Manchin, Schumer say they have energy, health care deal
WASHINGTON — In a startling turnabout, Senate Majority Leader Chuck Schumer and Sen. Joe Manchin announced Wednesday they had reached an agreement that had eluded them for months on health care, energy and climate issues, taxes on higher earners and corporations and federal debt reduction.
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 run-up to November congressional elections in which their control of Congress is in peril. A House vote would come perhaps later in August.
Unanimous Republican opposition in both chambers seems certain.
Just hours earlier, the expectation was that Schumer, D-N.Y., and Manchin, D-W.Va., appeared headed toward a far narrower package that Manchin was insisting be limited to curbing pharmaceutical prices and extending federal health care subsidies. Earlier Wednesday, numerous Democratic senators had said they were all but resigned to the more modest legislation.
There was no immediate explanation for Manchin’s about-face. Since last year, he had used his pivotal vote in the 50-50 Senate to force Biden and Democrats to abandon far more ambitious and expensive versions of the package. 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 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.
Tellingly, Democrats were calling the measure “The Inflation Reduction Act of 2022” because of its 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 proposed larger packages has been premised in part on his worry that they would fuel inflation.
The measure also 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.
Manchin said the new measure “would dedicate hundreds of billions of dollars to deficit reduction by adopting a tax policy that protects small businesses and working-class Americans while ensuring that large corporations and the ultra-wealthy pay their fair share in taxes.”
The overall proposal is far more modest that the $3.5 trillion package Biden asked Democrats to push through Congress last year, and the pared-down roughly $2 trillion version that the House approved last November after Manchin insisted on shrinking it. Even then, Manchin shot down that smaller measure in December, 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, $124 billion from beefing up IRS tax enforcement and $14 billion from taxing some “carried interest” profits earned by partners in entities like private equity or hedge funds.
The measure would spend $369 billion on energy and climate change initiatives and $64 billion to extend federal subsidies for three years for some buying private health insurance. Those subsidies, which lower people’s premiums, would otherwise expire at the end of this year.
That would leave $306 billion for debt reduction, an effort Manchin has been demanding.
Sen. John Cornyn, R-Texas, said the Democratic agreement would be “devastating to American families and small businesses.”