WASHINGTON — Senate Majority Leader Chuck Schumer told fellow Senate Democrats on Thursday they now have an opportunity to achieve two “hugely important” priorities on health care and climate change, if they stick together and approve a deal he brokered with hold-out Democratic Sen. Joe Manchin.
Schumer spoke at a private meeting after the startling turnaround over an expansive agreement he and Manchin struck that had eluded them for months. The Democratic leader’s comments were relayed by a person familiar with the meeting at the Capitol complex and granted anonymity to discuss it.
Manchin called the $739 billion package a “win-win” that shouldn’t come as such a big surprise despite the long months of on-again, off-again talks. He bristled at suggestions he’d left his own party dangling when he refused to support an earlier, broader bill.
“I’ve never walked away from anything in my life,” Manchin told reporters via video chat because he is isolating with COVID-19.
The new package, not as much as President Joe Biden once envisioned, remains a potentially remarkable achievement for the party, with long-sought goals of addressing health care and climate, while raising taxes on high earners and large corporations and reducing federal debt.
The Senate is expected to vote on the wide-ranging measure next week, setting up for the president and his party an unexpected victory in the runup to November elections in which their congressional control is in peril. A House vote would follow, perhaps later in August, with unanimous Republican opposition in both chambers seemingly certain.
Manchin called it “a good bill” that would benefit the country. “It’s a Democrat and Republican bill.”
But bipartisan the bill is not.
Schumer warned his colleagues in the 50-50 Senate that final passage will be hard. With staunch GOP opposition, Democrats have no votes to spare, relying on their own razor-thin majority.
One key vote, Sen. Kyrsten Sinema, D-Arizona, was still reviewing the agreement, said spokeswoman Hannah Hurley. Sinema backed Manchin last year in insisting on making the legislation less expensive but objected to proposals to raise tax rates, and the spokeswoman referred a reporter to her comments last year supporting a corporate minimum tax.
Manchin said Thursday he had not talked to Sinema about the new compromise.
Just hours before the announcement late Wednesday, Schumer, D-New York, and Manchin, D-West Virginia, seemed at loggerheads and headed toward a far narrower package limited — at Manchin’s insistence — to curbing pharmaceutical prices and extending federal health care subsidies. Earlier Wednesday, numerous Democrats said they were all but resigned to the more modest legislation.
The reversal was stunning, and there was no immediate explanation for Manchin’s abrupt willingness to back the new bolder measure. Since last year, he has used his pivotal vote in the 50-50 Senate to force Biden and Democrats to abandon far more ambitious, expensive versions. He dragged them through months of negotiations in which leaders’ concessions to shrink the legislation proved fruitless, antagonizing the White House and most congressional Democrats.
Biden called the bill “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.”
Tellingly, Democrats called the 725-page measure “The Inflation Reduction Act of 2022” because of provisions aimed at helping Americans cope with this year’s dramatically rising consumer costs. Polls show that inflation, embodied by gasoline prices that surpassed $5 per gallon before easing, has been voters’ chief concern. For months, Manchin’s opposition to larger proposals has been partly premised on his worry that they would fuel inflation.
Besides inflation, the measure seemed to offer something for many Democratic voters.
It dangled tax hikes on the wealthy and big corporations and environmental initiatives for progressives. And Manchin, an advocate for the fossil fuels his state produces, said the bill would invest in technologies for carbon-based and clean energy while also reducing methane and carbon emissions.
The measure would reduce carbon emissions by around 40 percent by 2030, Schumer and Manchin said. While that would miss Biden’s 50 percent goal, that reduction, the measure’s climate spending and the jobs it would create are “a big deal,” said Sen. Jeff Merkley, D-Oregon, an environmental advocate who had been upset with the absence of those provisions until now.
The overall proposal is far less aspirational than the $3.5 trillion package Biden asked Democrats to push through Congress last year, and the pared-down, roughly $2 trillion version the House approved last November after Manchin insisted on shrinking it. Even then, Manchin shot down that smaller measure the following month, asserting it would fuel inflation and was loaded with budget gimmicks.
Democrats said their proposal would raise $739 billion over the decade in new revenue, including $313 billion from a 15 percent corporate minimum tax. They said that would affect around 200 of the country’s largest corporations, with profits exceeding $1 billion, that currently pay under the current 21 percent corporate rate.
The agreement also contains $288 billion the government would save from curbing pharmaceutical prices. Those provisions would require Medicare to begin negotiating prices on a modest number of drugs, pay rebates to Medicare if their price increases exceed inflation and limit that program’s beneficiaries to $2,000 annual out-of-pocket expenses.
The deal also claims to gain $124 billion from beefing up IRS tax enforcement, and $14 billion from taxing some “carried interest” profits earned by partners in entities like private equity or hedge funds.
The measure would spend $369 billion on energy and climate change initiatives. These include consumer tax credits and rebates for buying clean-energy vehicles and encouraging home energy efficiency; tax credits for solar panel manufacturers; $30 billion in grants and loans for utilities and states to gradually convert to clean energy; and $27 billion to reduce emissions, especially in lower-income areas.
It would also aim $64 billion at extending federal subsidies for three more years for some people buying private health insurance. Those subsidies, which lower people’s premiums, would otherwise expire at year’s end.
That would leave $306 billion for debt reduction, an effort Manchin has demanded. While a substantial sum, that’s a small fraction of the trillions in cumulative deficits the government is projected to amass over the coming decade.
Sen. John Cornyn, R-Texas, said the Democratic agreement would be “devastating to American families and small businesses. Raising taxes on job creators, crushing energy producers with new regulations, and stifling innovators looking for new cures will only make this recession worse, not better.”
But if Democrats can hold their troops together, GOP opposition would not matter. Democrats can prevail if they lose no more than four votes in the House and remain solidly united in the 50-50 Senate, where Vice President Kamala Harris can cast the tie-breaking vote.
Democrats are using a special process that will let them pass the bill without reaching the 60 votes required for most legislation there. To use that, the chamber’s parliamentarian must verify that the bill doesn’t violate the chamber’s budget procedures, a review now underway.
Story by Lisa Mascaro and Alan Fram. Associated Press writers Matthew Daly, Will Weissert, Kevin Freking and Seung Min Kim contributed to this report.
