Senator Joe Manchin (D-WV) announced today that he had reached a deal with the Democrat Senate Majority Leader Chuck Schumer (D-NY) to pass a bill that would fund healthcare benefits, energy, and climate policies while also raising more than $700 billion in revenue through a higher corporate tax and enhanced tax enforcement methods by the IRS. The unexpected announcement of the Manchin-Schumer bill is a significant win for the Biden White House, which will now try to steamroll its last reconciliation package before the midterm elections.
The deal, officially called the Inflation Reduction Act, marks a significant turnaround for the Democrats’ legislative agenda, which has been stalled as the many factions within the Democrat Party have fought each other for almost two years over Biden’s legislative agenda. Last year, the fractious Democrats passed an infrastructure bill, but moderate Senators successfully shut down the $3 trillion “Build Back Better” spending plan Biden spent months pushing for.
Democrats’ hopes for passing another significant bill through congress appeared to die a few weeks ago when the powerful moderate West Virginian Senator said he would not support any legislation raising taxes or involving climate policy as he said he was concerned over inflation. Yet, Wednesday’s announcement shows that Schumer’s last-minute negotiations have worked with Manchin.
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What is inside the Manchin-Schumer bill?
In a joint statement published to the press, both senators announced the big strokes of the bill, which includes an estimated $739 billion in federal revenue and $433 billion in government spending over the next ten years. According to the one-page outline, the bill would reduce carbon emissions by 40% by 2030, allow Medicare to negotiate for prescription drug prices, and supposedly reduce the national deficit by $300 billion.
According to Schumer and Manchin, the expenditure would be “fully paid for by closing tax loopholes on wealthy individuals and corporations.” The outline argues that it will raise $313 billion through a corporate tax hike, $288 billion in prescription drug reform, $124 billion in stricter IRS tax enforcement, and $14 billion by closing the carried interest loophole. Schumer and Manchin estimate these measures will raise $739 billion.
The outline also states that the bill would invest a significant majority of the revenue in climate and energy policies, $369 billion. In comparison, $64 billion would be dedicated to the three-year extension of the Affordable Care Act (popularly known as Obamacare), and the remaining $306 billion would be spent on deficit reduction.
The difficult road ahead for the bill
The Democrats will try to pass the Schumer-Manchin deal through the budget reconciliation process, which is the same congressional tactic that allowed them to pass the $1.9 trillion spending package in March 2021 and the one they tried to use to pass Biden’s $3 trillion bill later that year.
Although Manchin’s support is a fundamental win for the Congressional Democrat Party, the bill still faces a tough road ahead as the Democrats will need total party discipline to get the proposed legislation to Biden’s desk. Since the Democrats’ hold of Congress is razor-thin, any power struggle between the party’s many factions can sentence the bill to death.
In the Senate, Schumer will have to convince Senator Kyrsten Sinema (D-AZ) to get behind the bill, as she did not have any prior knowledge of the bill. If Sinema, who opposed alongside Manchin Biden’s $3 trillion bill last year, decides not to support the project, Democrats would need a Republican vote to get their bill through. Sinema would be under heavy pressure to get behind the deal as she will probably be the sole Democrat opposing the bill, yet she could still fight the initial agreement and ask for some concessions in return.
If the bill gets passed through the Senate, Speaker Nancy Pelosi would have to herd the fractious House Democrats to get behind the bill. Due to the Democrats’ tight majority, they can only allow four representatives to defect if they want the bill to get through. This small room for error allows any faction of the House Democrats to sink the deal if they consider it too radical or not radical enough; progressives tried to do this last year to block the Manchin-negotiated infrastructure bill. This scenario could repeat itself if any potential deal with Sinema is deemed too conservative for progressive House Democrats.
Manchin’s deal with Schumer gives Democrats a chance to get one last piece of legislation through Congress before the midterm elections, where it is expected Republicans will recover at least one chamber of Congress. Whether they manage to get it through or not will be up to Schumer, Pelosi, and Sinema.