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Democrats might drop union bonus for electric vehicle credit

Lawmakers look for compromise in bicameral reconciliation talks

Ways and Means Chairman Richard E. Neal is open to allowing a bonus credit for any electric vehicles assembled in the U.S., not just those subject to collective bargaining agreements.
Ways and Means Chairman Richard E. Neal is open to allowing a bonus credit for any electric vehicles assembled in the U.S., not just those subject to collective bargaining agreements. (Tom Williams/CQ Roll Call)

House Democrats are starting to acknowledge changes to their sweeping budget package that will be needed to get through the evenly divided Senate, such as dropping a special add-on tax credit for electric vehicles built with unionized labor.

House Ways and Means Chairman Richard E. Neal of Massachusetts said Tuesday that Michigan Rep. Dan Kildee, the author of the bill’s tax credits for electric vehicles, and others are having conversations with the Senate on how to address West Virginia Sen. Joe Manchin III’s concerns with those provisions. 

“I think we could still work that out,” Neal said.

Manchin has said he opposes the bonus credit for manufacturers of plug-in electric vehicles that rely on union labor.

But the additional credit is a sensitive subject among top Democrats, particularly with President Joe Biden visiting a General Motors Corp. electric vehicle plant in Michigan on Wednesday. GM’s Chevy Bolt is currently the only electric vehicle on the market that would qualify for the maximum credit under the House bill, according to the AFL-CIO.

The House’s reconciliation bill would grant up to $7,500 in tax credits for buying electric vehicles, but those credits would increase by an additional $4,500 if the vehicle’s final assembly takes place at a U.S. facility operating under a union-negotiated collective bargaining agreement. Manchin said last week while visiting a Toyota facility in his home state that he opposes the union bonus.

“This can’t happen. It’s not who we are as a country. It’s not how we built this country, and the product should speak for itself,” Manchin said, according to Automotive News. “We shouldn’t use everyone’s tax dollars to pick winners and losers. … Hopefully, we’ll get that … corrected.”

Neal said he’d consider a potential compromise that would allow the bonus credit for any electric vehicles assembled in the U.S., not just those subject to collective bargaining agreements. “I’d be open to something along those lines, yeah,” he said. 

The electric vehicle provision is one of several that top Democrats are still negotiating in response to Manchin’s concerns, including a new paid leave benefit in the House bill. Neal said he spoke to Manchin on Monday about that issue and believes there’s a “good shot” of retaining it.

House vote timing 

House Majority Leader Steny H. Hoyer, D-Md., said the chamber would begin debating the roughly $2 trillion package Wednesday while lawmakers are waiting on additional cost estimates from the Congressional Budget Office. A handful of moderate Democrats are withholding their support for the bill until they see if the CBO numbers align with preliminary estimates from the White House.  

The nonpartisan budget scorekeeper has released scores for eight of the 13 committee titles, but the five outstanding include some of the biggest pieces of the package: Ways and Means, Education and Labor, Energy and Commerce, Judiciary, and Natural Resources. 

The House will vote as soon as the CBO completes those estimates, “which does not necessarily mean a CBO score [for the overall package] and does not necessarily mean that every i and every t is crossed,” Hoyer said. “But it does mean that the overwhelming information will be available to members.” 

Thursday would be the earliest the House would vote and Saturday the latest, Hoyer said, while noting he hopes to avoid a weekend session.

Hoyer said he expects that the CBO’s estimates will be consistent with a preliminary cost analysis from the White House “and will therefore warrant the support of individuals sufficient to have 218 votes.”

Democrats can’t lose more than three votes, since no Republicans are expected to support the bill.

Moderates’ thinking

Florida Rep. Stephanie Murphy, one of the Democratic moderates pushing for the CBO estimates, said she wants to see all five outstanding titles before voting because they cover big issues “from climate change to immigration to taxes and drug pricing.” 

“All of those things are important to me, and I’d like to see what the estimates say,” she said. 

One piece for which Murphy and other moderates, like New Jersey Rep. Josh Gottheimer, say they expect the CBO estimate to differ from the White House analysis is revenue raised from the IRS’ ability to increase tax enforcement measures through $80 billion in new mandatory funding.

Treasury has estimated the $80 billion in spending would net $400 billion in revenue, whereas the CBO recently estimated it would net $120 billion. 

“We knew that based off of our negotiations during the infrastructure bill, so it doesn’t come as a surprise to anyone,” Murphy said, signaling she could accept that discrepancy. 

Another moderate, Oregon’s Kurt Schrader, said differing estimates on the tax enforcement revenue “would not dissuade me at this point.”

Murphy also said she would personally allow some deficit impact from climate-related spending, consistent with a House rule change she advocated earlier this year that allows climate spending to be treated as emergency spending that is exempt from pay-as-you-go rules. 

“I do not believe that the cost of [climate] inaction is adequately captured in CBO scores,” Murphy said.

‘Privilege scrub’

Meanwhile, the Senate has begun a “privilege scrub” of the House text to ensure everything in the package complies with that chamber’s reconciliation rules. Anything found in violation would need to be changed before the package gets to the Senate or the measure would lose its privileged status that allows it to pass with a simple majority instead of the usual 60 needed to end debate. 

The House would likely go back to the Rules Committee to report a rule adopting any changes needed to preserve the package’s reconciliation privileges. 

“There may be a need to go back to Rules for technical adjustments, but we don’t expect that to be a very robust process,” Hoyer said. 

If the House vote occurs before the Senate privilege scrub is complete, the House would have to adopt an enrollment correction removing any offending provisions from the bill. Any language updates beyond striking existing text would require a new House vote. 

‘Byrd bath’

After the privilege scrub, certain more contentious provisions will undergo what’s known as the “Byrd bath.” Under that process, Republicans can raise challenges to any policy changes Democrats included in the package that they think only have a merely incidental impact on the budget, which would be a violation of the Byrd rule, which sets stringent limits on what reconciliation can be used for. The Senate parliamentarian will hear both parties’ arguments and then issue an opinion.  

“Republicans can choose to Byrd bath a whole lot of provisions,” Senate Majority Leader Charles E. Schumer told reporters Tuesday. “Now if they try to be dilatory, the parliamentarian can cut them off, but that’s going to take a little while too. And then we will move to get the bill done.”

Some Senate committees have already begun the Byrd bath process. 

“Ours is pretty well worked out between the House and the Senate. So we’ve already done some preliminary work with the parliamentarian,” said Sen. Benjamin L. Cardin, who chairs the Small Business Committee. 

The Maryland Democrat said “minor” adjustments to some language are needed but noted, “We’re not running into major problems.”the

Cardin said his panel has a jump-start on the Byrd bath process because CBO has produced a cost estimate for its portion of the package, whereas other committees can’t get final opinions from the parliamentarian without CBO scores. 

Senate Judiciary Democrats have been waiting for weeks for the CBO to produce an estimate of its “Plan C” option for providing deportation relief for undocumented immigrants through temporary work permits. The parliamentarian said two earlier options that would’ve provided millions of undocumented immigrants with more permanent pathways to legal status were merely incidental to the budget, violating the Byrd rule. 

Senate Banking Chairman Sherrod Brown of Ohio said he doesn’t see any Byrd problems in his portion of the bill, while Finance Chair Ron Wyden of Oregon also remains optimistic his pieces will survive, including new prescription drug pricing language. 

With all the procedural steps, the Senate is not expected to vote on the package until sometime in December. 

Schumer was careful not to offer a specific timetable, saying only, “We aim to pass it before Christmas.”

Jessica Wehrman and David Lerman contributed to this report.

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