CHARLESTON, W.Va. — U.S. Sen. Joe Manchin, D-W.Va., announced Wednesday he and Senate Majority Leader Chuck Schumer, D-N.Y., have reached an agreement on legislation addressing climate change, health care costs and deficit reduction.
The Inflation Reduction Act is the byproduct of months of discussions between the West Virginia moderate and the Senate’s top Democrat. The announcement followed doubts about the likelihood of Congress passing a large policy plan after Manchin raised concerns regarding inflation and government spending.
Manchin and Schumer submitted the legislative text on the proposal to the Senate Parliamentarian for a review; they hope the full chamber will consider the proposal next week.
The measure would raise revenue by $739 billion over a decade through a 15% corporate minimum tax, Medicare negotiating prescription drug prices, and enforcing existing tax codes. It dedicates $369 billion for energy and climate change efforts, and $64 billion for extending health insurance subsidies. Around $300 billion would go toward deficit reduction.
Democrats have struggled to get Manchin’s support for sweeping policy proposals during the party’s control of Congress. Manchin rejected the Build Back Better framework last December — even after Democrats reduced the plan’s scope — because of questions about inflation and the national debt. Manchin told Schumer earlier this month he did not want to back a measure involving climate change and taxes until the U.S. Bureau of Labor Statistics released inflation data for July.
“I have worked diligently to get input from all sides on the legislation my Democratic colleagues have proposed and listened to the views of my Republican friends to find a path forward that removes inflationary policies so that Congress can respond to Americans’ suffering from high prices,” Manchin said in a statement.
“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination.”
A one-page summary of the bill notes $739 billion in revenue split between the corporate minimum tax ($313 billion), prescription drug price changes ($288 billion), the enforcement of the tax code ($124 billion) and addressing the “carried interest loophole” ($14 billion).
The plan does not include new taxes on families making less than $400,000 or small businesses. The proposal would instead close tax loopholes; Manchin cited state and local tax deductions as an example.
“Through the enforcement of a fair tax code, we can use the revenue to cut the deficit and lower the cost of healthcare for working families and small businesses,” the senator said.
According to Manchin, the plan includes investments to “allow us to decarbonize while ensuring American energy is affordable, reliable, clean and secure.” Funding would go toward new technologies for multiple fuel types and energy storage with the goal of reducing carbon emissions by around 40% by 2030.
Manchin and Schumer said they have spoken to President Joe Biden and House of Representatives Speaker Nancy Pelosi, D-Calif., about considering permitting changes before the fiscal year ends Sept. 30.
Medicare would also get the ability to negotiate prescription drug prices. Out-of-pocket costs would be limited to $2,000. The plan also extends subsidies for health insurance through 2025. Lawmakers approved subsidies for insurance offered on the government marketplace as part of the American Rescue Plan Act.
Federal officials estimate 23,000 West Virginians would see higher insurance premiums if Congress does not extend the subsidies.
After Manchin cautioned against a broad domestic policy proposal, Biden called on the Senate to pass legislation allowing Medicare to negotiate drug prices in addition to funding for health insurance subsidies. The president also promised executive action on climate change if Congress did not take any action.
Biden, after speaking to Manchin and Schumer on Wednesday, announced his endorsement of the agreement.
“This is the action the American people have been waiting for,” the president said. “This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future.”
Pelosi described the proposal as “a victory for America’s families and for protecting our planet.”
“It is welcome news for House Democrats, who have fought relentlessly to lower the cost of health care, combat the climate crisis and ensure that the biggest corporations and the wealthiest few pay their fair share,” she said in a letter to colleagues.
Pelosi added, “In light of the discussions of the past year, this agreement is a remarkable achievement. We will continue to fight for priorities not contained in this legislation — because more must be done on behalf of America’s working families and to save the planet.”
The Senate Parliamentarian will determine if the chamber can consider the measure through reconciliation, allowing the Senate to approve the plan with a simple majority. Vice President Kamala Harris could deliver a tie-breaking vote if necessary.
The House would also have to approve the legislation.
“For too long, the reconciliation debate in Washington has been defined by how it can help advance Democrats’ political agenda called Build Back Better,” Manchin said. “Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together. I will do everything I can to usher in a new era of compromise and commonsense that will make America more energy secure, financially sound and a more united country for this generation and the next.”
Both congressional chambers are approaching lengthy recess periods ahead of a final work period leading up to the midterm elections. The House’s final day of voting is Friday, while the Senate will continue work in the nation’s capital through Aug. 5.