Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. Government funding. China competition. Russia sanctions. Electoral count reform. Federal Reserve nominations — and oh yeah, an open Supreme Court seat. Democrats determined to salvage something from the president’s Build Back Better agenda must contend with a crowded congressional calendar that could distract from their latest efforts at compromise. Can they pull something off? Policy analysts give it about a 50-50 chance. “It’s a little bit of a Groundhog Day story,” said Andy Laperriere, policy analyst for Cornerstone Macro research firm. “What’s changed is now there is more of a realistic assessment of what could get done.” Investors and executives, after anticipating a huge new government spending package last year, have shifted their focus from fiscal policy to monetary policy, as the Fed steps up its efforts to defeat inflation. And Wall Street firms dialed back their expectations for 2022 economic growth after Build Back Better stalled late last year. But there are signs of life: President Joe Biden has acknowledged that it will be necessary to pare back the White House’s agenda to advance parts of the plan that have enough support. And progressives have signaled they’re ready to acquiesce to some of Sen. Joe Manchin’s (D-W.Va.) demands to secure a legislative win. Then again, there are moments like yesterday, when Manchin was asked whether he was engaged in negotiations on Build Back Better: “No, no, no, no. It’s dead.” Asked to clarify, Manchin said, “If we’re talking about the whole big package, that’s gone.” Would he mind a smaller version? “We’ll see what people come up with. I don’t know.” OK then. What would a smaller measure potentially look like? Rep. Pramila Jayapal (D-Wash.) said Manchin has told her he supports these portions of the House-passed legislation: $550 billion on climate change, universal pre-K, eldercare, child care, lowering prescription drug costs and housing provisions. Jayapal, a prominent House progressive, called on Congress last week to move quickly to pass portions of the legislation, our colleagues reported. But it’s still not entirely clear whether all progressives would go along with such a dramatically scaled back plan, said Alec Phillips, chief political economist for Goldman Sachs. “It means that you probably have to tell people that more than two-thirds of the things in the bill that they were looking for are not going to be in there,” Phillips told MM. “And the question is, can you really do that when you need basically every vote in both chambers?” There’s also the matter of the calendar. Congress is a deadline-driven institution, but there aren’t many dates on the calendar that could pressure lawmakers to secure a deal, save for the upcoming government funding deadline (Feb. 18) and the president’s State of the Union address (March 1). “My impression is people are sort of thinking about Easter as the time when, if they haven’t gotten it done by that recess, then it’s probably hard to see it happening,” Laperriere said. On the other hand, Democrats still control both chambers and the White House, so the old adage of “nothing happens in an election year” may not play out the same way. Wall Street isn’t holding its breath. At this point, whatever package eventually comes together probably won’t have much impact on the economy this year, Phillips said. Traders on the website PredictIt put the odds of Build Back Better passing by April 1 at just 6 percent on Tuesday. “People are not foreclosing the possibility of any type of a bill happening, but at the same time it seems like there’s very little focus on it at the moment and probably not much being priced in,” Phillips said. IT’S WEDNESDAY — What to call the compromise legislation? Slate’s Jordan Weissmann had this savage suggestion: The Reducing Inflation, Deficits, and C02 and Improving Childcare but Ultimately Leaving Ourselves Unsatisfied Act, aka The RIDICULOUS Act. Send us your rebranding ideas, along with tips and takes, at kdavidson@politico.com, aweaver@politico.com, and on Twitter @katedavidson and @aubreeeweaver.
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