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A U-Turn on Climate Change Reforms and Business Tax Increases

A U-Turn on Climate Change Reforms and Business Tax Increases, a “Reconciliation” Bill Is Brought Back to Life

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

  • Yes, you heard that right: The Senate and House are now poised to vote on a “reconciliation” bill that most of us thought was DEAD on July 14th.
    • Analysis: AND, we now have confirmation that – at least in the initial iteration of this “reconciliation” bill – Sen. Manchin has agreed to a NON-“means tested” extension of the “enhanced premium subsidies,” and the extension is for 3 years (not just 2 years). Adding a 3rd year makes sense, as ACA supporters as well as the insurance carrier community argued that only going with a 2-year extension would result in the need to extend the enhanced premium subsidies yet again right before the Presidential election in Nov. 2024. Which may prove difficult, especially if Republicans re-take the majority in the House in the 2022 mid-term elections. BUT, adding a 3rd costs $$$, as does extending BOTH prongs of the “enhanced premium subsidies” with NO “means testing.” BUT, it appears that Leader Schumer and Sen. Manchin have the $$$ to pay for not only a 3-year extension of BOTH prongs of the “enhanced premium subsidies,” but also $300 billion worth of deficit reductions, which is something that Sen. Manchin demanded all along.

 

Let’s Talk $$$ and “The Dials”

  • As I have told you in my updates (see below), when it comes to building out a “reconciliation” bill, it’s all about “the dials” and “doing the math,” which is driven by how much $$$ the bill raises in tax revenue and/or saves in spending reductions.
    • Analysis: By way of example, in this initial iteration of the agreed upon “reconciliation” bill, Leader Schumer and Sen. Manchin were able to “dial” the extension of the “enhanced premium subsidies” to 3 years and there is NO “means testing.” BUT, will those “dials” have to be turned in the coming days, prior to votes on the Senate floor? How or why would changes need to be made? Well, the Senate Parliamentarian has NOT yet ruled on whether ALL of the drug pricing reforms that are included in this initial iteration of the agreed upon “reconciliation” bill satisfy the “reconciliation” rules. If, for example, the Parliamentarian rules that certain aspects of the reforms must FALL OUT of the underlying “reconciliation” bill, this will impact the current $288 billion that the original proposal saves through spending reductions. If that happens, then Leader Schumer and Sen. Manchin will have some decisions to make regarding “the dials.” For example, will the extension of the “enhanced premium subsidies” need to be “means tested” to lower the cost of the extension?? Would the extension have to be cut down to ONLY 2 years to save $$$?? At this stage of the game, I think the answer is NO to BOTH questions.  What I mean is, even if the drug pricing reforms save less $$$ than the $288 billion, I think Sen. Manchin will turn “the dials” on other provisions included in this iteration of a “reconciliation” bill (e.g., some of the climate change reforms or even the deficit reduction payments). BUT, I have been wrong before – and I am sure I will be wrong again – so we’ll just have to wait and see.

 

Let’s Talk About a Plan B

  • As stated, I have been wrong before – and I will be wrong again – but I can’t help to think the following: In the event Leader Schumer and Speaker Pelosi are UNABLE to get a majority of Congressional Democrats to YES on this latest Schumer-Manchin “reconciliation” bill, I STILL BELIEVE that (1) the drug pricing reforms and (2) “some form” of an extension of the “enhanced premium subsidies” will get to the President’s desk.
    • Analysis: Think about it. For the past couple of months, Leader Schumer and Sen. Manchin were trying to find common ground on a “reconciliation” bill that included climate change reforms and deficit reductions paid for with drug pricing reforms and business tax increases. An extension of the “enhanced premium subsidies” was on the outside-looking-in. BUT, on the evening of July 14th, reports trickled out that Sen. Manchin could NOT support climate change reforms and business tax increases, but Sen. Manchin COULD support drug pricing reforms and “some form” of an extension of the “enhanced premium subsidies.” In the days following July 14th, word was getting out that – while incensed that Sen. Manchin pulled the plug on climate change reforms and tax increases – all 50 Senate Democrats and a majority in the House would vote YES on a “reconciliation” bill that ONLY included (1) drug pricing reforms and (2) “some form” of an extension of the “enhanced premium subsidies.” Soooooooo, for at least the past week, getting this health care-only “reconciliation” bill to the President’s desk looked PRETTY PRETTY good. Fast-forward to the evening of July 27th.  Leader Schumer and Sen. Manchin issued a surprise announcement that Sen. Manchin in NOW BACK ON BOARD with climate change reforms and business tax increases, and it’s confirmed that the extension of the “enhanced premium subsidies” is NOT “means tested” and it’s a 3-year extension. Which leads us to where we are today. HOWEVER, we STILL do NOT know whether all 50 Senate Democrats and a majority in the House will vote YES on this latest iteration of a Schumer-Manchin “reconciliation” bill. At this point, it’s a 50/50 bet on whether this Schumer-Manchin “reconciliation” bill gets through the Senate and/or the House, although I believe the public is betting heavy on Democrats getting to YES on this iteration. Personally, I’m NOT there yet.  BUT, I am betting heavy on this:
      • I believe there is a Plan B in the back pocket of Leader Schumer and Sen. Manchin, and that Plan B is this: If things fall apart on this latest iteration of a “reconciliation” bill, Schumer and Manchin will pivot back to the health care-only “reconciliation” bill because they know they have the YES votes on (1) drug pricing reforms and (2) “some form” of an extension of the “enhanced premium subsidies.” What “form” an extension could end up taking is currently NOT known. Maybe we will never know (because maybe the latest Schumer-Manchin “reconciliation” bill gets through the Senate and House and to the President’s desk, so NO NEED for Plan B).

 

Last Comments: Timing?

When it comes to the timing on when all this could get done, there’s a lot to piece together:

  • First, the Senate Parliamentarian STILL has to rule on the drug pricing reforms.
    • Maybe we get that ruling today (Friday).  If not today (Friday), then certainly next week.
  • Second, once the Parliamentarian rules on the drug pricing reforms, the Parliamentarian MUST start reviewing the climate change reforms and business tax provisions included in this latest iteration of the Schumer-Manchin “reconciliation” bill.
    • Just to give you some perspective, that is HUNDREDS of pages of legislative language the Parliamentarian must review. That will TAKE TIME.
    • In addition, Senate Republicans MUST be given an opportunity to review the language and then schedule a meeting to argue to the Parliamentarian why they believe certain aspects of the language violate the “reconciliation” rules.
    • The Parliamentarian must weigh these arguments against her initial review of the language, and then make a final ruling.
    • Just to give you some more perspective, the drug pricing reform legislative language was given to the Parliamentarian in and around the week of July 11th (although the Parliamentarian had this language prior to that). Senate Republicans got their day in court on July 21st (to argue why certain aspects of the drug pricing reforms violate the “reconciliation” rules).  It’s now July 29th (and we STILL do NOT have a ruling from the Parliamentarian).
    • Note, maybe it will take LESS time to review (and rule on) the climate change reforms and business taxes than it is taking to review (and rule on) the drug pricing reforms. But again, it just TAKES a TON of TIME to get through the Parliamentarian review process.
  • Third, in the event the Parliamentarian bounces certain aspects of ANY of the provisions included in the current iteration of the Schumer-Manchin “reconciliation” bill, changes to the underlying bill WILL HAVE to be made.
    • Will those changes screw up the delicate balance of having gotten all 50 Senate Democrats and a majority of the House to YES on the current iteration?? If so, that will SLOW DOWN the process.
    • ALSO, any re-negotiated language would have to be run by the Parliamentarian. Again, that adds MORE TIME to the process.
  • Fourth, once the language is green-lighted by the Parliamentarian, the “reconciliation” bill will be brought to the Senate floor.
    • Once on the Senate floor, it will probably take 3 days to get to a final vote.
    • Then, the bill will go to the House, where it will probably take 2 days to get to a final vote.

 

Reports indicate that Leader Schumer wants to bring the current iteration of the “reconciliation” bill to the Senate floor the week of Aug. 1st (next week). Speaker Pelosi has said the bill will then be brought to the House floor some time the week of Aug. 8th. After connecting dots on everything said above, do you think that time-line is feasible?? I will let you answer that question. The DRAMA continues, so stay tuned…