WASHINGTON — West Virginia Senator Joe Manchin III, a leading centrist Democrat, announced Wednesday that he had 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 prescribing. drugs to lower, less than two weeks after hopes for such an agreement were abruptly reversed 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 an estimated $451 billion in new tax revenue over a decade, while cutting federal spending on prescription drugs by $288 billion. be reduced, according to a summary distributed Wednesday evening.
The product of a deal announced by New York Democrat and Majority Leader Senator Mr Manchin and Senator Chuck Schumer would cut the federal deficit by about $300 billion while lowering the cost of health care, prescription drugs and electricity.
The plan falls far short of the ambitious domestic policies and tax package President Biden proposed last year, but Democrats, anticipating midterm elections likely to be shaped by voters’ concerns over rising costs, cast it as a targeted attack on the fast prize distribution. increases that have hit US consumers’ pockets this year, with inflation at its highest point in 40 years.
And while many details weren’t immediately available, the announcement suggested Democrats could move in the coming days to salvage a major chunk of their domestic agenda, which seemed doomed just weeks ago given Mr. Manchin’s refusal. to sign up quickly.
“This is the action the American people have been waiting for,” Biden said in a statement, calling on both chambers to quickly approve the measure. “This solves today’s problems – high health care costs and overall inflation – as well as investing in our energy security for the future.”
It was not clear what had changed Mr Manchin’s mind, as he said less than two weeks ago that he could not support such a package until he saw the July inflation figures, which will be published in two weeks. But according to a person familiar with the talks, silent negotiations had resumed in recent days between Mr Manchin, Mr Schumer and their staff.
The abrupt announcement came just hours after the passage of a massive industrial policy bill aimed at bolstering U.S. competitiveness with China, which Kentucky Republican Senator Mitch McConnell said he would never support as long as the Democrats continue their efforts to push through their power. major domestic policy bill on GOP opposition.
With the Senate split 50 to 50 and Republicans uniformly opposed, Democrats need unanimous support within their party and the casting vote of Vice President Kamala Harris to approve the plan under special rules protecting certain budget laws from a filibuster. . Mr. Manchin’s opposition has all along been the main obstacle to doing so, giving him an effective veto power over its contents — and the final say on whether a measure could pass the Senate.
His embrace of the plan was no guarantee that it would go through. Several senators declined to comment on the deal when they learned Wednesday night, until they learned more about it. That included Senator Kyrsten Sinema, an Arizona Democrat who has been another defender of her party’s domestic policy move. A spokeswoman for her said the senator needed to review the legislation.
The tax increases included in the agreement would fall largely on multinational corporations and private equity firms, and would involve a crackdown on high-earning individuals and companies trying to evade the taxes they owe.
One possible clue to Mr. Manchin’s change of heart came in line with his joint announcement with Mr. Schumer that they had secured a commitment from both Mr. Biden and California President Nancy Pelosi that Congress would pass a separate measure. would approve to tackle the licensing process. of energy infrastructure, possibly including natural gas pipelines, before the end of the fiscal year on September 30.
That could pave the way for a project Mr. Manchin is personally interested in, the Mountain Valley Pipeline, which would transport Appalachian shale gas from West Virginia to Virginia.
Democrats said the Senate could pass the legislation next week, although a number of parliamentary and procedural hurdles remain. It must abide by strict fiscal rules, as Democrats plan to bring it under the secretive budget process known as reconciliation, which allows certain fiscal measures to be passed by just a simple majority.
The legislation “will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and production and cut carbon emissions by about 40 percent by 2030,” said Mr Manchin and Mr Schumer in their joint statement. The two senators added that “we urge every member of the US Senate to support this important legislation.”
Republicans opposed the announcement and reiterated their opposition to the Democrats’ plan.
“Democrats have already crushed American families with historic inflation,” McConnell said on Twitter. “Now they want to pass massive tax hikes that will cheat workers and destroy many thousands of American jobs. First they killed your family’s budget. Now they want to kill your job too.”
In his own separate statement, Mr Manchin applauded the agreement as good for the economy, climate and people’s wallets.
“Rather than risking more inflation with trillions in new spending, this bill will lower the inflation taxes Americans pay, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need.” have to stay. a global superpower through innovation rather than elimination,” said Mr Manchin.
He called the bill the Inflation Reduction Act of 2022, making a clear distinction between it and the ambitious, multibillion-dollar domestic policy plan Mr Biden proposed, and Democrats in Congress have spent most of last year toiling to pass it. let it succeed.
“Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together,” he said.
The agreement falls far short of Mr Biden’s initial proposals to review and pay for the government’s role in the economy by taxing corporations and high earners. But it’s an important addition to the package aimed at lowering the cost of prescription drugs and expanding extensive subsidies to the Affordable Care Act that Democrats resigned themselves to after Mr Manchin personally interviewed party leaders this month. told that he would not support climate or tax proposals in the short term.
The plan would increase most of its new tax revenue, estimated at $313 billion, by imposing a minimum tax on the so-called book income of large corporations, such as Amazon and FedExcurrently using tax credits and other maneuvers to lower their tax rates below the 21 percent corporate tax rate in the United States.
It would bring in another $14 billion by reducing preferential tax treatment for revenue earned by venture capitalists and private equity firms, which: has been a goal for a long time of Democrats.
Congressional officials and climate activists said climate investments were roughly in line with what had been negotiated in recent months: tax credits to accelerate the development of wind, solar and other low-carbon energy, as well as government aid to boost technologies that Mr. Manchin prefers. such as hydrogen and nuclear energy.
The deal also includes a $7,500 means-tested tax credit to make new electric vehicles more affordable, according to three people familiar with the details. The measure also includes a methane tax that goes into effect in 2025, the three people said, speaking anonymously because they were not authorized to discuss the details.
Also included is $60 billion to address the disproportionate burden of pollution on low-income and communities of color, $27 billion for a “green bank” to provide financial support for clean energy projects, and $20 billion for programs that emissions in the agricultural sector.
The announcement of the deal stunned environmental advocates.
“I honestly don’t know what to say,” said Samuel Ricketts, co-founder and senior advisor of Evergreen Action, an environmental group. “We need to see the details, of course, but people have worked hard to salvage a deal. This has the potential to be a huge breakthrough for climate progress.”
Mr Manchin said the plan includes “realistic energy and climate policies” that will “enable us to go low-carbon and ensure that U.S. energy is affordable, reliable, clean and safe.”
“As the world’s superpower, it is vital that we do not undermine our superpower status by removing reliable and affordable energy from fossil fuels before new technologies are ready to reliably carry the burden,” Manchin said in a statement. statement, in which he emphasized investments in fossil fuels. fuel energy and renewable energy.
“It’s really all of the above, meaning this bill isn’t arbitrarily shutting down 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 Senate member. He had been vilified by environmentalists during the past year and a half of climate law negotiations for blaming him for single-handedly thwarting the country’s response to a planetary crisis.
Biden has vowed to cut U.S. emissions by about 50 percent by the end of this decade, a goal scientists say is critical to limiting global temperature rise to 1.5 degrees Celsius by the end of this century. to keep. That’s the threshold above which scientists say the danger of catastrophic heat waves, fires and flooding increases significantly.
If passed, the package could bring the United States close to Biden’s goal, according to a summary of the deal released by Democrats.
Catie Edmondson and Stephanie Laic reporting contributed.