Senate Majority Leader Chuck Schumer and Sen. Joe Manchin unexpectedly announced a massive climate, healthcare, and tax deal.
Summary
Senate Majority Leader Chuck Schumer and West Virginia Sen. Joe Manchin unexpectedly announced a massive climate, healthcare, and tax deal months after negotiations over President Joe Biden’s gargantuan “Build Back Better” spending plan collapsed.
- The so-called “Inflation Reduction Act” would spend $369 billion on tax giveaways for green energy companies and other incentives for consumers including a $7,500 tax write-off if consumers who make less than $75,000 per year purchase an electric car (The cheapest Tesla model retails for $46,990).
- The plan would levy a 15 percent corporate minimum tax on companies with profits over $1 billion, which the senators estimated would raise $313 billion over ten years.
- The Manchin-Schumer framework calls for extending Obamacare subsidies through the 2024 presidential election, allowing Medicare to negotiate prescription drug prices and capping seniors’ annual out-of-pocket drug costs at $2,000.
- President Joe Biden called the plan “a historic agreement to fight inflation” while Senate Minority Leader Mitch McConnell lambasted the framework as “an absolute monstrosity.”
- Sens. Schumer and Manchin announced their deal just hours after a massive semiconductor subsidy bill, The CHIPS and Science Act, passed the Senate and is now waiting for Biden’s signature.
- The Washington Post broke down the bill’s contents, including $385 billion for energy and climate spending and tax breaks and $100 billion for expanded Obamacare subsidies. The “Inflation Reduction Act” would be paid for with $470 billion in projected revenue (including a projected $125 billion from tougher IRS tax enforcement) and $320 billion in health savings.
- POLITICO reported Sen. Kyrsten Sinema’s silence on the $700 billion “Inflation Reduction Act” is “stressing” Democrats desperate for a legislative win before the midterms. Sinema was described as “frustrated” that “she was not consulted” and was “totally shocked” by the agreement.
- The New York Times reported how Manchin and Schumer reached a deal in secret after their previous efforts imploded. Manchin received “major concessions” including “fewer tax increases, more fossil fuel development, and benefits for his home state.”
- National Review predicted the bill wouldn’t save the Democrats from a drubbing in November’s midterm elections. The editors mocked the bill, saying it’s “a delicious bit of Washington-speak that the Inflation Reduction Act, which will not reduce inflation, contains an extension of the Affordable Care Act, which did not make care more affordable.”
- The Washington Examiner argued the deal is a “big gamble” for Biden and the Democrats and is fraught with “political risk.” Sen. Kyrsten Sinema (D-AZ), whose vote is a necessity for Senate passage, hasn’t yet signed on.
- The Wall Street Journal noted the deal would close the so-called “carried interest loophole” by raising taxes on private-equity managers’ carried interest income that stems from the performance of their investments when sold. The tax hike would raise $14 billion.
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© Dominic Moore, 2022
