WASHINGTON – Senator Joe Manchin III of West Virginia, a key centrist Democrat, announced Wednesday that he has agreed to include hundreds of billions of dollars for climate and energy programs as well. such as raising taxes in a health care subsidy package and reducing prescription costs. drugs, less than two weeks after suddenly hoping for such a deal this summer.
Package will spend $369 billion on climate and energy proposals, the most ambitious climate action ever taken by Congress and raise an estimated $451 billion in new tax revenues over a decade, while cutting federal spending on prescription drugs by $288 billion, according to a summary circulated on Wednesday night.
The product of a deal announced by Mr Manchin and Senator Chuck Schumer, New York Democrat and majority leader, it would reduce the federal deficit by about $300 billion, while also seeking to reduce it health care costs, prescription drugs, and electricity. .
The plan doesn’t align with the ambitious domestic policy and tax package President Biden proposed last year, but Democrats, looking ahead to the midterm elections are likely to be shaped by Voters’ concerns about rising costs, saw this as a targeted attack on rapid pricing. The surge has sent US consumers flocking to wallets this year, with inflation at a 40-year high.
The announcement hinted that Democrats could move in the coming days to salvage a major part of their domestic agenda, which just weeks ago appeared to have been ruined by Mr Manchin’s refusal. Sign up quickly. Top Democrat release law on Wednesday night, aiming to vote as early as next week.
“This is the action the American people have been waiting for,” Biden said in a statement, calling on both houses to quickly pass the measure. “This addresses the problems of today – high health care costs and overall inflation – as well as investing in our energy security for the future.”
It is not clear what has changed Mr Manchin’s mind since he said less than two weeks ago that he could not support such a package until he saw inflation numbers for July, expected will not be issued for another two weeks. But quiet talks have resumed between Mr Manchin, Mr Schumer and their staff in recent days, according to a person familiar with the negotiations.
The sudden announcement came just a few hours later passed a giant industrial policy bill aims to strengthen America’s competitiveness with China that Senator Mitch McConnell, a Kentucky Republican and minority leader, has said he will never support as long as Democrats continue continued efforts to push through their domestic policy bill in the face of objections from the GOP. But that legislation still needs clarification in the House, and Republican leaders in that room have said they will instruct their ranks to oppose it once news of the deal becomes available.
With the Senate split 50-50 and Republicans unanimously opposed, Democrats need unanimous support within their party and Vice President Kamala Harris’ breakthrough vote to pass the plan under the rules. special rules to protect certain budget bills. Mr Manchin’s protest has been the main obstacle to doing so so far, giving him an effective veto over its contents – and a final decision on whether any measure can be taken. through the Senate or not.
The fact that he embraces the plan does not guarantee it will move forward. Several senators declined to comment on the deal when they heard about it Wednesday night until they knew more about it. That includes Senator Kyrsten Sinema, an Arizona Democrat who is also a supporter of her party’s domestic policy measures. (A spokesman said the senator needed to review the legislation.)
But by evening, several key Liberal Democrats rallied behind the plan.
“This legislation will be the largest pro-climate law ever passed by Congress,” Schumer said in a separate statement, thanking Mr Manchin. agreement.”
The tax increases included in the agreement will largely fall on multinational corporations and private equity firms, and will be accompanied by a crackdown on high-income individuals and businesses seeking to how to avoid paying the taxes they owe.
One possible clue to Mr Manchin’s shift appeared in a joint statement he made with Mr Schumer that they had secured pledges from both Mr Biden and Speaker Nancy Pelosi of California that Congress would pass. a separate measure to address the permitting of energy infrastructure, potentially including natural gas pipelines, before the end of the fiscal year on September 30.
That could facilitate a project in which Mr Manchin has a personal interest, the Mountain Valley Pipeline, which will transport Appalachian shale gas from West Virginia to Virginia.
Democrats said the Senate could pass legislation next week, although some procedural and congressional hurdles remain. It must adhere to strict budget rules as Democrats plan to move it under a complex budget process known as mediation that allows certain fiscal measures to pass with only a simple majority. simple.
The act “will make a historic payment towards deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by approximately 40% by 2030,” he said. Manchin and Mr Schumer said in their joint statement. The two senators added that “we urge every member of the United States Senate to support this important legislation.”
Republicans disagreed with the announcement, reiterating their opposition to the Democrats’ plan.
“Democrats have crushed American families with historic inflation,” McConnell said on Twitter. “Now they want to pile on huge tax increases that will hit workers and kill thousands of American jobs. First they kill your family budget. Now they also want to kill your job.”
Sen. Lindsey Graham, a South Carolina Republican, expressed dismay that Manchin “agrees to a massive tax increase in the name of climate change when our economy is in recession.”
“I hope that common sense will eventually win the day,” he added. “What I’m hearing about the terms of this latest settlement makes no sense.”
But in his own statement, Mr Manchin hailed the deal as good for the economy, the climate and people’s pockets.
“Instead of risking more inflation with trillions of new spending, this measure would cut the inflation taxes Americans are paying, reduce health insurance and prescription drug costs, and ensure our country invests in the energy security and climate change solutions we need to sustain. Mr Manchin said.
He noted that the bill, called the Inflation Reduction Act of 2022, makes a clear distinction between it and the ambitious billion-dollar domestic policy plan that Mr. Biden and Democrats have proposed. in Congress spent much of last year’s hard work getting it passed.
“Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together,” he said.
Manchin also rejected a lengthy request from some House Democrats to raise the state and local tax withholding limits as part of the final package, adding that “our tax code I shouldn’t favor red state elites or blue states with loopholes like SALT. “
The deal doesn’t align with Mr. Biden’s initial proposals to significantly expand social safety net programs and pay for them by taxing corporations and income earners. high. But it is significantly larger than a package aimed at reducing prescription drug costs and expanding subsidies that extend under the Affordable Care Act that Democrats have reluctantly concluded is the amount they can afford. hopes pass this summer after Mr Manchin privately told party leaders this month that he would not support any climate or tax proposals in the short term.
Both health care section will allow for the first time Medicare to directly adjust prescription drug prices start in 2023. It would also last through 2025, an expansion of high-profile subsidies that Democrats first passed in 2021 as part of the $1.9 trillion pandemic aid bill of the United States. them, preventing lapses later this year.
The plan would raise most of the revenue from the new tax, estimated at $313 billion, by imposing minimal taxes on the so-called book income of large corporations, like Amazon and FedExcurrently using tax credits and other measures to lower their tax rate below the 21 percent corporate income tax rate in the United States.
It would raise another $14 billion by reducing tax-advantaged treatment on income earned by venture capitalists and private equity firms, has long been a goal of the Democratic Party.
It invests $30 billion in manufacturing tax credits for solar panels, wind turbines, batteries and key mineral processing; $10 billion in tax credits to build clean technology manufacturing facilities; and $500 million to be used through the Defense Production Act for heat pumps and critical mineral processing.
The deal also includes a $7,500 vehicle-tested tax credit to make new electric vehicles more affordable, and a $4,000 tax credit for used electric vehicles, according to the summary. package. Both credits will be offered only to lower and middle income consumers.
The measure also includes a methane fee that will begin in 2025.
It will also include $60 billion to address the disproportionate pollution burden on low-income and communities of color, $27 billion for a “green bank” to provide financial assistance. for clean energy projects and $20 billion for programs that can cut emissions in the agricultural sector.
The announcement of the deal stunned environmental advocates.
“I honestly don’t know what to say,” said Samuel Ricketts, co-founder and senior advisor of Evergreen Action, an environmental group. “Obviously we would need to see the details, but everyone worked hard to save a deal. This has the opportunity to be a huge breakthrough towards climate progress.”
Manchin said the plan includes a “realistic climate and energy policy” that would “allow us to decarbonise while ensuring America’s energy is affordable, reliable, clean and safe.” .”
“As the world’s superpower, it is vital that we do not undermine our superpower status by phasing out reliable and affordable fossil fuel energy before technologies ready to reliably carry the load,” Manchin said in a statement, highlighting investments in fossil fuels as well as renewables.
Mr. Biden has vowed to cut US emissions by about 50% by the end of the decade, a goal that scientists say is crucial to helping keep global temperature rise at 1. ,5 degrees Celsius by the end of this century. That’s the threshold beyond which scientists say the risk of catastrophic heatwaves, fires and floods increases dramatically.
If the package is enacted, it could bring the United States closer to Biden’s goal, according to a summary of the deal released by Democrats.
Catie Edmondson and Stephanie Lai contribution report.
