Reconciliation Outlook

September 16, 2021

Lawmakers across the aisle and on both sides of the Capitol are in the midst of working on the annual Budget Reconciliation bill—this year to the tune of Senate Democrats proposed $3.5 trillion economic plan, the Build Back Better proposal.

This major spending bill is moving through the reconciliation process—a procedural process in the Senate that enables lawmakers to pass a handful of budget related bills free from threat of filibuster each year. This year, that means bipartisanship is not a concern for Senate Democrats—much as has been the case for Republicans when they’ve been the party in power. On the House side a simple majority is needed to pass any bill meaning that if anything is to pass the narrowly divided Senate, House Republicans must pass a deal that is palatable to all 50 Senate Democrats.

Following the recent Senate and House passage of the budget resolution—which amounts to an agreement on the general outline of the budget for the coming year—various committees are now putting together their sections of the reconciliation bill. Once those bills are crafted, marked-up and passed in their respective committees of jurisdiction, they will have to get final approval from both the full Senate and House before being sent to the White House.

During the week of Sept. 7, committees of jurisdiction in the House began to mark-up portions of the Build Back Better Act, a human infrastructure plan that includes parts of President Biden’s infrastructure bill. House Leadership is aiming for all committees to finish their markups by Sept. 15.

The key provisions of the bill relative to small business are:

Paid Family Leave – the legislation contains 12 weeks of paid family and medical leave starting in July 2023. NSBA is opposing this provision – read more here.

Mandated Retirement Enrollment – this provision requires employers without employer-sponsored retirement plans to automatically enroll their employees in IRAs or 401(k)-type plans and imposes an excise tax on an employer for failing to maintain or facilitate an automatic contribution plan or arrangement. NSBA is opposing this provision – read more here.

Expanding Organized Labor – one provision under the House Education and Labor Committee package includes language from the NSBA-opposed Protecting the Right to Organize (PRO) Act which would drastically and fundamentally change the nature and scope of the National Labor Relations Act (NLRA) and labor-management relations in the private sector. NSBA continues to oppose these provisions – click here to read more.

Small Business Aid – this proposal from the House Small Business Committee would provide $25 billion in small-business aid over the next decade for entrepreneurship training, business incubators, aid for underrepresented small businesses and new direct lending programs. NSBA generally supports efforts to expand small business investment – click here to read more.

Tax Pay-Fors – this piece of the package is how it will be paid for, and lawmakers have endorsed tax increase proposals of $2 trillion over 10 years, including graduated increased tax rates for corporations and top-earning individuals, higher capital gains taxes, a limit to the qualified business income deduction and much more. While the tax increase proposals appear to want to ease increased burdens for the smallest of businesses, it adds layers of complexity and could have a stifling effect on small-business growth – click here to read more.

Democratic leaders now face challenges in tying the bipartisan infrastructure bill passed by the Senate to the budget bill. While there is broad support for the infrastructure bill, some Democrats in the House have said they will not vote for the bill unless the $3.5 reconciliation bill gets a vote in connection with the infrastructure bill.

House Speaker Nancy Pelosi said she would have a vote on the infrastructure bill by Sept. 27, however moving the massive budget bill through the House and Senate by that deadline could prove difficult.