Manchin, in inversion, agrees to quick action on climate and fiscal plan

WASHINGTON — Sen. Joe Manchin III of West Virginia, a key centrist Democrat, announced Wednesday that he has agreed to include hundreds of billions of dollars for climate and energy programs and tax increases in a package to subsidize health care and reduce the cost of prescription drugs, less than two weeks after it abruptly dashed hopes of such a deal this summer.

The package would set aside $369 billion for climate and energy proposals, the most ambitious climate action ever taken by Congress, and generate about $451 billion in new tax revenue over a decade, while reducing federal spending on prescription drugs by $288 billion, according to a summary released Wednesday evening.

The result of an agreement announced by Mr. Manchin and Senator Chuck Schumer, Democrat of New York and Majority Leader, it would reduce the federal deficit by about $300 billion, while seeking to lower the cost of health care. health, prescription drugs and electricity. .

The plan falls far short of the ambitious domestic policy and fiscal package that President Biden proposed last year, but Democrats, eyeing midterm elections likely to be shaped by voter concerns about the surge costs, framed it as a targeted attack on the rapid price increases that have bloated US consumers’ wallets this year, with inflation at its highest level in 40 years.

And while many details weren’t immediately available, the announcement suggested Democrats could act in the coming days to salvage a major piece of their national agenda, which just weeks ago seemed doomed. failed given Mr. Manchin’s refusal to sign quickly.

“This is the action the American people have been waiting for,” Biden said in a statement, calling on both houses to pass the measure quickly. “It solves the problems of today – high health care costs and global inflation – as well as investments in our energy security for the future.”

It is unclear what changed Mr Manchin’s mind as he said just two weeks ago that he could not support such a package until he saw the figures from the inflation for July, which should not be published for another two weeks. But quiet negotiations had resumed between Mr. Manchin, Mr. Schumer and their staffs in recent days, according to a person familiar with the talks.

The abrupt announcement came just hours after the passage of a massive industrial policy bill aimed at boosting American competitiveness with China that Senator Mitch McConnell, Republican of Kentucky and Minority Leader, said that ‘he would never support as long as Democrats continued their efforts to push their marquee domestic policy bill over GOP opposition.

With a Senate split 50-50 and Republicans evenly opposed, Democrats need unanimous support within their party and the decisive vote of Vice President Kamala Harris to pass the plan under special rules that protect certain bills from a buccaneer’s budget law. Mr. Manchin’s resistance has always been the main obstacle to this, giving him an effective veto over its content – and the final say on whether a measure passes through the Senate.

His adherence to the plan did not guarantee that he would go ahead. Several senators declined to comment on the deal after hearing about it Wednesday night until they knew more. That included Sen. Kyrsten Sinema, an Arizona Democrat who has been another holdout to her party’s domestic policy measure. A spokeswoman for her said the senator needs to review the legislation.

The tax increases included in the deal would fall largely on multinational corporations and private equity firms, and come with a crackdown on high-income individuals and corporations seeking to avoid paying the taxes ‘they must.

A possible clue to Mr. Manchin’s change of heart came in a line from his joint announcement with Mr. Schumer that they had secured a commitment from Mr. Biden and Speaker Nancy Pelosi of California that Congress would approve a measure to respond to the authorization of energy infrastructure, potentially including gas pipelines, before the end of the financial year on September 30.

That could pave the way for a project Mr. Manchin has a personal interest in, the Mountain Valley Pipeline, which would transport Appalachian shale gas from West Virginia to Virginia.

Democrats have said the Senate could pass the legislation by next week, though a number of parliamentary and procedural hurdles remain. He must follow strict budget rules as Democrats plan to push him through the murky budget process known as reconciliation that allows certain tax measures to pass with only a simple majority.

The legislation “will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by approximately 40% by 2030,” said MM. . Manchin and Schumer in their joint statement. The two senators added that “we urge every member of the United States Senate to support this important legislation.”

Republicans balked at the announcement, reiterating their opposition to the Democrats’ plan.

“Democrats have already crushed American families with historic inflation,” McConnell said on Twitter. “Now they want to rack up giant tax hikes that will hammer hard workers and kill thousands of American jobs. First they killed your family budget. Now they want to kill your job too.

In his own separate statement, Mr Manchin hailed the deal as good for the economy, the climate and people’s wallets.

“Rather than risk more inflation with trillions in new spending, this bill will reduce the inflation taxes Americans pay, reduce the cost of health insurance and prescription drugs, and ensure that our country is investing in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination,” Mr. Manchin said.

He called the bill the Cut Inflation Act of 2022, drawing a clear distinction between it and the ambitious multi-trillion-dollar domestic policy plan proposed by Mr Biden and the Democrats in Congress has spent most of the last year working hard to pass.

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

The deal falls far short of Mr Biden’s initial proposals to overhaul the government’s role in the economy and pay for it by taxing businesses and high earners. But it’s an important addition to the package aimed at lowering the cost of prescription drugs and expanding the expanded Affordable Care Act subsidies to which Democrats had resigned themselves after Mr. Manchin said privately. to party leaders this month that he would not support any climate or tax proposals in the short term.

The plan would raise the bulk of its new tax revenue, estimated at $313 billion, by imposing a minimum tax on the so-called book income of large corporations, like Amazon and FedEx, which currently use tax credits and tax credits. other maneuvers to reduce their tax rates. lower than the 21% corporate tax rate in the United States.

That would raise an additional $14 billion by reducing preferential tax treatment for income from venture capitalists and private equity firms, which has long been a goal of Democrats.

Congressional aides and climate activists said the climate investments were roughly in line with what had been negotiated over the past few months: tax credits to accelerate the development of wind, solar and other low-carbon energies, as well as government assistance to boost technologies. that Mr. Manchin favours, such as hydrogen and nuclear.

The deal will also include a means-tested $7,500 tax credit to make new electric vehicles more affordable, according to three people familiar with the details. The measure also includes a methane levy that will begin in 2025, said the three people, who spoke anonymously because they were not authorized to discuss details.

Also included will be $60 billion to address the disproportionate burden of pollution on low-income communities and communities of color, $27 billion for a “green bank” to provide financial support for clean energy projects and $20 billion for programs that can reduce emissions in the agricultural sector.

The news of the deal stunned conservationists.

“Honestly, I don’t know what to say,” said Samuel Ricketts, co-founder and senior adviser of Evergreen Action, an environmental group. “We’re going to need to see the details, obviously, but people have worked hard to salvage a deal. This has the opportunity to be a huge breakthrough for climate progress.

Mr Manchin said the plan includes a “realistic energy and climate policy” that will “allow us to decarbonize while ensuring that American energy is affordable, reliable, clean and secure”.

“As the world’s superpower, it is essential that we do not undermine our superpower status by removing reliable and affordable fossil energy before new technologies are ready to reliably carry the load,” Mr. Manchin said. in a statement, which highlighted investments in fossil fuels. combustible energy as well as renewable energy.

“It’s really all of the above, which means this bill doesn’t arbitrarily cut off our abundant fossil fuels,” he said.

Mr. Manchin has personal financial ties to the coal industry and has received more campaign contributions from the fossil fuel industry than any other member of the Senate. He had been vilified by environmentalists over the past year and a half of negotiations on the climate bill, as they blamed him for single-handedly thwarting the nation’s response to a planetary crisis.

Mr Biden has pledged to cut US emissions by about 50% by the end of this decade, a goal that scientists say is key to helping keep global temperature rises to 1.5 degrees Celsius by the end of this century. This is the threshold beyond which scientists say the danger of catastrophic heat waves, fires and floods increases dramatically.

If the package passes, it could bring the United States closer to Mr. Biden’s goal, according to a summary of the deal released by Democrats.

Catherine Edmondson and Stephanie Lai contributed report.