Manchin says he has health, energy, tax deal with Schumer
Washington — In an unexpected turnabout, Sen. Joe Manchin announced Wednesday that he had reached an expansive agreement with Senate Majority Leader Chuck Schumer that had eluded them for months on health care costs, energy and climate issues, taxing higher earners and large corporations and reducing federal debt.
Manchin, D-W.Va., whose resistance had long derailed sweeping legislation on those issues, abruptly revealed the agreement in a press release.
The deal would include $433 billion in new investments and raise federal revenues by $739 billion, according to a fact sheet released by Manchin and Schumer shortly after the announcement.
The revenue would be raised through a 15% minimum tax on corporations estimated at $313 billion; a policy to allow Medicare to negotiate drug prices and cap out-of-pocket costs at $2,000 estimated at $288 billion; IRS enforcement of the tax code estimated at $124 billion; and closing a "carried interest loophole" that allows investment managers to pay a lower tax rate estimated at $14 billion.
"Energy security and climate change" — described as policies that would lower energy costs, increase production of clean energy and reduce carbon emissions by around 40% by 2030 — is estimated to cost $369 billion. Extending expanded Affordable Care Act subsidies through 2025 is estimated at a cost of $64 billion.
The full Senate plans to consider the plan next week, Schumer and Manchin said in a joint statement.
They added that they have reached a deal with President Joe Biden and House Speaker Nancy Pelosi to pass permitting reform legislation before the end of the fiscal year. "We urge every member of the U.S. Senate to support this important legislation," they said.
Schumer and Manchin released the full text of the bill Wednesday evening. The climate provisions include a used clean vehicle tax credit of $4,000 and a new clean vehicle tax credit of $7,500. It would lift the 200,000 vehicle per manufacturer cap that has already stopped General Motors Co. and Tesla Inc. from continuing to benefit from the existing credit.
The bill also includes consumer tax credits and rebates to make homes more energy-efficient, production tax credits for manufacturing renewable energy tools and other clean technology, funding for environmental justice-related grants, and funding for "climate-smart" agriculture.
The prescription drug policies would allow Medicare to begin negotiating the price of prescription drugs in 2023, create an "inflation rebate" under Medicare if companies raise prices higher than inflation, make all vaccines free for seniors, and more.
Manchin, one of the most conservative Democrats in Congress, just last week said he would only agree this month to far more limited legislation curbing prescription drug costs and extending federal subsidies for health care costs.
He said he was open to considering a broader compromise on environment and tax issues after Congress returns from a summer recess in September, an offer that many Democrats thought dubious.
Biden released a statement Wednesday evening thanking Schumer and Manchin "for the extraordinary effort" it took to reach the agreement.
"This is the action the American people have been waiting for," he said. "This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future."
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.
Michigan Sen. Debbie Stabenow, D-Lansing, praised the legislation in a statement Wednesday night: "Not only will this bill lower costs and create good-paying jobs, the bill will bring down prescription drug costs by allowing Medicare to negotiate. Democrats are putting the American people first."
There was no immediate explanation why Manchin had suddenly agreed to the far broader package. In December, his resistance derailed a wide-ranging $3.5 trillion, 10-year social and environment bill that was President Joe Biden’s top domestic priority.
In his statement, Manchin said the 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.”
Sen. Kyrsten Sinema, D-Ariz., who backed Manchin last year in insisting on making the legislation less expensive but objected to proposals to raise tax rates, was still reviewing the agreement, said spokeswoman Hannah Hurley. The spokeswoman referred a reporter to Sinema comments last year supporting a corporate minimum tax.
Sen. John Cornyn, R-Texas, said the Democratic agreement would be “devastating to American families and small businesses. Raising taxes on job creators, crushing energy producers with new regulations, and stifling innovators looking for new cures will only make this recession worse, not better.”
But if Democrats can hold their troops together, GOP opposition would not stop them.
The key is Democratic unity. They can prevail if they lose no more than four votes in the House and remain solidly united in the 50-50 Senate, where Vice President Kamala Harris can cast the tie-breaking vote.
“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.
Collin O’Mara, president and CEO of the National Wildlife Federation, hailed Manchin’s announcement. “This agreement affirms that we can address the climate crisis, lower costs for consumers, lift up frontline and rural communities, and invest in made-in-America jobs and clean energy innovation,” O’Mara said.
Sierra Club Legislative Director Melinda Pierce took a more cautious approach. “We are eager to see text of this legislation, and are grateful that Biden and Schumer have remained resolute in finding a path to pass once-in-a-generation investments in our communities, our economy, and our future,” she said.
Detroit News Washington Correspondent Riley Beggin and Alan Fram of the Associated Press contributed.