Making a Manchin out of a molehill: Senate infrastructure and budget debates heat up

Eversheds Sutherland (US) LLP

Fresh from their July 4 recess, the Senate has returned to Washington to continue infrastructure and budget bill negotiations. As previously discussed, there are two distinct legislative paths making their way through Congress: (1) a bipartisan infrastructure package; and (2) a Democratic budget reconciliation bill focusing on family aid, healthcare, and a global minimum tax. Important to the passage of both bills appears to be Sen. Joe Manchin (D-WV). Regarding the infrastructure package, Sen. Manchin is one of the twenty-two senators working to reach a bipartisan agreement on a $1.2 trillion infrastructure bill. The bipartisan bill would need 60 votes to pass the Senate. Regarding the budget bill, all 50 Democratic senators, including Sen. Manchin, plus Vice President Kamala Harris will need to vote in favor of the bill for it to pass.

On Tuesday, July 13, Sen. Manchin told reporters that he would not support a bipartisan infrastructure bill or a Democratic-only budget bill that was not fully supported by pay-fors. Pay-fors, the revenue raisers that support the spending provisions in legislation, are “scored” by the Congressional Budget Office (CBO) to determine how much a bill will officially cost. When spending provisions outweigh pay-fors, a deficit is created. (An example of scoring can be seen in the Treasury’s 2022 Green Book, which outlines the Biden Administration’s revenue proposals.)

It is unclear how some of the “pay-fors” being discussed, such as enhanced IRS enforcement, will be officially scored by the CBO even if they are expected to raise revenue in the real world. How the official scoring is done may become a critical question in determining final support for the bipartisan bill by Manchin and others. It is also unclear to what extent Manchin and the rest of the bipartisan group will focus solely on the official scoring or will in the end take into account “soft” pay-fors regardless of what the CBO says. In addition, there may be wiggle room on the bipartisan bill to lose a vote or two, including possibly Manchin’s, without jeopardizing passage.

In contrast, on the Democratic-only budget reconciliation bill there will be less room for anyone to maneuver in order to satisfy Manchin’s requirements and the strict Senate rules that apply to such bills. In a case of history repeating itself, the Senate requirements include the Byrd rule, which is named after a prior influential Senator from West Virginia and generally requires long-term deficit neutrality.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Eversheds Sutherland (US) LLP

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