Chuck Schumer's secret deal with Joe Manchin - The Horn News

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Chuck Schumer’s secret deal with Joe Manchin

By: The Horn editorial team

Earlier this month, Democrat Sen. Joe Manchin — a rare swing voter from West Virginia — reportedly said on a radio show that he would withhold any deal on energy policy until July’s inflation report.

“Chuck, can we just wait until the inflation decisions come out in July,” Manchin said he told Senate Majority Leader Chuck Schumer, D-N.Y. “And then make a decision.”

Manchin announced a secret backroom energy deal with Schumer a mere 11 days after that statement. The West Virginia senator has yet to release the 725-page text of the bill… and we still don’t have the inflation numbers for the full month of 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 Wednesday. “Based on that work, I now propose and will vote for the Inflation Reduction Act of 2022.”

The West Virginia senator added, “I support the Inflation Reduction Act of 2022 because it provides a responsible path forward that is laser focused on solving our nation’s major economic, energy and climate problems.”

It’s a startling turnabout. Manchin announced an expansive spending agreement after more than a year of on-and-off negotiations with Schumer.

Just hours earlier, Schumer and Manchin’s negotiations seem headed toward a far narrower package limited — at Manchin’s insistence — to curbing pharmaceutical prices and extending federal health care subsidies. Earlier Wednesday, numerous Democrats said they were all but resigned to the more modest legislation.

With this new bill, Manchin and Schumer said they intend to address the deficit, the environment, and the health care mess. They want to pay for it by raising taxes on both high earners and large corporations, according to statements from their offices.

The two Democrats said the Senate would vote on the wide-ranging measure next week, setting up President Joe Biden and Democrats for an unexpected victory in the runup to November elections in which their congressional control is in peril. A House vote would follow, perhaps later in August.

The reversal was stunning, and there was no immediate explanation for Manchin’s abrupt willingness to back the huge spending bill. Since last year, he has used his pivotal vote in the 50-50 Senate to force Biden and Democrats to abandon far more ambitious, expensive versions. He dragged them through months of negotiations in which leaders’ concessions to shrink the legislation proved fruitless, antagonizing the White House and most congressional Democrats.

Tellingly, Democrats called the 725-page measure “The Inflation Reduction Act of 2022” despite the increase in government spending. Polls show that inflation, embodied by gasoline prices that surpassed $5 per gallon before easing, has been voters’ chief concern. For months, Manchin’s opposition to larger proposals has been partly premised on his worry that they would fuel inflation.

After the announcement, a tweet from Feb. 1 went viral. “I am begging Democrats to just name the revised spending bill ‘The Inflation Reduction Act’ instead of whatever alliteration they’re concocting,” Dan DeBrakeleer, a communications professional in D.C., tweeted almost six months ago.

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Besides inflation, the measure seemed to offer something for many Democratic voters.

It dangled tax hikes on corporations and environmental initiatives for progressives. And Manchin, an advocate for the fossil fuels his state produces, said the bill would invest in technologies for carbon-based and clean energy while also reducing methane and carbon emissions.

“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,” Manchin said.

Schumer called the bill Congress’ “greatest pro-climate legislation.” He said it would also cut pharmaceutical prices and “ensure the wealthiest corporations and individuals pay their fair share in taxes.”

Schumer and Manchin said the measure would reduce carbon emissions by around 40% by 2030. While that would miss Biden’s 50% goal, that reduction, the measure’s climate spending and the jobs it would create are “a big deal,” said Sen. Jeff Merkley, D-Ore., an environmental advocate who had been upset with the absence of those provisions until now.

The overall proposal is far less than the massive $3.5 trillion package Biden asked Democrats to push through Congress last year, and the pared-down, roughly $2 trillion version the House approved last November after Manchin insisted on shrinking it. Even then, Manchin shot down that smaller measure the following month, asserting it would fuel inflation and was loaded with budget gimmicks.

Schumer and Manchin have yet to announce the spending bill’s total price tag, but it is expected to be huge.

In summaries that provided scant detail, Democrats claimed their proposal would raise $739 billion in tax revenue over the decade to offset the spending, including $313 billion from a 15% corporate minimum tax. They said that would affect around 200 of the country’s largest corporations, with profits exceeding $1 billion, that currently pay under the current 21% corporate rate.

The agreement also contains $288 billion the government would save from curbing pharmaceutical prices. Those provisions would also require Medicare to begin negotiating prices on a modest number of drugs, pay rebates to Medicare if their price increases exceed inflation, and limit that program’s beneficiaries to $2,000 annual out-of-pocket expenses.

The deal also claims to gain $124 billion from beefing up IRS tax enforcement, and $14 billion from taxing some “carried interest” profits earned by partners in entities like private equity or hedge funds.

The measure would spend $369 billion on energy and climate change initiatives. These include consumer tax credits and rebates for buying clean-energy vehicles and encouraging home energy efficiency; tax credits for solar panel manufacturers; $30 billion in grants and loans for utilities and states to gradually convert to clean energy; and $27 billion to reduce emissions, especially in lower-income areas.

It would also aim $64 billion at extending federal subsidies for three more years for some people buying private health insurance. That spending would otherwise expire at year’s end.

That would leave $306 billion for debt reduction, an effort Manchin has demanded. While a substantial sum, that’s a small fraction of the trillions in cumulative deficits the government is projected to amass over the coming decade.

Of course, Schumer also reportedly included some concessions to Manchin, who represents a state rich in fossil fuels.

Schumer and Manchin said leaders committed to revamp permitting procedures this fall to help infrastructure like natural gas pipelines and export facilities “be efficiently and responsibly built to deliver energy safely around the country and to our allies.”

Reactions have been polarized, with Republicans almost certain to oppose the bill almost unanimously.

Sen. John Cornyn, R-Texas, said the Democratic agreement would be “devastating to American families and small businesses.” Other conservatives slammed the Democrats for naming the bill “The Inflation Reduction Act,” a name that promises a cure-all.

Senate Minority Leader Mitch McConnell, R-Ky., vowed to withhold support for the CHIPS Act as long as the Senate Democrats were pursuing a bill like the Inflation Relief Act. McConnell eventually voted for the CHIPS Act, and Manchin backstabbed McConnell by introducing the Inflation Reduction Act anyway.

Even some Democrats have yet to commit.

Some members of the House Progressive Caucus — like Rep. Alexandria Ocasio-Cortez, D-N.Y. — caused a headache for party leadership by voting against last year’s bipartisan infrastructure law. The Progressive Caucus has yet to issue a statement on the Inflation Reduction Act.

Meanwhile, Sen. Kyrsten Sinema, D-Ariz., was still reviewing the agreement, said spokeswoman Hannah Hurley. Sinema backed Manchin last year in insisting on making the legislation less expensive but objected to proposals to raise tax rates, and the spokeswoman referred a reporter to her comments last year supporting a corporate minimum tax.

The bill lacks increased tax deductions for state and local taxes, which some Democrats from high-tax states have demanded as the price for their support. A spokesperson for Rep. Josh Gottheimer, D-N.J., a leader of that group, did not immediately return the Associated Press’s message seeking comment.

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But if Democrats can hold their troops together, GOP opposition would ultimately not matter. Democrats can prevail if they lose no more than four votes in the House and remain solidly united in the 50-50 Senate, where Vice President Kamala Harris would cast the tie-breaking vote.

In the Senate, Democrats are using a special process that will let them pass the bill without reaching the 60 votes required for most legislation there. To use that, the chamber’s parliamentarian must verify that the bill doesn’t violate the chamber’s budget procedures, a review now underway.

 

 

The Horn editorial team and the Associated Press contributed to this article.