WASHINGTON – Key Senate Democrats have agreed on a deal they say will lower the cost of prescription drugs, reduce carbon emissions and eliminate the federal deficit.
In a major breakthrough, Senate Majority Leader Chuck Schumer and Sen. Joe Manchin, DW.Va., announced Wednesday that they have reached agreement on a sweeping proposal that could save parts of President Joe Biden’s stalled domestic agenda. It was an unexpected turn after talks hit a snag earlier this month.
Manchin’s support was key because of his continued opposition to large government spending bills and any energy proposals that would dramatically cut back on the fossil fuel industry crucial to his state’s economy.
Chief among its components are allowing Medicare to negotiate prescription drug prices — long opposed by the pharmaceutical industry — and investing in clean energy transmission that would help Biden’s goal of significantly reducing cabin emissions over the decade.
The measure is also projected to reduce the deficit by about $300 billion over the next decade, in part by increasing IRS enforcement and closing certain tax loopholes.
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“This bill will reduce the inflationary taxes Americans pay, reduce 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 in a statement. said.
The Inflation Reduction Act of 2022 would:
- Invest in local energy generation and production and reduce carbon emissions by around 40% by 2030.
- Allow Medicare to negotiate prescription drug prices.
- Extend the Affordable Care Act program through 2025.
- Reduce the federal deficit by about $300 billion over the next ten years.
- Improve environmental clearance to expedite domestic power generation and transmission projects.
Senators project that the proposal would raise $739 billion over 10 years, with about half coming from a 15% corporate minimum tax. The move is aimed at closing a loophole that has allowed big companies to avoid paying income tax.
Increased enforcement by the Internal Revenue Service would generate an additional $124 billion in revenue.
In a joint statement, Manchin and Schumer called the deal “a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions.”
The deal comes two weeks after Manchin dashed Democrats’ hopes for a legislative package that goes beyond prescription drugs and Affordable Care Act subsidies. Mnuchin has previously said he wants to wait until August, when July inflation figures are released, to determine what can be passed without further increases in consumer prices.
Biden praised the deal, calling it “historic” in part because it is estimated to reduce health insurance costs by an average of $800 a year for the 13 million Americans covered under the Affordable Care Act.
“This is the action the American people have been waiting for,” the president said in a statement Wednesday evening. “This addresses today’s problems — high health care costs and overall inflation — as well as investing in our energy security for the future.”
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It’s unlikely to receive much — if any — GOP support, so Schumer said Democrats (who control just 50 seats) will try to pass the measure by Senate rule bypassing a potential 60-vote vote. Only a simple majority is required to filibuster and pass.
Last year, Biden backed off during negotiations, letting Schumer take the lead after Manchin’s opposition thwarted the president’s negotiations to trim-down the $2.2 trillion Build Back Better bill.
The deal was announced hours after the Senate approved a bipartisan bill designed to boost the computer chips industry and high-tech research in the US.
Senate Minority Leader Mitch McConnell, R-Ky., Vow to block the CHIPs bill If Democrats try to ram through a separate tax and spending package.
Oklahoma GOP Rep. Kevin Hearn urged his fellow Republicans to block the CHIPs bill “in light of this deal.”
“Whether Republican members support CHIPS or not (I don’t), we should all vote No. Passing CHIPS will pave the way for a radical build back break plan.” He tweeted minutes after the Schumer-Manchin accord was announced. “Now is the time to fight.”
Advocates praised the deal because many of its details have still not been released.
“This is one of the best health care developments for Americans in years,” said Sara Leonardo, spokeswoman for the progressive group Families USA. “It promises lower drug costs and broader health care access.”
Heather Zichle, CEO of American Clean Power, was equally impressive.
“The entire clean energy industry just breathed a huge sigh of relief,” she said in a statement. she said in a statement. “This is an 11th-hour recovery for climate action and clean energy jobs, and America’s biggest legislative moment for climate and energy policy.”