandemic. He added that while he expects inflation will decrease over the next year, there is a chance it will persist longer.
What Members Are Saying
- CBO projects government to run out of funds by mid-December, Schumer and McConnell remain quiet on solution. On November 30, the Congressional Budget Office (CBO) projected that if the debt limit remains unchanged and the Treasury transfers $118 billion to the Highway Trust Fund on December 15 – as currently planned, and required to implement the IIJA – the Treasury would most likely run out of cash before the end of December. To avoid breaching the current debt limit, which the Department has already reached, the Treasury is using extraordinary measures that allow it to continue to borrow additional amounts for a limited time. However, the Secretary of the Treasury may have the authority to defer all or part of the transfer to the Highway Trust Fund and transfer only the amounts needed for immediate use. Under this scenario, the government would be able to pay its obligations until sometime in January. Senate Majority and Minority Leaders Schumer (D-NY) and McConnell (R-KY) have not offered any information on their discussions for a debt limit solution; though Senator Schumer has signaled there will be a bipartisan measure.
- Manchin will not commit to Schumer’s Christmas BBB timeframe, reiterates concerns over inflation. On November 29, Senator Manchin (D-WV) stated he is in the process of reviewing the House-passed version of the BBB and he will not commit to Senate Majority Leader Schumer’s (D-NY) timeframe of passing the legislation before Christmas. Senator Manchin also reiterated his concerns over inflation, highlighting the Federal Reserve’s findings that it is not transitory. Earlier this year, Senator Manchin urged his Democratic colleagues to hit a “strategic pause” on the reconciliation bill in order to evaluate whether inflation is transitory or not. Senator Manchin also noted the discovery of the Omicron COVID-19 variant is exasperating economic uncertainty.
- Sinema not committed to voting “yes” on BBB. During a December 2 interview on CNN, Senator Kyrsten Sinema would not commit to voting in favor of BBB. However, she stated she is “prepared to vote and to vote for what’s right for the interests of Arizona.” Reportedly, Senator Sinema has also privately been telling her colleagues that BBB will not pass before Christmas – Majority Leader Schumer’s timeline.
- Sanders and Mendez clash over alternate SALT proposal. Senators Bob Menendez (D-NJ) stated that Senator Bernie Sanders (I-VT) has “walked away” from their negotiations on an alternate state and local tax (SALT) proposal for BBB. The House-passed version of the BBB increases the cap on the SALT deduction from $10,000 to $80,000 through 2030 and then returns the deduction cap to $10,000 in 2031. However, Senator Sanders and Menendez have been discussing an alternative proposal that would allow an unlimited deduction for individuals up to a certain income level. Senator Sanders (I-VT) would like to set the income limit at $400,000, and raise revenue, while Senator Mendendez would like to set the income level higher at around $550,000 and keep the proposal revenue neutral.
- Canada Trade Minister meets with Congressional leaders over BBB EV proposals. This week, Canada’s International Trade Minister, Mary Ng, met with Congressional leaders and industry stakeholders to advocate on behalf of the Canadian auto industry in light of the electric vehicle (EV) proposals included in the BBB and IIJA. Last month, Canadian Prime Minister Justin Trudeau discussed the concerns with President Biden, where he argued proposed EV tax credits in the BBB would violate international trade agreements, including the United States-Mexico-Canada Agreement (USMCA) and undermine the Canadian auto industry.
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