Joe Manchin has reached a deal with fellow Senate Democrats on a tax, climate and social spending bill, in a reversal that could hand a significant legislative victory to president Joe Biden ahead of the US midterms.
The agreement represents some of the most significant climate legislation in US history and comes as a surprise after Manchin, one of the most moderate Democrats in the Senate and a constant thorn in the administration’s side, repeatedly balked at previous iterations of the president’s flagship economic and social spending package.
Manchin, who represents West Virginia, on Wednesday said the new bill would not be “Build Back Better” — the Biden administration’s name for its multitrillion-dollar policy plan — but rather the “Inflation Reduction Act of 2022”, which would address “record inflation by paying down [the country’s] national debt, lowering energy costs and lowering healthcare costs”.
The bill includes $300bn in deficit reduction, aided by a new 15 per cent corporate minimum tax and closing the tax loophole on carried interest — the share of investment profits that hedge fund and private equity managers are paid as an incentive to hit higher returns.
These savings will be coupled with $369bn of spending on climate and energy reforms and $64bn on the Affordable Care Act.
“Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together,” Manchin said in a statement.
The legislation will allow Medicare to negotiate lower prescription drug prices, reducing annual health insurance costs for about 13mn Americans by an average of $800 a year. Manchin also cited investments in new technologies to reduce domestic methane and carbon emissions.
The deal could pass as soon as next week before the Senate departs on August recess. If it does, it would represent an eleventh-hour win for the Biden administration, which has been criticised by Democrats for failing to achieve some of the president’s central campaign promises.
“This is the action the American people have been waiting for,” Biden said in a statement released by the White House on Wednesday evening. “This addresses the problems of today — high healthcare costs and overall inflation — as well as investments in our energy security for the future.”
Senate Democrats and climate activists expressed shock at the last-minute deal, which had all but been ruled out.
“Holy shit,” Senator Tina Smith, a Democrat from Minnesota, wrote on Twitter. “Stunned, but in a good way.”
Manchin said his agreement included a commitment from Democratic leader in the Senate Chuck Schumer and speaker of the House of Representatives Nancy Pelosi to move forward “a suite of common sense permitting reforms”, smoothing the way for new gas pipeline projects.
The commitment to fossil fuel infrastructure is likely to draw opposition from environmental and climate groups, who broadly welcomed the announcement but called on Democrats to oppose the expansion of fossil fuel production.
“Political pressure has finally brought Senator Manchin back to the table on climate,” said Erich Pica, president of Friends of the Earth. “Now political pressure needs to safeguard our bedrock environmental laws.”
Wenonah Hauter, executive director at Food & Water Action, said the agreement promoted “false climate solutions . . . Streamlining permitting for natural gas pipelines and exports is not climate action, it is the opposite.”
The Sierra Club, a US climate group, said it was “encouraged” by the possibility of the Senate passing bold climate action.
Lori Lodes, executive director of Climate Power, an environmental group, said, the bill, if passed, would “put the United States on a path to lowering emissions in half by 2030”.
“Congress needs to seize on this opening and pass the strongest clean energy and climate provisions possible as soon as possible.”
Source: Economy - ft.com
