Economic forecasters are downgrading predictions for the United States’ GDP growth in 2022 following news that Sen. Joe Manchin (D-WV) will oppose the Build Back Better reconciliation bill in its current form.
“BBB enactment had already looked like a close call and in light of Manchin’s comments we are adjusting our forecast to remove the assumption that BBB will become law,” said a team at Goldman Sachs led by chief U.S. economist Jan Hatzius, according to MarketWatch.
Without programs like the enhanced child tax credit guaranteed, Goldman moved the GDP forecast for the first quarter of 2022 from 3 percent to 2 percent, from 3.5 to to 3 in the second quarter and from 3 to 2.75 in the third quarter.
“While BBB in its current form looks unlikely, there is still a good chance that Congress enacts a much smaller set of fiscal proposals dealing with manufacturing incentives and supply-chain issues,” the team wrote. “There is also still a chance that Congress retroactively extends the expanded child tax credit, with some modifications, though we think the odds of this occurring are less than even.”
Mark Zandi of the Moody’s Analytics economic team took to Twitter with a similarly bleak forecast.
“Without BBB, the economic recovery will be vulnerable to stalling out if we suffer another serious wave of the pandemic; an increasingly likely scenario with Omicron spreading rapidly,” he wrote.
“It puts the economic recovery at some risk in the near-term and will diminish the economy longer-run,” he added, noting that fallout will be “quick” as families with children lose the tax break of the child tax credit, which expires after a final Dec. 15 payment.
Manchin announced his opposition to the bill in its current form Sunday during a Fox News interview. He’d already forced the bill down to a third of its original size and axed many key programs over months of protracted negotiations. The White House responded to his announcement with a blistering statement accusing him of not negotiating in good faith.