Tax Update Blog

State of Play: Manchin’s opposition to Reconciliation Bill puts in Question Congress passing It

December 20, 2021 | Blog
By Jay Heflin

Senator Joe Manchin’s (D-W.Va.) statement on December 19th that he will not support the budget reconciliation bill does not mean that the legislation is dead, but its path to enactment has gotten much trickier and the fate of its tax provisions are unclear.  

The legislation under discussion in the Senate has already passed the House

State of Play:

Democratic Senate leaders took Manchin’s opposition to the bill to mean that he opposes the legislation as it is currently written and that changes to the text might entice him into supporting it. Senate Majority Leader Chuck Schumer (D-NY) basically said as much in a December 20th statement: 

“Senators should be aware that the Senate will, in fact, consider the Build Back Better Act, very early in the new year… 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 stated.

Before Manchin stated his opposition to the bill, there was an expectation that provisions in the bill would be scaled back and eventually the legislation would be enacted into law. Now, it won’t be until next year before the legislation’s fate is known.

All Senate Democrats (along with Vice President Harris) must support the reconciliation bill for it to pass the Senate. This makes securing Manchin’s support vital to President Biden getting his economic package enacted into law.

Possible Sticking Points?

Manchin has many of issues with the bill, and if not corrected could keep him from supporting the legislation. Below are a few of the issues he has with the bill’s tax provisions.

Child Tax Credit:

Manchin has stressed that the enhanced Child Tax Credit (CTC) should be means-tested and require recipients to be employed.  

He also wants the credit to be extended for ten years, instead of the one-year extension in the House-passed bill. Such an extension would cost roughly $1.6 trillion, according to unofficial estimates.  

If Democratic leaders were to agree with this extension, then nearly all other incentives would need to be stripped from the legislation. The House-passed bill costs $1.75 trillion and a ten-year extension of the Child Tax Credit cost just about as much.  Manchin also opposes increasing the bill’s price, leaving little wiggle room to add more provisions to the bill if the CTC is extended for a decade.

Renewable Energy:

Manchin has discussed with Senate leaders cutting tax incentives that promote the use of renewable fuels over the use of coal and fossil fuels. On Sunday, he made the following remarks on this subject:

“If enacted, the bill will also risk the reliability of our electric grid and increase our dependence on foreign supply chains. The energy transition my colleagues seek is already well underway in the United States of America… [W]e have invested billions of dollars into clean energy technologies so we can continue to lead the world in reducing emissions through innovation. But to do so at a rate that is faster than technology or the markets allow will have catastrophic consequences for the American people,” he stated.

Stripping the House-passed bill of its green energy provisions would cut the legislation’s overall cost by $10.2 billion, according to the Joint Committee on Taxation (JCT), Congress’s official cost estimater for tax provisions.

Manchin has also suggested that he does not support $12,500 in tax credits for buying an electric car from a union shop. He also supports income limits for those who qualify for these credits.

Tax Increases In?

Manchin has been adamant that the reconciliation bill should not add to the deficit or debt. He is also a proponent of deficit reduction. There is the possibility that the tax increases in the House-passed bill remain in the final piece of legislation even if the overall price of the bill decreases, thereby allowing the excess revenue raised to be used for deficit reduction.

The House passed its reconciliation bill on November 19th. Its tax increases can be found here.

Possible Death Knell for the Bill?

Manchin wants the reconciliation bill to go through Senate committees so that its provisions can be properly vetted, he told West Virginia Metro News’ “Talkline with Hoppy Kercheval.”

If followed through, this proposal would likely be the death-knell for the legislation.  

The Senate is evenly divided with 50 Republicans and 50 Democrats.  The party breakdown in committees is also evenly split.

Getting a reconciliation bill passed out of committee to the Senate Budget Committee (as prescribed by reconciliation rules) requires a majority vote of committee members. No Republican is expected to support this bill, so it will not receive the votes needed to advance out of committee.

If Manchin insist that the reconciliation bill go through Senate committees, it will not be passed out of those committees, it will not pass the Senate, and it will not become law.


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