The legislative process is never straightforward, and this weekend’s news about Sen. Joe Manchin opposing the Build Back Better Act (BBB) is the latest proof. But despite what you may be hearing, there is still a potential path forward for the bill, albeit likely in a scaled down form.

With the possibility of a smaller bill still ahead of us, it remains vitally important for businesses and other interested parties to continue to engage with the process to ensure their policy priorities are included in the final product.

During the Obama Administration, Democrats struggled to enact health care reform and were unable to pass climate legislation. During the Trump Administration, Republicans similarly were unable to repeal and replace Obamacare and were only able to enact tax reform after a long and protracted process. Three of those efforts relied on the budget reconciliation process. It is with that backdrop that we feel we will likely see some version of the BBB pass in early 2022, and what that legislation ultimately looks like is being decided right now.

Build Back Better

Since the bipartisan $1.2 trillion infrastructure bill was signed into law in November, Democrats in Congress have been trying to find a path forward on BBB, which aims to accomplish many of the social and climate goals President Biden campaigned on. Democrats have been attempting to use budget reconciliation, a rules process that would allow them to sidestep the filibuster in the Senate and pass the Senate with a simple majority.

The rules of reconciliation place constraints on what can be included in the final bill. All provisions must be shown to have a budgetary impact (called the “Byrd Rule”); otherwise, they must be struck from the legislation. Any provision can be challenged by a senator; both sides are required to make their arguments to the Senate Parliamentarian, who then issues a final determination on whether a given provision may remain in the bill. Despite the decision from Manchin, the Senate remains in the midst of this process, called “the Byrd Bath,” for BBB.

After Sen. Manchin announced that he would oppose BBB over the weekend, he added on Monday that Senate Democrats should start from scratch and send the legislation through the committee process. Since the summer, Sen. Manchin has repeated his concerns about the cost and size of the bill, including the potential negative impact of climate provisions on the nation’s economy and electrical system, the possibilities of creating incentives for people not to work, and, more recently, concerns about the bill contributing to inflation.

Following Sen. Manchin’s announcement, Majority Leader Schumer indicated on Monday that the chamber would continue to press forward on the bill, and that the chamber would vote on a revised BBB in the near future.

Despite the hot rhetoric we are seeing, we expect Democrats to continue to negotiate with the goal of finding agreement on a scaled-down version of BBB. While the differences between moderates and progressives have received the most press attention, the party does have agreement on wide swathes of the package. It now needs to figure out a proposal that balances the differing concerns and priorities.

These negotiations are ongoing, and we will continue to monitor.

 Appropriations

In addition to BBB, Congress is also working to find agreement on legislation to fund the government in fiscal year (FY) 2022. Currently, the government is being funding through a continuing resolution, which keeps federal departments and agencies operating at FY21 levels until Feb. 18, 2022. Democrats and Republicans have been at a standoff over conflicting policy and funding priorities since the fiscal year expired on Sept. 30, 2021.

While Congress works to find agreement on FY22 funding, the president will need to put forward a proposed budget for FY23 in early 2022. Currently, federal departments and agencies are submitting their final budget requests for FY23 to the Office of Management and Budget. The president is expected to transmit a proposed budget in early February, which will kick start the appropriations process (meaning we may see Congress finalizing spending for the rest of FY22 just as they start considering FY23 funding).