Senate Majority Leader Chuck Schumer and Sen. Joe Manchin on Wednesday announced a deal on an energy and health care bill, representing a breakthrough after more than a year of negotiations that have collapsed time and again.
But it will face furious GOP opposition.
With a deal in hand, the health and climate bill stands a serious chance of becoming law as soon as August – assuming Democrats can pass the bill in the House and that it passes muster with the Senate parliamentarian to allow it to be approved along straight party lines in the budget process.
While Manchin scuttled President Joe Biden’s Build Back Better bill, the final deal includes a number of provisions the moderate from West Virginia had privately scoffed at. That includes provisions addressing the climate crisis.
The agreement contains a number of Democrats’ goals. While many details have not been disclosed, the measure would invest $369 billion into energy and climate change programs, with the goal of reducing carbon emissions by 40% by 2030, according to a one-page fact sheet. For the first time, Medicare would be empowered to negotiate the prices of certain medications, something Democrats say would raise $288 billion, and it would cap out-of-pocket costs at $2,000 for those enrolled in Medicare drug plans. It would extend expiring subsidies under the Affordable Care Act for three years.
The announcement comes at a crucial time for Congress, as the Senate is a little over a week away from starting a monthlong recess, when many Democrats will campaign for reelection. The news also came several hours after the Senate passed a separate bill to invest $52 billion in US manufacturing of semiconductors, sending it to the House to consider as soon as this week.
Notably, Senate Minority Leader Mitch McConnell had previously vowed to try to halt passage of the semiconductor bill if Democrats continued to pursue their party-line bill on climate and drug prices.
Manchin’s support is notable given his stance earlier this month that he “unequivocally” wouldn’t support the climate or tax provisions of the Democratic economic package, which appeared to torpedo any hope Democrats had of passing legislation to fight climate change in the near future.
But Schumer and Manchin have been in revived talks since July 18 and locked down a deal Wednesday, according to a source familiar with the matter. Manchin had thrown cold water on doing tax and energy provisions as part of the deal, but ultimately agreed to it.
The White House has signed off on this deal, Biden said in a statement.
The deal still faces multiple hurdles before it can make it to Biden’s desk, including the parliamentarian and having to pass both chambers of Congress, where practically any Democrat could sideline or delay passage.
In a statement, Schumer’s office said the bill would reduce US carbon emissions by roughly 40% by 2030. Clean energy tax credits would drive the majority of those emission reductions, a Democratic aide said.
Two weeks ago, Schumer and Manchin were nearing a deal on $375 billion for the climate and energy provisions of the bill; the topline for climate announced tonight is $6 billion less than the original figure.
Still, a senior Democratic aide told CNN they were happy with the $369 billion figure on spending for the climate and energy portion of the bill, saying it was more funding than was expected to come out of a deal.
Leaders of two prominent climate groups told CNN the latest deal with Manchin was unexpected.
“This is not what anyone was expecting, but we are so excited it’s back on,” Tiernan Sittenfeld, the senior vice president of government affairs at the League of Conservation Voters, told CNN. “Obviously it’s coming not a moment too soon as families struggle from the crazy heat across the world and country.”
Advocates were awaiting more details on the climate provisions, expected to be released on Wednesday evening.
“We need to see the details of this deal, especially if there’s permitting reform and development of fossil fuels,” Evergreen Action co-founder Jamal Raad told CNN. “We’re going to need to see in the coming days modeling on this legislation.”
But if the package does indeed achieve the emissions reductions Schumer is promising, Raad said it would be a hugely important step.
“If this package does that in a bold way, this could put us on the path to reaching our goals and could be a huge win,” he said.
The deal keeps the prescription drug prices reforms that Manchin had previously agreed to, including empowering Medicare to negotiate the price of certain costly medications administered in doctors’ offices or purchased at the pharmacy.
It would also redesign Medicare’s Part D drug plans so that seniors and people with disabilities wouldn’t pay more than $2,000 a year for medication bought at the pharmacy. And, the deal would require drug companies to pay rebates if they increase their prices in the Medicare and private-insurance markets faster than inflation.
Altogether, the drug price provisions would reduce the deficit by $288 billion over a decade, according to the Congressional Budget Office.
The agreement also calls for extending the enhanced Affordable Care Act subsidies for three years. The original deal would have continued the beefed-up subsidies for two years, which meant they would have expired just after the 2024 presidential election – a scenario that congressional Democrats did not want to encounter.
The subsidies were expanded through this year as part of Democrats’ $1.9 trillion coronavirus relief package, known as the American Rescue Plan, which was enacted in March 2021. They have made health care coverage on the Obamacare exchanges more affordable, leading to record enrollment this year.
Enrollees pay no more than 8.5% of their income toward coverage, down from nearly 10%. And lower-income policyholders receive subsidies that eliminate their premiums completely. Also, those earning more than 400% of the federal poverty level have become eligible for help for the first time.
To raise revenue, the bill would impose a 15% corporate minimum tax, while raising taxes on carried interest and raising another $124 billion through IRS tax enforcement. Democrats say families making less than $400,000 per year would not be affected.
Democrats say it would reduce the deficit by $300 billion.
“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower 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 his own statement Wednesday afternoon.
This story has been updated with additional development Wednesday.