October 5, 2022

Joe Manchin has reached an agreement with fellow Senate Democrats on a tax, climate and social spending bill, in a turnaround that could land President Joe Biden a key legislative victory ahead of the US midterm elections.

The deal will be the largest climate bill in history and comes as a surprise after Manchin, one of the most moderate Democrats in the Senate and a constant thorn in the government’s side, has been repeatedly hampered by previous iterations of the president’s flagship , the economic and social spending package. .

On Wednesday, Manchin, who represents West Virginia, said the new bill would not be “Build Back Better” — the Biden administration’s name for its multi-trillion-dollar policy plan — but rather the “Inflation Reduction Act of 2022,” which would relate to “record inflation by paying” [the country’s] government debt, lowering energy costs and lowering healthcare costs”.

The bill includes a $300 billion deficit reduction, aided by a new 15 percent minimum corporate tax and closing the tax loophole on carry interest — the portion of investment profits that hedge fund and private equity capital gains. managers are paid as an incentive to achieve higher returns.

These savings will be matched by $369 billion in climate and energy reform spending and $64 billion in 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 allows Medicare to negotiate lower prices for prescription drugs, reducing annual health insurance for an estimated 13 million Americans by an average of $800 per year. Manchin also mentioned investments in new technologies to reduce domestic methane and carbon emissions.

See also  Anxious US consumers carry on spending regardless

The deal could be passed next week before the Senate goes on recess in August. If so, it would mark an 11th-hour victory for the Biden administration, which has been criticized by Democrats for failing to deliver on 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 Wednesday night by the White House. “This addresses today’s problems – high healthcare costs and general inflation – as well as investments in our energy security for the future.”

Senate Democrats and climate activists reacted with shock to the last-minute deal, which was virtually ruled out.

“Holy shit,” Senator Tina Smith, a Minnesota Democrat, wrote on Twitter. “Stunned, but in a good way.”

Lori Lodes, executive director of Climate Power, an environmental group, said the bill, if passed, “would put the United States on a path to halving emissions by 2030.”

“Congress must seize this opening and implement the strongest possible clean energy and climate facilities as soon as possible.”

Climate Capital

https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2F384cfd92 a50b 4bce 9d00 ffdbff93b8ec

Where climate change meets business, markets and politics. Discover the coverage of the FT here.

Are you curious about the FT’s commitments to environmental sustainability? Learn more about our science-based goals here