The week ends with growing signals from DC that Democrats are closing in on a deal to pass the President’s Build Back Better (BBB) program under the Budget Reconciliation process, and also approve the $1T bipartisan infrastructure bill that has passed the Senate and awaits action in the House.

The President’s initial proposal to have the BBB plan come in at $3.5T has been in real trouble for weeks as Senators Manchin and Sinema have been making clear that they couldn’t support that level of spending. 

Senator Manchin has been the most public that his limit is $1.5T and he has been consistent with his position.  Progressives, led by Senator Sanders, have been clear that they wanted a number as high as $6T and the $3.5T number represented a compromise for them.  Now, with the personal involvement of President Biden, a proposal appears to be emerging that is reportedly between $1.7T and $2.0T and could be agreed on next week.

Frustration is growing among Democratic voters as DC argues about a top number and nothing gets done.  Virginia Democratic Gubernatorial candidate Terry McAuliffe has argued that his campaign is lagging because the Democrats in Congress won’t help by passing the $1T infrastructure bill that offers the chance to create jobs and improve roads, bridges, airports, replace lead pipes, and expand broadband. 

Speaker Pelosi backed off her pledge to have a vote on the Senate passed legislation by September 27 and is now approaching her new target date of October 31.  Intramural arguing, and  failure to pass big bills, is taking its toll in the polls. President Biden’s numbers slip with each poll, and in Virginia, a state that has been trending Democratic, polls show the November 2 election too close to call.

There are reports that at the insistence of Senator Sinema some of the tax provisions have been cut back, but in my view this is very much in flux.  There is significant support for an increase in the corporate tax rate and an increase in the top personal rate, but new corporate offshore tax increases and capital gains increase may be taken off the table. Today Speaker Pelosi indicated that progress is being made, and others have said that are close enough that staff may begin drafting legislative language.  Next week should be a time of big decisions, driven by the White House, to close a deal.

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