Optimism remains for a resurrected, though likely downsized, Build Back Better package — and for municipal market-friendly provisions — despite opposition from key Sen. Joe Manchin.
“If this means the bill is dead, then any chances for muni provisions may be dead,” said Charles Samuels of Mintz Levin, counsel to the National Association of Health & Educational Facilities Finance Authorities. “But I wouldn’t be surprised if they try to resurrect a version of the bill in shrunken form, keeping hopes alive.”
Manchin, D-W.Va., whose vote is needed to usher the high-profile legislation through the 50-50 divided Senate, told Fox News on Sunday that he was “a no,” expressing concerns with the cost of the $1.75 trillion bill amid rising inflation, COVID-19 uncertainty and growing national debt.
Senate Majority Leader Chuck Schumer vowed Monday that the Senate would bring the bill to a vote early in 2022 despite Manchin’s opposition.
"We are going to vote on a revised version of the House-passed Build Back Better Act — and we will keep voting on it until we get something done," Schumer said.
Also Monday, Manchin appeared to point to a path forward when he said the legislation should go through Senate committee hearings and that he still wants to roll back the tax cuts in the Tax Cuts and Jobs Act of 2017.
“I won't continue to go down everything you want to do, major policy changes and reconciliation. It needs to go through a process,” Manchin said. The Senate did not hold any hearings on the bill.
The municipal bond market had its hopes dashed early when the House bill, which passed in November,
"There’s no doubt that this is a major setback in the broader Biden Build Back Better Agenda, albeit it one that has been projected by Senator Manchin for months now,” said Brett Bolton, vice president of federal legislative and regulatory policy at the Bond Dealers of America. “We do not believe that this is the end to the conversation surrounding muni provisions however, and plan to continue lobbying in support of these provisions as discussion around BBB continue, including breaking the package into multiple bills, potentially providing additional opportunities, as well other spending vehicles down the legislative road."
In a Dec. 20 special commentary, Wells Fargo said Manchin’s move marked “a major step backwards,” but that the agenda may be resurrected next year in a smaller form.
“Instead of abandoning BBB altogether, perhaps Democrats in Congress and the Biden administration will return in January and attempt to slim down the package while making all the policies that remain permanent,” Wells Fargo analysts said. “If a package does come together, we suspect it would look something like this: about $1.5 trillion in total size, but with fewer new spending programs/tax credits and a greater share of permanent policies than the House-passed BBB plan.”
Wells Fargo added that it expects the bill’s fate will be decided in the first quarter of 2022.
