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Reversing His Recent Position, Manchin Now Says He Agrees to Climate and Tax Bill

Ruth Singleton
Published Date:
Jul 28, 2022


Sen. Joe Manchin (D-W.Va.) yesterday agreed to a bill that would provide hundreds of billions of dollars for climate and energy programs and also include tax increases, reversing a position he took less than two weeks ago, the New York Times reported. The package would also subsidize health care and lower the cost of prescription drugs. The bill, now called the Inflation Reduction Act of 2022, includes several provisions of the Build Back Better package supported by President Joe Biden and congressional Democrats. 

According to a summary circulated Wednesday evening, the bill would raise revenue through three tax measures. The bill would raise $313 billion by establishing a 15 percent corporate minimum tax and $14 billion by closing the carried interest loophole, meaning that the profits earned by partners of private equity, venture capital and hedge funds would be taxed as short-term capital gain at rates up to 37 percent rather than as long-term capital gain at a 20 percent rate. The bill would also raise $124 billion through enhanced IRS enforcement efforts. In addition, prescription drug pricing reform would yield $288 billion in revenue, for total revenue of  $739 billion. 

The bill would invest $369 billion in energy security and climate change measures and $64 billion in Affordable Care Act Extension. Thus, in total, it is projected to lead to over $300 billion deficit reduction. 

It would also include a means-tested $7,500 tax credit to make new electric vehicles more affordable, and a $4,000 tax credit for used electric vehicles, according to a summary of the package. Both credits would be offered only to lower and middle-income consumers. 

According to the Times, the bill is the product of a deal announced by Manchin and Senate Majority Leader Chuck Schumer (D-N.Y.).  It is not as ambitious as the Build Back Better domestic policy and tax package that Biden proposed last year, which did not make it through the Senate. Democrats, with an eye toward the midterm elections, which are likely to be shaped by voters’ concerns about inflation, renamed the bill the Inflation Reduction Act of 2022, as several provisions are intended to counteract the recent steep price increases, now at a 40-year high. 

The Times said that it was not clear what had changed Manchin’s mind. Less than two weeks ago, he said that he could not support such a package until he saw inflation numbers for July, which are not scheduled to be issued for two more weeks. Citing an unnamed person familiar with the talk, the Times reported that quiet negotiations had resumed between Manchin, Schumer and their staffs in recent days. 

“This is the action the American people have been waiting for,” Biden said in a statement, calling on both chambers  of Congress to quickly pass the bill. “This addresses the problems of today high health care costs and overall inflation—as well as investments in our energy security for the future.” 

Senate Minority Leader Mitch McConnell (R-Ky.) criticized the bill, posting on Twitter, “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.” 

Whether the bill will pass the Senate remains up in the air. Because the Senate is divided 50- 50, and Republicans are uniformly opposed, Democrats will need unanimous support within their party and the tiebreaking vote of Vice President Kamala Harris to pass it under special rules that shield certain budget bills from a filibuster. While Manchin’s resistance had been the primary obstacle, his agreement to the bill does not guarantee it will go forward. The Times reported that several senators declined to comment on the deal until they learned more about it. That included Senator Kyrsten Sinema (D-Ariz.) who has been a holdout on previous policy measures supported by Democrats.  

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