US Senator Joe Manchin and US Senate Majority Leader Chuck Schumer have struck a deal on a tax, energy and climate bill, breaking a deadlock on the Democrats’ long-sought legislation to enact major parts of US President Joe Biden’s agenda.
The plan, announced by the two Democrats on Wednesday evening, would generate an estimated US$739 billion in revenue, spend US$433 billion and reduce deficits by US$300 billion over a decade. That is still much smaller than the Biden administration’s plans before encountering Manchin’s repeated opposition.
Revenue would come from the 15 percent corporate minimum tax, allowing Medicare to negotiate drug-price cuts, and from boosting tax enforcement by increasing the Internal Revenue Service budget. The package would raise US$14 billion from taxing carried interest, or profits made by some investment managers, at a higher rate.
Photo: Reuters
The surprise agreement hit just hours after the US Federal Reserve announced another 75 basis-point hike in interest rates, furthering its campaign to rein in the fastest inflation in four decades.
Schumer and Manchin billed their plan as aimed at stabilizing prices, though economists have said smaller-scale fiscal measures are unlikely to have much impact.
The two lawmakers said in a joint statement that the Senate would vote on the legislation next week.
The package is a substantial reduction from the US$3.5 trillion Build Back Better agenda that congressional Democrats discussed a year ago, which was whittled down to a US$2.2 trillion bill passed by the US House of Representatives.
Still, just weeks ago plans to salvage some parts of Biden’s agenda were at a standstill. The current deal represents a partial reversal of Manchin’s position earlier this month, when he told Schumer he could not support a package of climate change measures and tax increases because of rising consumer prices after inflation hit 9.1 percent, and wanted to wait until September to act.
It also is a major strategic maneuver for Schumer. It was announced just hours after the Senate passed a US$52 billion semiconductor industry subsidy bill.
The bill is expected to pass the House later this week and then move to Biden’s desk for his signature.
US Senate Minority Leader Mitch McConnell had threatened to block the semiconductor legislation if Democrats went through with their partisan tax and climate package. He relented after Manchin balked because of his inflation concerns.
The agreement came about after Manchin approached Schumer on last week to restart their negotiations, which continued until the deal struck on Wednesday, a person familiar with the matter said.
Before the Senate can vote, the parliamentarian must determine if all the provisions comply with Senate budget rules to allow Democrats to pass the bill with just 50 votes, bypassing a Republican filibuster by using what is known as the budget reconciliation process.
Every member of the Democratic caucus would need to vote for the deal for it to pass by a simple majority in the 50-50 Senate, and that has made Manchin, who represents a solidly Republican state, a linchpin in negotiations.
Another key Democratic vote is US Senator Kyrsten Sinema, who has declined before to support ending the carried-interest tax break.
Asked whether she would vote for the agreement, a spokeswoman for the Arizona lawmaker said that she has not made a decision yet;
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