Reconciliation Vibe Shift
Biden agenda shows signs of life as Manchin signals readiness to re-engage
This week marked a distinct shift in media coverage surrounding reconciliation, with a spate of newly optimistic stories in outlets ranging from niche trade publications to national newspapers. And while Congress plowed ahead with its priorities for the current work period—processing the nomination of Judge Ketanji Brown Jackson, beginning the process of resolving inter-cameral differences on China competitiveness legislation, and seeking a deal on Russian sanctions—Senator Joe Manchin (D-WV) surfaced in Paris of all places, appearing alongside Secretary Jennifer Granholm for a meeting of global energy ministers at the International Energy Agency (IEA.) There he touted tax incentives for advanced manufacturing and nuclear power, both elements of the House-passed Build Back Better clean energy package. The appearance comes on the heels of private comments to a group of renewable energy executives and advocates in which he reportedly indicated an openness to a reconciliation package focused on climate, prescription drug reforms, and deficit reduction. Manchin rounded out this week’s charm offensive by cutting a $100,000 check to the Democratic Senatorial Campaign Committee, a gesture of comradery after months of simmering intramural tension.
Before we go any further, a reality check: nothing has materially changed. That's not a bad thing if you have been fairly sanguine about the odds of an eventual deal of some sort all along, as we have. But it's a note of caution to temper your expectations if you, like much of Washington, have experienced this process as a seemingly endless rollercoaster. There is a lot of work left to be done before any reconciliation bill has a clear path to President Biden's desk, and the questions we have previously posed in this space remain operative. Matters of timing, substance, and consensus-building are still very much in flux. But the fact that Manchin himself is signaling a readiness to re-engage is a notable and necessary development after an extended cooling off period.
This will not be a speedy process, especially with Congress otherwise engaged through the Easter break. But with the broad contours of a deal fairly obvious, Manchin’s willingness to cut to brass tacks opens the door to an agreed upon framework before Memorial Day, at which point things could move fairly quickly. With August recess looming as the effective start of the campaign season sprint, rendering further legislative action highly unlikely beyond a continuing resolution, June would be the sweet spot for floor action, with July as the backstop for any procedural spillover. This timeline assumes things proceed relatively smoothly, which of course has not been a hallmark of this effort to date.
Perhaps the biggest wrinkle in the renewed chatter surrounding Manchin is what his “all of the above” energy posture—newly emboldened by fallout over the Ukraine conflict—might entail for a reconciliation deal. While the administration has seemingly warmed to the idea of significant deficit reduction as a cost of doing business with the West Virginia Senator, it’s less clear how inclined they will be to indulge any of his conventional energy asks, or whether acceptable concessions could be made outside of this package.
To be sure, Manchin is not the only important stakeholder who needs minding. While Senator Kyrsten Sinema (D-AZ) has been relatively quiet since the House bill was constructed around her revenue concerns, it seems unlikely that Manchin’s fellow moderate maverick will yield without further direct negotiation. Small but critical issues continue to agitate around prized provisions ranging from the state and local tax (SALT) deduction to the now-lapsed enhanced child tax credit (CTC). And any effort to further appease the holdouts stands to exacerbate existing frustrations among progressives, all of which makes for a delicate balance. But with the midterms rapidly approaching, along with the likely end of Democrats’ narrow trifecta, Biden and congressional leaders are keenly aware that the window of legislative opportunity is closing fast. The second quarter of 2022 represents the last best chance to enact meaningful progressive priorities, and with Manchin playing ball, it is in the entire party’s interest to seize the opportunity and take whatever they can get.
[This is an except from the March 25 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.]