Senate Democratic leaders failed to break a deadlock over President Joe Biden’s $2 trillion economic agenda, punting action on the tax and spending bill to January in a political blow to the White House.
The delay, confirmed by two people familiar with the matter, risks solidifying the intra-party divide on the legislation, which many Democrats consider key heading into the 2022 mid-term elections.
A spokesman for Senate Majority Leader Chuck Schumer didn’t respond to requests for comment. And Schumer, after a lunch meeting with Democrats, said only that the party had “good discussions” on the tax and spending bill and separate voting rights legislation.
But several Democrats signaled the delay was a near certainty as West Virginia Democrat Joe Manchin, the key holdout in the 50-50 Senate, continued to withhold his support.
“We’ve got to get it done in the first couple of months” of 2022, Senator Chris Van Hollen, a Maryland Democrat, said when asked about retroactive tax issues in the bill.
Senator Mark Kelly, whose Arizona seat is competitive in the upcoming election, said Democrats should see much of the bill text by Thursday. But he likewise signaled Democrats no longer hoped to pass it by year-end.
“I don’t think it’s going to be before Christmas,” Kelly said. “It shouldn’t be, right? It should be when we’re ready.”
Other senators, including those involved in the months-long negotiations, could barely hide their frustration. “Every day that we delay is a bad day for the American people” Senate Budget Chair Bernie Sanders said. The Vermont independent vowed any changes to the bill would be to make it more in line with progressive priorities.
Progressives and moderates have disagreed publicly on the size and scope of the package for months, although House Democrats were able to pass its version of the bill last month. But talks this week between Biden and Manchin have gone poorly, people familiar with the negotiations have said.
Manchin, however, attributed the delay to the Senate parliamentarian’s ongoing scrub of the bill to ensure it complies with strict rules for the process Democrats are using to avert a Republican filibuster.
“They’re getting their job done,” Manchin said of the parliamentarian’s ongoing review. “When the parliamentarian gets their work done we’ll see what they have.”
Most of the benefits in the bill, which has no Republican support, would have taken months or even years to become reality. But expanded Child Tax Credit payments that expired Wednesday are at risk of lapsing. The Internal Revenue Service had sought enactment of the bill before Dec. 28 to ensure Jan. 15 payments go out on time.
“The delay matters,” Ohio Democratic Senator Sherrod Brown said. “If we do it in the first weeks of January it makes it a little more challenging for the secretary of the Treasury to get the checks out by Jan. 15.”
“But it’s going to all happen,” he said.
The delay to next year is the latest set back for the Build Back Better agenda which Democrats have been wrangling over since April. Passage last month of the bill in the House had raised hopes that the infighting would end but those hopes have now been dashed.
Senate GOP leader Mitch McConnell was gleeful Thursday at the prospect of a delay in the bill, which he argues will add to inflation.
“The best Christmas gift Washington could give working families would be putting this bad bill on ice,” McConnell said.
As approved by the U.S. House, Biden’s plan would spend $1.64 trillion over 10 years, according to the Congressional Budget Office’s analysis. When tax credits are factored in, the investment in the economy is about $2.2 trillion.
It would provide universal pre-K, childcare subsidies, four weeks of subsidized paid family leave, subsidized Obamacare premiums and an alternative to Medicaid in some states, and would allow Medicare to negotiate prescription drug prices for the first time while capping out-of-pocket costs for seniors. Medicare would cover hearing benefits for the first time.
The legislation aims to fight climate change by imposing a fee on methane and providing a slew of tax credits for renewable energy and electric vehicle purchases, and it would provide relief from deportation for millions of undocumented immigrants.
On the tax side, the bill would extend expanded Child Tax Credits and make them permanently refundable to those without sufficient income-tax liability to get the full benefit. It would also increase the cap on federal deductions for state and local taxes, a provision that will benefit wealthy taxpayers and which has sparked some push-back from progressives.
To raise revenue, it would impose a new 15% corporate minimum tax and a 5% surtax on individual incomes over $10 million, with an additional 3% tax above income of $25 million. There are also taxes on large individual retirement accounts and stock buybacks.