On the tail end of a rather conspicuously (if unsurprisingly) quiet recess week on the reconciliation front, it was Senate Republicans making waves. Late Thursday, after virtual radio silence in the wake of last week’s bullish reports on Senator Joe Manchin’s negotiations with Majority Leader Chuck Schumer, multiple Capitol Hill news outlets reported that Republicans were declaring the parallel bipartisan discussions all but dead, citing their West Virginia counterpart’s apparent commitment to the partisan budget process.
“These talks had been a long shot to begin with,” Sen. Kevin Cramer (R-ND) told Axios. “Manchin informed us in the last meeting that reconciliation is probably the route he’s going down.”
The sourcing of the pieces is notable, as the buzzy headlines hinting toward an imminent deal are based on characterizations by Republicans who oppose the reconciliation package and were not inclined to be used as leverage in his talks with Schumer. Indeed, one Democratic colleague sought to pour cold water on the claims, disputing the GOP accounting of Manchin’s statements during the meeting. “It wasn’t that firm… The GOP is worried that Manchin is open to doing something [in reconciliation] so they are making [stuff] up,” Senator Brian Schatz (D-HI) told Politico. Whether the new Republican tack is a thinly disguised gambit, or simply an attempt to get out in front of an inevitable agreement, the deliberate tempering of expectations caught our eye.
As we have indicated in recent updates, the ongoing activity of the bipartisan group was a net negative on the outlook for reconciliation, and the path needed to be resolved one way or another before one could conceivably move forward with the partisan track. That resolution is apparently at hand, however abruptly. Now the question turns to what, exactly, Manchin and Schumer can agree to, and how quickly.
One thing is for certain—time is of the essence. With just three legislative weeks left before the Fourth of July holiday, and three more before Congress’ traditional August recess, the sooner the two men can roll out an outline or framework agreement, the better the odds of success. Until the big picture is mutually established, it’s difficult to pin down the particulars, let alone wrangle the rest of the caucus.
Should Manchin and Schumer reach such a deal—and an announcement really could come any time—it would be a hugely positive development, but a number of questions, variables, and potential squeaky wheels would still remain.
The most obvious stumbling block is Senator Kyrsten Sinema (D-AZ), whose concerns have long been distinct from, but in some ways complementary to Manchin’s own. While the pool of pay-fors used in the House-passed Build Back Better Act (BBBA) was largely designed around her stated concerns, she will likely require further accommodation, particularly as it relates to how potential tax increases on the individual side of the code might impact pass-through entities. Despite being the other remaining holdout, according to a late April report from Politico, Sinema has not been engaged in similar talks, suggesting leadership’s strategy entails isolating the Arizona senator with the bet that she will not be willing to personally stand in the way of a deal. (Given her track record, and her political spirit animal, this may be a bit presumptuous.)
Other minor characters within the upper chamber to keep an eye on include Senator Bernie Sanders (D-VT), the Budget Committee chair who famously drafted a $6 trillion version of the reconciliation instructions, and Senator Bob Menendez (D-NJ), a pharmaceutical industry ally and fierce advocate of state and local tax (SALT) relief, but neither would be likely candidates to upend an otherwise consensus agreement.
The House is its own animal, though the prevailing expectation is that the chamber would swallow whatever the Senate could manage to send over. Speaker Nancy Pelosi’s already paper-thin margin could be trimmed even further this month, as Republicans stand a good chance of picking up a special election in south Texas to fill the seat of now-former Rep. Filemon Vela (D-TX). In the meantime, unfilled GOP vacancies still net out in Democrats’ favor, though they can still only spare five votes. (At last count, the “No SALT, no deal” caucus stood at three.)
But by far the biggest hurdle remains the calendar itself, which stands to fly by as the midterm drumbeat builds, especially as front-page events consume political oxygen and floor time alike. While base text remains on the shelf leftover from House BBB and staff of the relevant committees have continued to fine tune their product, pending a green light from leadership, the drafting process will still take some time, as will a reprise of the parliamentary vetting that was put on hold in late 2021. While the dramatic narrowing of the bill’s scope from 13 Senate committees to likely no more than a handful will make this chore easier, it will still face a lengthy “Byrd bath” and inevitable challenges from Republicans. In short, the longer it takes to come up with a framework, the tighter the squeeze, with a distinct possibility of the ultimate floor action slipping into September, the final month the package would enjoy the underlying privilege of the reconciliation process, and just weeks before voters begin to head to the polls.
In the week since reconciliation talks started showing public signs of life, the tragic events in Texas have hijacked the policy conversation, sparking remote mark-ups, bipartisan legislative talks, and prime time Presidential speeches. In some ways the sudden attention being heaped on a hot button topic creates more space for reconciliation talks that have never thrived under the spotlight, but it serves as a reminder of how quickly events can intercede. At the end of the day, the collapse of bipartisan talks was a necessary if not sufficient development for reconciliation to take flight, and the process is still liable to have a few twists and turns.
[This is an excerpt from the June 3 PRG weekly reconciliation update. Read the rest of my firm’s reconciliation updates here. And if you like my “Bottom Line” analysis, check out my moderated discussion with my colleague Yasmin Nelson, who pens “The Breakdown” newsletter. Watch on Youtube or listen wherever you get your podcast.]