Manchin and Schumer announce deal that includes energy, taxes

Joe Manchin and Senate Majority Leader Chuck Schumer on Wednesday reached a deal on a bill that includes energy and tax policy, a turnaround after the two deadlocked earlier this month in talks on Democrats' marquee party-line agenda.

In a joint statement, the two Democrats said the legislation will be on the Senate floor next week. It includes roughly $370 billion in energy and climate spending, $300 billion in deficit reduction, three years of subsidies for Affordable Care Act premiums, prescription drug reform and significant tax changes.

The duo said their bill, dubbed “The Inflation Reduction Act of 2022,” would "fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030." Moreover, as part of the agreement announced Wednesday, Schumer and Speaker Nancy Pelosi agreed to pass legislation governing energy permits.

Following Manchin's stated interest in limiting a party-line domestic policy bill to health care and lowering prescription drug prices, Democrats were expecting to pursue a bill that did not include climate or energy provisions. But Manchin and Schumer quietly continued negotiating behind the scenes, mostly through staff, leading to a surprise breakthrough while Manchin was sidelined with Covid.

The agreement mirrors roughly what Manchin first laid out earlier this year, albeit with a more limited tax title. Democrats will raise revenues for the legislation by imposing a 15 percent corporate minimum tax, increasing IRS enforcement, reducing drug prices and closing the so-called carried interest loophole. Notably, the legislation also extends the Affordable Care Act subsidies through the 2024 election and the first term of Joe Biden’s presidency, taking a big political headache off the table for Democrats.

It does not include surtaxes on people making more than $10 million a year, ending the campaign of most Democrats to make the wealthy pay higher rates.

Another moderate Senate Democrat, Kyrsten Sinema of Arizona, learned of the deal on Wednesday afternoon and had no immediate comment.