President Biden’s economic agenda hasn’t exactly gone to plan, mostly due to a deadlocked Senate and infighting among the Democratic Party.
The president's signature piece of legislation — the Build Back Better (BBB) plan — has essentially been stuck in limbo as debates over spending and key components have made the package in its entirety polarizing. Because of that, many are expecting the president to separate parts of the plan into individual pieces of legislation.
“What we’re looking at right now is Build Back Smaller and Build Back Later,” Ed Mills, a policy analyst at Raymond James, said on Yahoo Finance Live (video above). “What’s included in the package, at least in conversations right now, the core of it is probably the climate change provision. Some of the energy tax provisions on renewables, solar, nuclear, hydrogen, have the support of all Democrats, including Senator Manchin."
Sen. Joe Manchin (D-WV) has become a key swing vote for the Democratic Party, along with Sen. Kyrsten Sinema (D-AZ). Both moderates have raised concerns about government spending, particularly as the U.S. experiences record inflation. They’ve also come out strongly against abolishing the filibuster, which would allow Democrats to push their bills through the Senate with a simple majority vote instead of the 60-vote threshold.
“Compared to the expectations, what’s been accomplished, what looks like can be accomplished between now and the midterm elections are a lot less than what the progressives had hoped for,” Mills said.
'The issue is not whether the Republicans take the House'
Key components of Build Back Better include extending child tax credits, clean energy and climate investments, universal child care and pre-K, a corporate minimum tax on large corporations, and a tax on stock buybacks.
AGF Investments Chief U.S. Policy Strategist Greg Valliere noted that at least some parts of BBB could get passed with Manchin’s support.
“I think Joe Manchin is perfectly happy to get pre-K funding,” Valliere told Yahoo Finance. “He’s always been a big proponent of it.”
Valliere noted that Manchin would also likely agree to an expansion of Obamacare and environmental provisions.
“So if you split this up into two or three or even four bills, I think some of it will get done,” Valliere said. “That is a very desperately needed victory for the Democrats because I would have to say right now, here we are in the middle of January, we have a long way to go but right now, I’d say the issue is not whether the Republicans take the House, the issue is by how many seats.”
Republicans only need to win five seats in order to regain control of the House, but Valliere is predicting that they could win up to 20, which he said is “on the low side.”
“There are many other analysts who think it could be 25, 30, 35 seats,” he said. “So Biden needs some victories, and maybe the first victory he gets by springtime is some form of Build Back Better.”
A debate over cost
In a press conference Wednesday, Biden indicated that he’s willing to break up pieces of his legislation in order to get them passed and focus attention on the more hotly debated parts of the agenda.
“The social spending aspects of it are much more debated,” Mills said. “The child tax credit is really expensive. So that has to be changed or significantly eliminated from the bill. Universal pre-K for three- and four-year-olds seems to be at the high on that list. More subsidies for child care seems to be more on the bubble right now, so it really comes down to the total cost over 10 years.”
The actual cost of Build Back Better has been a contentious topic. According to estimates by the Committee for a Responsible Federal Budget (CRFB), the bill would increase spending by $2.4 trillion through 2031 with nearly $2.3 trillion in offsets.
CRFB also noted, however, that "because the legislation includes a number of temporary programs with arbitrary sunsets and expirations, ultimate costs could be much higher. We previously estimated that extending temporary provisions in the bill would double its gross costs to nearly $5 trillion."
The child tax credit would cost $190 billion over 10 years, according to the estimates, while universal pre-K would amount to $110 billion.
According to Secretary of Commerce Gina Raimondo, Biden will still get something signed by the end of it, even if it’s significantly different from his original proposal.
"The final bill the president signs, the law he signs, will look different than what he proposed, will look different from what came out of the House, but fundamentally it will be transformative," she told Yahoo Finance.
Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at firstname.lastname@example.org.