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Surprise news from Washington last night: Senate Majority Leader Chuck Schumer (D-New York) and Sen. Joe Manchin (D?-West Virginia) announced that they had reached an agreement on a bill that will address climate change, limit healthcare costs, hold down inflation, and put a little dent in the federal deficit, too. Since it includes measures that the Senate has been working on for months, the bill text is ready to go.
In a nod to the thing Manchin kept saying prevented him from supporting any version of Joe Biden’s Build Back Better agenda, the bill is named the “Inflation Reduction Act,” although it would be terribly cynical to suggest that just renaming it was enough to get Manchin on board. But if that was what did the job, then Schumer clearly needs to do one more reconciliation bill that would extend the expanded Child Tax Credit for a full 10 years, pay for it (and then some) with another whack at the Trump tax cuts, and call it the Deficit Reduction Act.
The bill includes $369.75 billion for fighting climate change — mostly in the form of tax credits and incentives — so if it passes, it’ll be the biggest investment in climate action the federal has taken to date. Dollar-wise, that total falls short of the more ambitious $555 billion for climate action in the House version of Build Back Better that passed last fall, but it’s also $369.75 billion more in climate spending than we were looking at yesterday morning. A Senate fact sheet estimates the measures in the bill will “put the U.S. on a path to roughly 40% emissions reduction by 2030,” helping to boost the US transition to clean energy and transportation.
The bill also aims to contain healthcare costs by authorizing Medicare to negotiate prices for prescription drugs, a longstanding Democratic goal; it also would cap seniors’ out-of-pocket prescription drug costs at $2,000 a year, and would extend tax credits that have helped reduce Obamacare health insurance premiums. That latter bit is a big freaking deal, since without it, the tax credits, which were part of Biden’s American Rescue Plan stimulus package, would have expired next year, meaning premium increases for folks buying health insurance through the ACA exchanges. It also would have been bad news for the midterms, since states would have had to notify policyholders of the increases this fall, before the elections.
The climate and healthcare spending would be paid for through the savings from the prescription drug measure, as well as by targeted tax increases, including a new 15 percent tax on corporate profits, that will bring in $739 billion over 10 years — enough to cover the new spending and to reduce the federal deficit by $300 billion, which appealed to Manchin’s fiscal hawk impulses.
In a long statement, Manchin took credit for finally getting Washington politicians to take inflation seriously, and if that’s how he wants to frame it, we’re fine with him declaring victory while actually passing necessary legislation, well good for him.
Over the last year, leaders in Washington have ignored repeated warnings about the severe threat of inflation and the consequences of unprecedented domestic spending. Despite these concerns and my calls to give the country time to fully realize the impacts of such historic levels of spending and our inflation crisis, many Democrats have continued to push for trillions more in spending to meet a political deadline. As difficult as it is for some to hear, political calls to action that ignore the severity of the crises we face and will continue to face are a recipe for national disaster.
We must be honest about the economic reality America now faces if we want to avoid fanning the flames of inflation. At its core, the purpose of reconciliation is to get our economic and financial house in order. Contrary to foolish talk otherwise, America cannot spend its way out of debt or out of inflation. With respect to my position, I have never and will never walk away from solving the problems facing the nation we all love. I strongly support the passage of commonsense policies that reduce inflation and focus on the major challenges confronting America today and in the future.
Manchin declared victory over Biden’s first-term agenda while he was at it, because nobody actually needs universal pre-K, childcare, family leave, reduction of child poverty, or any of it. He snottily dismissed the full year the president and fellow Democrats spent trying to get his vote, explaining that
For too long, the reconciliation debate in Washington has been defined by how it can help advance Democrats [sic] political agenda called Build Back Better. Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together.
OK, glad he may have gotten that out of his system, as long as he doesn’t find another excuse to weasel out of the deal next week. (We’re reasonably sure Manchin doesn’t read Wonkette. If he did, he’d be a better person, like all our readers, who are smarter and better looking than most folks, not to mention far more resistant to hollow flattery.)
Why yes, there was also some good old-fashioned horse-trading involved in getting Manchin’s support for the climate package: The joint announcement from Schumer and Manchin noted that they had agreed with Biden and House Speaker Nancy Pelosi (D-California) to “pass comprehensive permitting reform legislation before the end of this fiscal year,” which the Washington Post explains amounts to an agreement to ease permitting requirements for pipelines and other infrastructure:
Such regulatory changes have to be tackled separately from Democrats’ spending package, given the rules under which lawmakers hope to advance their forthcoming bill. Manchin has in particular prioritized a drilling project in Alaska and a natural gas pipeline that runs through West Virginia.
Yes, that’s fossil fuel stuff, but it seems an OK compromise in order to get the long-term climate action we need. Even better, if Democrats can hold the House and add just two new senators this fall — which polling suggests is possible — then Congress and the White House can conceivably murderize the filibuster and pass more aggressive climate measures in the next two years.
The Post also reports that Manchin’s Democratic colleagues “sought an intervention from Larry Summers, the former treasury secretary who has been sharply critical of Biden’s earlier stimulus law,” according to two anonymous sources. Manchin apparently found Summers’s pep talk persuasive:
The two men spoke this week, and Manchin listened as Summers talked in detail about why Democrats’ proposed economic package — including its energy provisions — would not lead to higher prices, the people said. Manchin has on occasion consulted with Summers throughout the last year, and the senator’s allies have been adamant that his views have been consistent throughout the negotiations.
Also too, the reconciliation bill managed to stick a (metaphorical only) thumb in Mitch McConnell’s eye by undermining one of the Senate Minority Leader’s vows to never pass anything that might help Joe Biden, as HuffPo explains. You see, last month, McConnell promised he would absolutely not allow passage of a bipartisan bill that would boost US manufacturing of computer chips if Democrats insisted on passing any part of Build Back Better. Increasing domestic manufacturing of computer chips is a high priority for Biden, since international chip shortages have held back the recovery of the auto industry, which can’t meet post-pandemic demand for new cars. The resulting high prices for new cars has been one of the top causes of inflation.
The Senate, in a rare moment of some Republicans actually doing something, passed a version of the CHIPS bill yesterday; it’ll now go back to the House, which will likely pass it and send it on to Biden to sign.
But just hours after the CHIPS bill passed in the Senate, Manchin and Schumer announced their agreement on the climate and healthcare bill, which, whatever Manchin wants to claim, includes a lot of the climate parts of Build Back Better. SO neener, neener Mitch, NEENER NEENER.
McConnell doesn’t seem too happy about being outsmarted. In a tweet last night, he wrote,
Democrats have already crushed American families with historic inflation.
Now they want to pile on giant tax hikes that will hammer workers and kill many thousands of American jobs.
First they killed your family’s budget. Now they want to kill your job too.
Just to be clear: The bill is going to provide incentives that will create jobs and make clean energy more affordable. We’ll follow up soon with a closer look at all the terrific climate stuff in the bill, which should create jobs and hold back inflation, with the not incidental benefit of keeping the planet habitable for large mammals, and even for large aquatic shelled reptiles, too.
[NPR / WaPo / HuffPo / Inflation Reduction Act bill text / Inflation Reduction Act fact sheet]
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