What you need to know about the Manchin-Schumer agreement on climate, taxes and health care

In a surprise twist Wednesday afternoon, Sen. Joe Manchin, DW.Va., announced that he had reached an agreement with Senate Majority Leader Chuck Schumer on legislation that would address climate change, reduce prescription drug prices and institute a mandatory minimum tax on corporations

Manchin, who recently tested positive for COVID and has suggested delaying any major legislative action until later in the year, said in a long statement that he and Schumer had reached an agreement on the 725 pages and a $739 billion proposal.

“From now on, the discussion about a future reconciliation bill or any specific legislation must focus on supporting the everyday hardworking Americans we have been elected to serve,” Manchin said. “I support the Reduce Inflation Act of 2022 because it provides a responsible path forward that is laser-focused on solving our nation’s major economic, energy and climate problems. The question for my colleagues is whether they are willing to put aside their electoral politics and take the common sense approach that the overwhelming majority of the American people support and that will best serve the future of this nation.”

Senator Joe Manchin.

Senator Joe Manchin on July 19. (Shutterstock)

The senator, who represents a state former President Donald Trump carried by nearly 40 points in 2020, has been one of the highest-profile roadblocks to the Democratic agenda. Just two weeks ago, Manchin had said that could not support a bill with climate and tax provisions until he saw additional data on inflation.

“It’s like two brothers from different mothers, I guess. He gets pissed off, I get pissed off, and we go back and forth. He basically made statements and the dogs chased me again.” Manchín told Politico of his discussions with Schumer, adding: “I didn’t know if it could come to fruition. I really didn’t know, okay, so why talk about something, again, raise people’s hopes? I have everyone’s anger.”

In his own statement praising the news, President Biden said: “This is the action the American people have been waiting for. This addresses today’s problems (high health care costs and general inflation) as well as investments in our energy security for the future. … I want to thank Senator Schumer and Senator Manchin for the extraordinary effort it took to achieve this result.”

What would the bill do?

The bill would address two major Democratic priorities: climate change and lowering prescription drug prices. The law would invest $369 billion in clean energy, with the goal of reducing carbon emissions by 40% by 2030. This includes tax credits to encourage the manufacture of equipment such as solar panels and wind turbines and the purchase of electric vehicles. The bill also includes funds for research and state programs, as well as to reduce pollution and preserve forests and coastal habitats. The announcement comes as parts of the nation and the world are affected by Heat waves.

Wind turbines silhouetted against the setting sun as they produce electricity near Beaumont, Kansas.

Wind turbines near Beaumont, Kansas. (Charlie Riedel/AP)

“By a wide margin, this legislation will be the largest pro-climate legislation Congress has ever passed,” Schumer said in a statement. “This legislation combats the climate crisis with the urgency that the situation demands and puts the US on a path to an emissions reduction of approximately 40% by 2030, while creating new, high-paying, short-term jobs. long term”.

If passed, the legislation would also allow Medicare to negotiate directly with prescription drug companies, lowering drug costs and limiting out-of-pocket drug costs for older Americans. It would also provide subsidies for Obamacare premiums that are due to expire, keeping health care costs low for many Americans.

The bill does not contain a series of provisions previously considered by Democrats that would reverse much of the Trump tax cuts that disproportionately benefited corporations and the wealthiest Americans, but would impose a minimum 15% corporate tax rate on companies earning more than $1 billion annually and would modify the “carried interest loophole”, which allows hedge and private equity fund managers to pay lower taxes on much of their compensation. The bill would also boost IRS enforcement of tax cheating as a means to boost income and uphold Biden’s promise not to raise taxes on families earning less than $400,000 per year.

All told, the proposed bill is a compromise between Biden’s initial proposal, which would have significantly expanded social programs, and the framework many Democrats agreed to earlier this month that would have only addressed drug prices. prescription drugs and health care subsidies.

Is the passage of the bill certain?

Senator Kyrsten Sinema of Arizona.

Sen. Kyrsten Sinema, D-Arizona, in May. (Tom Brenner/Reuters)

No. Because the bill is unlikely to gain support from Republicans, it needs all 50 members of the Democratic caucus to vote yes for the Senate to go through the reconciliation process. Getting Manchin signed is a big step, but there is still some hesitation. Sen. Kyrsten Sinema, D-Ariz., had opposed plans to tax high-income Americans and corporations last fall and appeared unaware of details of the deal when Manchin and Schumer announced it on Wednesday, with his office saying that “you will have to revise the text.” Sinema is up for re-election in 2024 and is likely to face a major contender.

In addition to Sinema, Sen. Bob Menendez, DN.J., told Axios Wednesday night that there was “problems” with the dealciting the failure to remove the cap on the state and local income tax (SALT) deduction that affects only some of the highest-earning Americans. This could also be a problem in the House, where House Speaker Nancy Pelosi has such a slim majority that she can only afford a few Democratic defections if the bill is to pass. Several centrists there, including Democratic Rep. Josh Gottheimer, who also represents New Jersey, also want the SALT cap removed and were allegedly considering not requiring new taxes in the deal earlier this month.

There is also the possibility that the Senate parliamentarian, an advisory position that Democrats could choose to ignore, rules that some of the provisions Schumer hopes to include in the bill will not be eligible.

“I expect that the remaining work with the parliamentarian will be completed in the coming days and the Senate will vote on this transformative legislation next week,” Schumer said in a statement.

Why are Republicans unhappy?

Senate Minority Leader Mitch McConnell walks through the Capitol Rotunda.

Senate Minority Leader Mitch McConnell walks through the Capitol Rotunda on Wednesday. (Nathan Howard/Getty Images)

Hours before Manchin and Schumer announced their deal, 17 Republicans voted with all Democrats present to pass the $280 billion Science and Chips Act, intended to boost American semiconductor production and fight China. The Republican leadership felt those votes meant the chance of Democrats coming together to pass a bill to address climate change and raise taxes on corporations was dead.

“Let me be perfectly clear: There will be no bipartisan USICA [U.S. Innovation and Competition Act] long as Democrats pursue a partisan reconciliation bill,” McConnell tweeted on June 30.

Republicans hoped that by passing a smaller bipartisan infrastructure deal last year could stop the rest of Biden’s broader agenda, a strategy that seemed to be working until Manchin and Schumer’s announcement. Speaking to Laura Ingraham of Fox News on Wednesday night, Sen. Tom Cotton, R-Arkansas, said the deal “obviously it was a double crossManchin’s. Cotton said the deal was not yet certain to pass, citing Sinema, whom Republicans have courted in the past.

On Thursday morning, Sen. John Kennedy, R-Los Angeles, told Fox News: “The Democrats basically sucked up my Republican votes like a Hoover Deluxe and then got their votes and then, bam, they announced their new tax increase. . There aren’t many coincidences here on Capitol Hill, I think the timing was exquisite. We look like a lot of… well, I’m not going to say what we look like.”


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