After spiking earlier talks, Manchin agrees to a new deal on climate and taxes
Updated July 27, 2022 at 9:00 PM ET
Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., have released preliminary details of a bill to address climate change, taxes, health care and inflation.
The agreement is a major reversal for Democrats, who had narrowed their ambitions for the package to address looming lapses in the Affordable Care Act and changes to prescription drug prices after Manchin raised concerns over approving more spending during record inflation.
" After many months of negotiations, we have finalized legislative text that will invest approximately $300 billion in Deficit Reduction and $369.75 billion in Energy Security and Climate Change programs over the next 10 years," the senators said in a joint statement. "The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations."
The legislation — called the Inflation Reduction Act of 2022 — would also continue expansions to the Affordable Care Act that passed during the pandemic though 2025 and allow Medicare to pursue lower drug costs by negotiating directly with drug companies. Democrats say the plan avoids any new taxes on families making $400,000 or less and does not include any new taxes on small businesses.
Read the bill here.
The new agreement aims to "reduce carbon emissions by roughly 40 percent by 2030" and address inflation while also reducing the deficit, according to documents released by Schumer and Manchin. Schumer planned to submit the bill to the Senate parliamentarian for review on Wednesday night in order to start votes on the bill next week. Democrats plan to pass the bill using the budget process known as reconciliation to avoid a Republican filibuster, provided the legislation has unanimous support among Senate Democrats.
Manchin and Schumer say they have also reached an agreement with House Speaker Nancy Pelosi, D-Calif., and President Biden to pass a permitting reform bill by the end of the year, with the goal of easing permits for domestic energy production and transmission.
The agreement is a significant expansion of the very narrow bill Democrats had hoped pass through reconciliation before the midterm elections, though it still falls far short of the broader Build Back Better plan they began negotiating last year. That proposal initially included massive domestic spending to address climate, taxes, health care and social programs.
Manchin became the leading voice of opposition to major spending as inflation concerns grew in the country. He was able to single-handedly drive the talks because Democrats need unanimous support to pass the bill in the evenly divided Senate.
The agreement comes hours after the Senate passed a major bipartisan bill to expand domestic production of critical semiconductor chips that have been in short supply, leading to delays in the delivery of new cars and supply chain issues for smartphones, computers and medical equipment. Senate Minority Leader Mitch McConnell, R-Ky., had threatened to block the semiconductor bill, known as CHIPS, if Democrats continued to pursue climate and tax legislation.
Finalizing the CHIPS bill paved the way for Democrats to reach a deal without the threat of losing support for the semiconductor bill they viewed as a critical economic and political achievement.
The next step will be for the Senate Parliamentarian to assess whether the proposals meet strict Senate budget rules that govern the reconciliation process. Once that is done, it will go through a vote-a-rama, a process that would serve to circumvent the 60-vote threshold that bills normally must cross in order to be passed. The House must then pass a similar bill before President Biden signs it into law.
In a statement after the deal was announced, Biden praised it as "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," he said.
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JUANA SUMMERS, HOST:
It has been a busy day on the Senate side of Capitol Hill. In a minute, we'll hear from a Republican senator on a more than $50 billion spending plan for semiconductors. But first, Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin announced a new spending deal this evening that would include some climate spending previously spiked by Manchin. The two recently reached an agreement on a smaller package that's focused on reducing health care spending. NPR congressional correspondent Kelsey Snell has been gathering the details of this deal, and she joins us now. Hey there.
KELSEY SNELL, BYLINE: Hi there.
SUMMERS: So Kelsey, tell us what is included in this new agreement.
SNELL: Well, we'll start with the biggest items, and that includes nearly $370 billion for energy security and climate change. And those programs would last over the next 10 years. There's also $65 billion to extend elements of the Affordable Care Act through 2025. They're also pairing that with more than $300 billion in deficit reduction, which has been a really critical element for Manchin, who refused to go along with other proposals over fears that more spending would stoke already-record-breaking inflation in the country. So they plan to achieve that deficit reduction by introducing a 15% corporate minimum tax, and they say that would raise about $313 billion.
Plus, they want to expand IRS enforcement and have new tax changes for carried interest. So that's all in addition to the already-announced plans to allow Medicare to negotiate the cost of prescription drugs. You know, this is certainly a far cry from the trillions they had once hoped to spend on a plan that would have included child care and education, but it is also more than many Democrats expected.
SUMMERS: OK. Kelsey, Senators Schumer and Manchin have been going back and forth at this for months now. How did this agreement come together so suddenly?
SNELL: Well, it's a little bit of politics, maybe a little bit of theater, and definitely a lot of midterm election pressure. So this agreement was made public just a few hours after the Senate passed that critical semiconductor bill you mentioned. And Republicans had promised to block that bill as long as Democrats were still trying to pass a broader partisan bill on climate and taxes. Well, now that the semiconductor bill is done, Republicans have almost nothing to hold over Democrats, so they were able to move forward.
Democrats are also entering a really critical period ahead of the midterm elections. This upcoming August recess, which is an annual thing - Congress always leaves for a month in August - this year, it's all about campaigning and making a pitch to voters that Democrats not only need to stay in power; they need to gain seats in the Senate. And this is a bill that could do a lot with helping to overcome a lot of skeptics who question that Democrats haven't done much of anything with the time they've had in control of the House and the Senate. So that's why they want to vote on this next week. They want to send Democrats home armed with fresh success and a promise that it's just a down payment on bigger plans, just as long as voters show up.
SUMMERS: Fast is not necessarily a thing that I think the Senate often does.
SUMMERS: Is that even possible?
SNELL: When they say next week, they may mean the very end of next week or even the weekend, but it really is their goal. You know, the next step is to go through the process of vetting the proposals with the Senate parliamentarian, who will decide if the bills fit into the really strict rules for budget reconciliation, which is the system that allows Democrats to pass the bill without the threat of a Republican filibuster. Then, there's a lengthy voting process, and all of this hinges on the bill having unanimous support among Democrats, which isn't really known yet. Then, the bill still has to pass the House before going on to President Biden for his signature, but we do know that Biden supports the deal, and that'll add a lot of pressure on Democrats to get in line.
SUMMERS: All right, we'll keep watching. NPR's Kelsey Snell. Thank you.
SNELL: Thanks for having me. Transcript provided by NPR, Copyright NPR.