Manchin says he’s reached a deal with Democrats on economy and climate bill

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Sen. Joe Manchin III (DW.Va.) on Wednesday reached an agreement with Democratic leaders on a spending package aimed at cutting health care costs, tackling climate change and reducing the federal deficit, marking a massive potential breakthrough for President Biden’s long term. – stalled economic program.

The new agreement, brokered between Manchin and Senate Majority Leader Charles E. Schumer (DN.Y.), opens the door for party lawmakers to try to push the measure forward in the coming weeks. It caps months of fierce debate, delays and acrimony, a level of infighting that some Democrats saw as damaging their political destiny ahead of this fall’s critical election.

As part of the deal, Schumer secured backing from Manchin for about $433 billion in new investment, much of it focused on climate change and power generation. They tied the spending to provisions aimed at lowering health care costs for Americans, primarily by allowing Medicare to begin negotiating the price of certain prescription drugs on behalf of seniors.

To pay for the package, Manchin and Schumer also opted for a series of tax law changes that would bring in $739 billion over the next decade – enough to offset the cost of the bill while securing more than $300 billion. to reduce the deficit, a priority. of Manchin. Democrats pulled the cash from new policies, including a new minimum corporate tax and new investments in the Internal Revenue Service that will help it prosecute tax cheats.

Taken together, the package represents more than some Democrats once thought they could win against Manchin, who has repeatedly raised budget concerns about his own party’s ambitions. Just two weeks earlier, moderate West Virginia, a coal-rich state, signaled his opposition to new climate investments, fearing that increased spending – funded in part by tax hikes – could hurt the economy and worsen inflation.

But the new deal still totals far less than Democrats hoped to achieve through the more sweeping roughly $2 trillion initiative known as the Build Back Better Act. Manchin scuttled his party’s proposed overhaul of the country’s health, education, climate, immigration and tax laws last December, angering Democrats. He described the since-abandoned plan in provocative terms on Wednesday.

“For too long, the reconciliation debate in Washington has beenefined by how he can help advance the Democrats political agenda called Build Back Better,” Manchin said in a lengthy statement, referring to the initial and larger Democrats spending package that carried the slogan of Biden’s 2020 campaign.

“Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together,” Manchin said.

Biden, meanwhile, called the legislation “historic,” stressing in a statement, “It’s the action the American people have been waiting for.” The White House had issued its own ultimatum earlier this month, stressing that if Congress did not act on climate change, then Biden would issue executive orders to address the issue.

“It solves the problems of today — high health care costs and headline inflation — as well as investments in our energy security for the future,” Biden said.

With a deal in hand, Schumer quickly set about briefing his party members on the bill, dubbed the Cut Inflation Act of 2022. It surprised some Democratic lawmakers, illustrating the tumultuous negotiations and secrets between Schumer and Manchin, which lasted for months.

From there, Schumer aims to finalize the proposal and move it forward in the process known as reconciliation. The tactic allows Democrats to band together and push their spending bill through the tightly divided Senate using their 50 votes and Vice President Harris’ tie-breaking power, avoiding opposition and opposition. Republican filibuster.

That dynamic has long given Manchin immense leverage in the talks, which began with bright hopes that Democrats could redo vast swaths of the economy — backed by up to $6 trillion in spending. Even as Biden sought to “build back better,” Manchin has maintained a cautious fiscal disposition, recently seizing record inflation as the reason for the restraint.

In the latest twist this month, Manchin essentially gave his party an ultimatum: He said Democrats could omit climate spending and pass a small bill in July or try a more comprehensive package again if economic indicators showed improvement later. The senator then stressed that he supports efforts to address global warming, though his demands have left Democrats seething, fearing the costs of inaction to the planet will be disastrous and deadly.

Publicly, Schumer and top Democrats chose to prioritize a smaller proposal, settling for a health care package that Manchin could support. Behind the scenes, however, the Democratic leader continued to advocate for climate spending. Suddenly, on Wednesday, he and Manchin announced the first contours of their deal: tax credits and other proposals aimed at cutting energy costs, increasing clean energy production and reducing carbon emissions from about 40% by 2030.

“There’s no better time to announce a significant deal on a climate emergency than when you’re in the middle of a heat wave,” Sen. Chris Van Hollen (D-Md.), briefed Wednesday evening, said. plan. “A lot of us were very worried about not getting anything on that front.”

The deal came in part because Schumer, House Speaker Nancy Pelosi (D-Calif.) and Biden also agreed to seek and pass new legislation easing federal permitting rules for pipelines and other infrastructure. In the coming months. Such regulatory changes must be addressed separately from the Democrats’ spending package, given the rules under which lawmakers hope to advance their next bill. Manchin notably prioritized a drilling project in Alaska and a gas pipeline that runs through West Virginia.

Some Democratic senators have also in recent days called for an intervention from Larry Summers, the former Treasury secretary who strongly criticized Biden’s earlier stimulus bill, according to two people familiar with the matter, who spoke on condition of anonymity to describe private conversations. Summers was among the economists who first warned that inflation would rise.

The pair spoke this week, and Manchin listened to Summers detail why the Democrats’ proposed economic package — including its energy provisions — wouldn’t lead to higher prices, the people said. Manchin has consulted with Summers at times throughout the past year, and the senator’s allies have been adamant that his views have been consistent throughout the negotiations. A spokeswoman for Summers declined to comment.

On health care, Schumer won Manchin’s support for a three-year extension of tax credits that help lower health insurance costs for about 13 million Americans. Without congressional action, these people would have seen their premiums rise next year on plans purchased through insurance exchanges — a financial headache for families and a political conundrum for price-sensitive Democrats.

The deal also allows Medicare to negotiate drug pricing for the first time, a policy Democrats have campaigned on for years. And it also includes a $2,000 annual cap for seniors on their out-of-pocket prescription drug spending. But it amounts to a significant shift from the one-size-fits-all remake of health care some Democrats wanted, after lawmakers called for a major expansion of Medicare and other new benefits for seniors.

Jeff Stein, Rachel Roubein and Maxine Joselow contributed to this report.

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