Earlier this month, Senator Joe Manchin tanked Democrats’ hopes of passing a sweeping social spending bill addressing issues ranging from climate change to capping healthcare costs to actually making corporations and the ultra-wealthy pay their fair share of taxes. That package was a more Manchin-friendly version of Joe Biden’s ambitious Build Back Better package, which the purported Democrat had also single-handedly killed late last year. He and his colleagues spent nearly a year negotiating, altering the bill to his liking, and then at the last minute, he pulled out anyway, saying he was too concerned about inflation to support legislation that would, you know, actually help people.
Now, Manchin has made a sudden about-face and has reportedly reached a deal with Senate Majority Leader Chuck Schumer to support a version of the package, which, while still significantly scaled-back, will provide meaningful reform to a number of areas, including climate programs and capping prescription drug prices.
An added (major) bonus to this deal is that it must be pissing the hell out of Mitch McConnell. The Senate recently passed a huge industrial policy bill that McConnell refused to support while this domestic package was still on the table. Manchin killed the bill, the Senate passed the other one, and now Schumer and Manchin announced they’ve reached a deal on reconciliation.
Mitch McConnell said he wouldn’t let the CHIPS legislation pass if Democrats pursued a reconciliation bill. Just hours after CHIPS passed, Schumer and Manchin announced their reconciliation deal.
— Kyle Griffin (@kylegriffin1) July 28, 2022
On the one hand, this bill—which is no longer Build Back Better and is now called the Inflation Reduction Act of 2022 (*eye roll*)—is nowhere near as ambitious as what was originally introduced but it would be pretty major.
The proposal would raise $740 billion by instituting a 15% minimum corporate tax rate; beefing up the Internal Revenue Service’s enforcement of tax laws on the ultra-wealthy; narrowing the carried interest loophole, which allows hedge fund managers and other wealthy investors to pay lower taxes; and requiring Medicare to negotiate the prices of some drugs directly with manufacturers, leveraging the social insurance program’s massive buying power to wring savings from drugmakers.
It then spends a historic $369 billion on “energy security and climate change,” which Democrats say will be enough to cut carbon emissions in the United States by 40% before 2030, and puts $64 billion toward extending subsidies for the Affordable Care Act for three years. The remaining $300 billion will go toward reducing the deficit, a priority for Manchin.
On the other hand, anything Manchin promises falls directly into the “believe it when we see it” category, as we’ve been down this road so many times before. Also, Manchin isn’t the only potential roadblock here. To pass the bill, every single Democrat needs to get on board and as of now, Arizona’s Kyrsten Sinema is refusing to say whether she’ll support it or not.
A specific hurdle is that Manchin’s plan includes closing or at least substantially limiting the “carried interest loophole,” a tax loophole that allows ultra-wealthy private equity and hedge fund executives to claim a far lower tax rate than what they should be paying. Sinema has flat-out refused to support closing the loophole.
There’s absolutely no way Sinema is on board with ending the carried interest loophole, barring some profound change in her personality on the level of divine intervention, so this just seems like a nice diary entry from Manchin about things he likes. https://t.co/Lze69n1CdX
— Alex Sammon (@alex_sammon) July 27, 2022
So we’ll see what happens and we can dream big but for now, this deal is far from closed.
(via NYT, image: Lee Mendelson Film Productions / Peanuts Worldwide)
