President Biden’s intentions to split up his Build Back Better bill after Sen. Joe Manchin ended its hopes of passing last month offers public finance advocates new hope for the inclusion of advance refunding, a bank-qualified expansion and a direct-pay bond program in the resulting legislation.
In a press conference Wednesday, Biden said he now supports splitting up his signature social spending package by putting those provisions most likely to receive enough support to pass now in a bill to be passed as soon as possible and the other, more controversial provisions in another bill for another time.
“I think we can break the package up, get as much as we can now and come back and fight for the rest later,” President Biden said. “There’s really two big components that I feel strongly about that I’m not sure I can get in the package. One is the child care tax credit and the other is help for the cost of community colleges.”
But Manchin, D-W, Va., who tanked discussion on the previous bill, had signalled his support for certain environmental provisions, which President Biden hopes to take advantage of before the midterm elections later this year.
“I think it’s clear that we would be able to get support for the $500 billion plus for energy and the environment,” Biden said.
The municipal bond market saw its priorities gutted from the reconciliation bill in November after House Ways and Means Committee Chairman Richard Neal had added them in. The President’s comments represent a new dawn for the muni market’s legislative priorities.
“The president’s statement reflects the logical, pragmatic next step," said Chuck Samuels, member at Mintz Levin and counsel for the National Association of Health & Educational Facilities Finance Authorities. "The reality is that there are huge components in the BBB bill that as standalone items are very significant and could garner bipartisan support. Bipartisanship will be key if this is not done through budget reconciliation so this will bring any willing Republicans back into the process.”
“For the public finance community, which was largely left out of the BBB legislation, there is a new opportunity to promote small borrowers and advance refunding,” Samuels continued. “In general, standalone bills will be smaller than the sum of the parts of [BBB], but there’s always room for additional items."
“Our community needs to take advantage of this, get in gear and out of our doldrums,” he added.
Muni market advocates
“It certainly highlights new opportunities in 2022 that we were hoping for,” said Emily Brock, director of the federal liaison center at the Government Finance Officers Association. “[President Biden’s] strategy is only a potential gain for us.”
By breaking up the bill into those provisions that may gain bipartisan support and those that surely won’t, he’s also diminishing the immediate price tag, which could help the relatively affordable muni provisions to be included.
“Even in a $500 billion bill, we are extremely cheap,” Brock said. Others are hoping that this signals that Biden is open to including other provisions that may have been left out during negotiations last year.
“We hope that the President, by stating that the package needs to be ‘passed in chunks,’ is opening the door to bringing back some important muni policies in this broadened and elongated effort,” said Brett Bolton, vice president of federal legislative and regulatory policy at the Bond Dealers of America.
“The BDA remains focused on advancing key muni policy priorities that were included in the original Build Back Better Act in mid-2021,” he added. “While those provisions were removed as a cost savings mechanism late last year, we continue to press Congress and the administration to revisit that decision.”
But uncertainty amid a closely divided Congress remains. Manchin has yet to lend his support to the strategy, telling reporters on Wednesday that “I haven’t talked to anyone about what’s going on,” he said. “I’m just hearing the same thing you’re hearing.”
