Manchin says he has reached agreement with Democrats on economics and climate law

Suspension

Senator Joe Manchin III (DW.Va) on Wednesday reached an agreement with Democratic leaders on a spending package aimed at lowering health care costs, combating climate change and reducing the federal deficit, presenting a huge potential breakthrough for longtime President Biden. Proven economic agenda.

The new agreement, brokered between Manchin and Senate Majority Leader Charles E. Schumer (DNY), opens the door for party lawmakers to try to advance the measure in the coming weeks. It is the culmination of months of violent debate, delay and strife, a level of infighting that some Democrats have deemed detrimental to their political destiny ahead of crucial elections this fall.

Under the deal, Schumer secured Manchin’s backing for approximately $433 billion in new investment, much of it focused on climate change and energy production. They paired spending with provisions aimed at lowering health care costs for Americans, mainly by allowing Medicare to begin negotiating the price of prescription drugs on behalf of seniors.

To pay for the package, Manchin and Schumer also settled on a series of tax code changes that would raise $739 billion over the next decade — enough to offset the cost of the bill while also securing more than $300 billion to cut the deficit, a priority from Manchin. Democrats got money from new policies including a new minimum corporate tax and new investments in the Internal Revenue Service that will help it pursue tax fraud.

Taken together, the package represents more than some Democrats once thought they could win from Manchin, who has repeatedly raised financial concerns about his party’s ambitions. Just two weeks ago, the temperate of West Virginia, a coal-heavy state, He indicated his opposition to new climate investments out of concern that increased spending – financed in part by tax increases – could hurt the economy and exacerbate inflation.

But the new agreement still falls far short of what Democrats had hoped to achieve through the more comprehensive, nearly $2 trillion initiative known as the Building Back Better Act. Manchin invalidated his party’s proposed reform of the country’s health care, education, climate, immigration and tax laws last December, angering Democrats. He described that plan, which has since been abandoned, in bold terms on Wednesday.

For a long time, the debate over reconciliation in Washington has been deManchin said in a lengthy statement, referring to the Democrats’ initial and largest spending package that carried Biden’s campaign slogan for 2020.

“Building back better is dead,” Manchin said, “and instead we have the opportunity to make our country stronger by bringing Americans together.”

Meanwhile, Biden called the legislation “historic,” emphasizing in a statement: “This is the action the American people have been waiting for.” The White House issued its own ultimatum earlier this month, asserting that if Congress does not take action on climate change, Biden will issue executive orders to address the problem.

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

With an agreement in hand, Schumer quickly proceeded to brief members of his party on the bill, dubbed the Inflation Reduction Act of 2022. It came as a surprise to some Democratic lawmakers, illustrating the turbulent and secret negotiations between Schumer and Manchin, which spanned months.

From here, Schumer aims to finalize the proposal and move it forward through a process known as reconciliation. This tactic allows Democrats to band together and move their spending bill across the narrowly divided Senate using the 50-vote vote and comma power of Vice President Harris, avoiding Republican opposition and disruption.

This dynamic has long afforded Manchin tremendous leverage in the talks, which once began with rosy hopes that Democrats could reshape vast swathes of the economy — buoyed by as much as $6 trillion in spending. Even as Biden looked to “build back better,” Manchin maintained a fiscally cautious stance, recently capturing a record inflation rate as a reason for restraint.

In the latest development this month, Manchin issued an ultimatum to his party: He said Democrats could cut climate spending and pass a small bill in July or try again on a more comprehensive package if economic indicators show an improvement later. The senator later asserted that he supports efforts to respond to global warming, though his demands have left Democrats in a rage, fearing that the costs of inaction on the planet will be dire and deadly.

Publicly, Schumer and top Democrats chose to prioritize a smaller proposal, and settled on a health care package that Manchin could support. But behind the scenes, the Democratic leader has continued to advocate climate spending. Suddenly, on Wednesday, he and Manchin announced the outlines of their agreement: tax breaks and other proposals aimed at lowering energy costs, increasing clean energy production and reducing carbon emissions by nearly 40% by 2030.

“There is no better time to announce a significant deal on a climate emergency than when you are in the midst of a heat wave,” said Senator Chris Van Hollen (D-MD), who was briefed on the plan late Wednesday. “A lot of us were very worried that we weren’t going to get anything on this front.”

The agreement came in part because Schumer, House Speaker Nancy Pelosi (D-CA), and Biden also agreed to seek new legislation that would relax federal permit 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 introduce their next bill. Manchin in particular has given priority to the Alaskan drilling project and the natural gas pipeline that runs through West Virginia.

Some Democratic senators in recent days have also sought the intervention of Larry Summers, a former Treasury secretary who has been highly critical of the previous Biden stimulus bill, according to two people familiar with the matter, who spoke on the condition of anonymity to describe the private conversations. Summers was among the economists who first warned that inflation would rise.

The two men spoke this week, and Manchin listened as Summers detailed why the Democrats’ proposed economic package — including energy provisions — wouldn’t drive prices up, People said. Manchin occasionally consulted with Summers throughout the past year, and the senator’s allies were insistent that his views were consistent throughout the negotiations. A Summers spokeswoman declined to comment.

On health care, meanwhile, Schumer secured Manchin’s support to extend three-year tax credits that help lower health insurance costs for about 13 million Americans. Without action from Congress, these individuals would have seen premium increases next year on plans purchased through insurance exchanges — a financial headache for families and a political dilemma for Democrats sensitive to price hikes.

The deal also allows Medicare for the first time to negotiate drug prices, a policy Democrats have launched for years. It also includes a $2,000 annual cap for seniors on their out-of-pocket spending on prescription medications. But it represents a major departure from the once-in-a-generation health care remake that some Democrats wanted, after lawmakers sought a major expansion of Medicare and other new benefits for seniors.

Jeff Stein, Rachel Rubin, and Maxine Gosselo contributed to this report.