Manchin and Schumer announce agreement on energy and health-care legislation, providing a significant boost to Democrats

Manchin-and-Schumer-announce-agreement-on-energy-and-health-care-legislation-providing-a-significant-boost-to-Democrats

Manchin and Schumer announce agreement on energy and health-care legislation, providing a significant boost to Democrats

Manchin-and-Schumer-announce-agreement-on-energy-and-health-care-legislation-providing-a-significant-boost-to-Democrats

According to CNN Correspondent, Senate Majority Leader Chuck Schumer and Senator Joe Manchin announced a deal on an energy and health care bill on Wednesday, marking a breakthrough after more than a year of negotiations that have repeatedly failed.

However, it will face fierce GOP opposition.
The agreement represents a significant reversal for Manchin, and the health and climate bill could become law as early as August if Democrats can pass it in the House and it passes muster with the Senate parliamentarian to allow it to be approved along straight party lines in the budget process.

While Manchin blocked President Joe Biden’s Build Back Better bill, the final agreement includes several provisions that the West Virginia moderate had privately scoffed at, a significant shift from earlier this month. This includes provisions dealing with the climate crisis.

Several Democratic objectives are included in the agreement. According to a one-page fact sheet, the measure would invest $369 billion in energy and climate change programs, with the goal of reducing carbon emissions by 40% by 2030. For the first time, Medicare would be able to negotiate drug prices, and out-of-pocket costs for those enrolled in Medicare drug plans would be limited to $2,000 per year. It would also extend for three years the expiring enhanced subsidies for Affordable Care Act coverage.

The announcement comes at a critical juncture in Congress, as the Senate is about a week away from beginning a month-long recess during which many Democrats will campaign for reelection. The announcement came just hours after the Senate passed a separate bill to invest $52 billion in US semiconductor manufacturing, sending it to the House for consideration as soon as this week.

Notably, Senate Minority Leader Mitch McConnell previously stated that if Democrats continued to pursue their party-line bill on climate and drug prices, he would try to halt the passage of the semiconductor bill.

Manchin’s agreement represents a turnabout.

Manchin’s support is notable given his earlier statement that he “unequivocally” would not support the Democratic economic package’s climate or tax provisions, which appeared to dash Democrats’ hopes of passing climate legislation in the near future.

However, Schumer and Manchin have been in renewed talks since July 18 and reached an agreement on Wednesday, according to a source familiar with the situation. Manchin had initially opposed including tax and energy provisions in the deal, but eventually agreed to it.

The White House has approved the agreement, according to Biden in a statement.

Before it can reach Biden’s desk, the agreement must first be approved by the parliamentarian and then by both chambers of Congress, where virtually any Democrat can block or delay passage.

Climate provisions have the potential to be a huge win.

According to Schumer’s office, the bill would reduce US carbon emissions by roughly 40% by 2030. According to a Democratic aide, clean energy tax credits would drive the majority of those emission reductions.

Two weeks ago, Schumer and Manchin were on the verge of reaching an agreement on $375 billion for the bill’s climate and energy provisions; the topline for climate announced tonight is $6 billion less than the original figure.

Nonetheless, a senior Democratic aide told CNN that they were pleased with the $369 billion figure for climate and energy spending in the bill, saying it was more funding than was expected to come from a deal.

According to two Senate Democratic aides, tax credits for electric vehicles were included in the new agreement. Electric vehicle tax credits will remain at current levels of up to $4,000 for a used EV and $7,500 for a new EV. However, the income threshold for people who can use the tax credits will be reduced – a key demand of Manchin’s. Throughout the negotiations, Manchin was adamantly opposed to electric vehicle tax credits.

Democratic Senator Tina Smith of Minnesota told CNN that she was presiding over the Senate on Wednesday evening when Schumer called to tell her that he and Manchin had reached an agreement on a climate and energy bill. While Smith was presiding, her phone continued to ring nonstop with an unlisted number, which was Schumer calling. She finally responded.

“I knew it was Chuck; I did the unthinkable and picked up the phone,” Smith told CNN. “He said, ‘40% emission cuts by 2030, this is a big F-ing deal!'”

Smith, a Senate climate hawk, told CNN she was overjoyed that a deal had been reached after months of back-and-forth with Manchin.

She called the agreement the “most significant action we’ve ever taken on climate and clean energy.”

“Everyone is ecstatic. I’m taken aback, but in a good way “Smith stated.

The latest development, according to the leaders of two prominent climate groups, was also unexpected.

“This is not what anyone expected, but we are so excited it’s back on,” Tiernan Sittenfeld, the League of Conservation Voters’ senior vice president of government affairs, told CNN. “It can’t come soon enough as families around the world and country struggle with the extreme heat.”

Climate advocates were waiting for more information on the provisions, which were expected to be released on Wednesday evening.

“We need to see the details of this deal, particularly if there is permitting reform and fossil fuel development,” Evergreen Action co-founder Jamal Raad told CNN. “We’ll need to see modeling on this legislation in the coming days.”

However, if the package achieves the emissions reductions that Schumer has promised, Raad believes it will be a huge step forward.

“If this package does that boldly, it could put us on the path to meeting our objectives and be a huge win,” he said.

The bill retains Medicare drug price negotiation provisions.

The agreement maintains the prescription drug price changes that Manchin previously agreed to, such as allowing Medicare to negotiate the price of certain expensive medications administered in doctors’ offices or purchased at pharmacies. The Secretary of Health and Human Services would negotiate the prices of ten drugs in 2026, fifteen more in 2027, and ten more in 2028. In 2029 and beyond, the number would rise to 20 drugs per year.

It would also restructure Medicare’s Part D drug plans so that seniors and people with disabilities would not have to pay more than $2,000 per year for medication purchased at a pharmacy. Furthermore, the agreement would require drug companies to pay rebates if their prices in the Medicare and private insurance markets increased faster than inflation.

According to the Congressional Budget Office, the drug price provisions would reduce the deficit by $288 billion over a decade.

The agreement also calls for a three-year extension of the enhanced Affordable Care Act subsidies. An earlier agreement would have extended the enhanced subsidies for two years, meaning they would have expired shortly after the 2024 presidential election, a scenario that congressional Democrats did not want to face.

The subsidies were increased this year as part of the Democrats’ $1.9 trillion coronavirus relief package known as the American Rescue Plan, which was passed in March 2021. They have reduced the cost of health insurance on the Obamacare exchanges, resulting in record enrollment this year.

Enrollees pay no more than 8.5 percent of their income for coverage, a decrease from nearly ten percent previously. Lower-income policyholders receive subsidies that completely eliminate their premiums. Additionally, those earning more than 400 percent of the federal poverty level are now eligible for assistance for the first time.

According to the CBO, extending the enhanced subsidies would cost $64 billion over a decade.

settling the bill

To generate revenue, the bill would impose a 15% minimum tax on corporations, raising $313 billion over a decade. While details on the current agreement are scarce, the House version of the Build Back Better package would have levied the tax on corporate profits reported to shareholders rather than the Internal Revenue Service. It would have applied to companies with profits of more than $1 billion and resulted in a similar revenue-raising figure.

The current agreement also seeks to close the carried interest loophole, which allows investment managers to treat their compensation as capital gains and pay a 20% long-term capital gains tax rate rather than income tax rates of up to 37%. Eliminating this loophole, which would raise $14 billion over a decade, has long been a goal of Democrats in Congress.

The package also includes an increase in IRS funding for tax enforcement, which would raise $124 billion.

Democrats say families earning less than $400,000 per year will be exempt, as promised by Biden. There would also be no new taxes on small businesses.

Manchin said in a statement that the agreement would ensure “that large corporations and the ultra-wealthy pay their fair share in taxes,” though it does not include the tax hikes on wealthy Americans and large corporations that Democrats wanted to include in the budget reconciliation packages before they were shot down by Democratic Sen. Kyrsten Sinema of Arizona.

Notably, Manchin shot down one of Schumer’s top priorities: addressing the $10,000 cap on state and local tax deductions, known as SALT, which was included in the GOP tax cut package in 2017 and affects many states in the Northeast and West Coast.

Many details of the current agreement need to be worked out, which could cause it to be delayed or scuttled, according to Howard Gleckman, a senior fellow at the nonpartisan Tax Policy Center.

Democrats claim that the agreement will reduce the deficit by more than $300 billion.

“Rather than risking more inflation with trillions in new spending,” Manchin said in a statement Wednesday afternoon, “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.”

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