Senator Joe Manchin of West Virginia has reached an agreement with Senate Majority Leader Chuck Schumer worth hundreds of billions of dollars to lower prescription drug prices, raise taxes, combat climate change and invest in renewable energy.
The bill represents a slimmer version of a massive domestic spending plan dubbed Build Back Better, which was a central pillar of Joe Biden’s first-term agenda.
The legislation would raise money through a 15 per cent corporate minimum tax; prescription drug pricing reform; enforcement through the Internal Revenue Service; and closing what is called the Carried Interest Loophole, which allows partners at private investment funds to have their income taxed as capital gains instead of regular income.
It would allocate $369bn for energy security and efforts to combat climate change, as well as $64bn on extending subsidies for the Affordable Care Act.
Mr Biden called it “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,” he said in a statement on Wednesday evening.
“If enacted, this legislation will be historic,” he added.
The agreement came after months of often fractious negotiations between Mr Manchin and his fellow Democrats. Mr Manchin had previously expressed reservations about additional spending given the high rate of inflation and had previously told Mr Schumer he wanted to pause negotiations after inflation jumped 9.1 per cent between June 2021 and June 2022.
But the West Virginia Democrat billed the legislation as The Inflation Reduction Act of 2022.
Mr Manchin, who is currently self-isolating after he tested positive for Covid-19, released a statement on Wednesday afternoon outlining the agreement he made with the Senate Majority Leader.
“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”, he said in a statment.
Mr Manchin said that the proposed raising taxes on the largest corporations was a means to pay for the spending.
“It is wrong that some of America’s largest companies pay nothing in taxes while freely enjoying the benefits of our nation’s military security, infrastructure and rule of law”, he said. “It is commonsense that a domestic corporate minimum tax of 15 percent be applied only to billion-dollar companies or larger ensuring that America’s largest businesses are no longer able to operate for free in our economy.”
Mr Manchin’s statement also laid out that his legislation would not reduce fossil fuel production, particularly as gas prices rose in the past year, and said the plan would invest in hydrogen, nuclear and renewable energy along with fossil fuels and energy storage.
“It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels”, he said. “It invests heavily in technologies to help us reduce our domestic methane and carbon emissions and also helps decarbonize around the world as we displace dirtier products.”
The legislation also focuses on capping the price of prescription drugs and lowering health insurance premiums.
Representative Jackie Speier celebrated the news on Wednesday evening.
“Miracles happen”, she told The Independent.
House Transportation Committee Chairman Peter DeFazio said: “We got to deal with the reality of a dysfunctional Senate.”
“So you know if we can if we can do prescription drugs. That’s the number one issue with America. If we can do something about climate, that’s the number one issue to save the planet. So you know, I’ll take it,” he added.
Mr Manchin and Democrats have gone back and forth in the past year on a proposed spending package. Mr Manchin ultimately rejected a $1.75tn package that House Democrats passed known as Build Back Better in December.
In recent weeks, Mr Schumer went into overtime negotiating with Mr Manchin on a tapered-down piece of legislation. Democrats hope to pass the legislation through a process called budget reconciliation, which allows them to pass bills with a simple majority and sidestep a filibuster.
With 50 Senators, and Vice President Kamala Harris as a tiebreaker, Democrats needed every Democratic senator on board, including Mr Manchin, the most conservative member of their conference.
But Mr Manchin is not the only member of the conference that Democrats must appease. Senator Kyrsten Sinema of Arizona has worried about raising taxes.
“Well, I think she has to figure that out herself”, Representative Ruben Gallego, who is considering challenging her in a primary in 2024, told The Independent. “But I think she'd be really misreading the room if she's gonna side with corporations that are making billions of dollars right now, while families are dealing with inflation.”
