Manchin, Schumer in surprise deal on health, energy, taxes
WASHINGTON — In a startling turnabout, Senate Majority Leader Chuck Schumer and Sen. Joe Manchin announced an expansive agreement Wednesday that had eluded them for months addressing health care and climate, raising taxes on high earners and corporations and reducing federal debt.
The two Democrats said the Senate would vote on the wide-ranging measure next week, setting up President Joe Biden and Democrats for an unexpected victory in the runup to November elections in which their congressional control is in peril. A House vote would follow, perhaps later in August, with unanimous Republican opposition in both chambers seemingly certain.
Just hours earlier, Schumer, D-N.Y., and Manchin, D-W.Va., seemed at loggerheads and headed toward a far narrower package limited — at Manchin's insistence — to curbing pharmaceutical prices and extending federal health care subsidies. Earlier Wednesday, numerous Democrats said they were all but resigned to the more modest legislation.
The reversal was stunning, and there was no immediate explanation for Manchin's abrupt willingness to back a bolder, broader measure. Since last year, he has used his pivotal vote in the 50-50 Senate to force Biden and Democrats to abandon far more ambitious, expensive versions. He dragged them through months of negotiations in which leaders' concessions to shrink the legislation proved fruitless, antagonizing the White House and most congressional Democrats.
“This is the action the American people have been waiting for. This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future," Biden said in a statement. He added, “If enacted, this legislation will be historic, and I urge the Senate to move on this bill as soon as possible, and for the House to follow as well."
Tellingly, Democrats were calling the measure “The Inflation Reduction Act of 2022” because of provisions aimed at helping Americans cope with this year's dramatically rising consumer costs. Polls show that inflation, embodied by gasoline prices that surpassed $5 per gallon before easing, has been voters’ chief concern. For months, Manchin’s opposition to larger proposals has been partly premised on his worry that they would fuel inflation.
Besides inflation, the measure seemed to offer something for many Democratic constituencies.
It dangled tax hikes on the wealthy and big corporations and environmental initiatives for progressives. And Manchin, an advocate for the fossil fuels his state produces, said the bill would invest in technologies for carbon-based and clean energy while also reducing methane and carbon emissions.
“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination,” Manchin said.
Schumer called the bill Congress' “greatest pro-climate legislation.” He said it would also cut pharmaceutical prices, reduce federal deficits and “ensure the wealthiest corporations and individuals pay their fair share in taxes.”
The measure would reduce carbon emissions by around 40% by 2030, Schumer and Manchin said. While that would miss Biden's 50% goal, that reduction, the measure's climate spending and the jobs it would create are “a big deal," said Sen. Jeff Merkley, D-Ore., an environmental advocate who had been upset with the absence of those provisions until now.
The overall proposal is far less aspirational than the $3.5 trillion package Biden asked Democrats to push through Congress last year, and the pared-down, roughly $2 trillion version the House approved last November after Manchin insisted on shrinking it. Even then, Manchin shot down that smaller measure the following month, asserting it would fuel inflation and was loaded with budget gimmicks.
In a summary that provided scant detail, Democrats said their proposal would raise $739 billion over the decade in new revenue. That included $313 billion from a 15% corporate minimum tax that a Manchin statement suggested would affect only “billion-dollar companies or larger."
The agreement also contains $288 billion the government would save from curbing pharmaceutical prices and $124 billion from beefing up IRS tax enforcement. Another $14 billion would come from taxing some “carried interest” profits earned by partners in entities like private equity or hedge funds.
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