This week, Senate Majority Leader Chuck Schumer and Senator Joe Manchin (D-WV) announced that they’d reached an agreement on a reconciliation package that aims to combat climate change, extend Obamacare subsidies, and cut the deficit.
Schumer and Manchin reached an agreement on a reconciliation bill, the Inflation Reduction Act of 2022, which would, in their view, “reduce record inflation by paying down our national debt, and reducing energy costs, and healthcare costs.”
The two Democrats claimed that the legislation would reduce deficits by $300 billion over ten years, spend $369.8 billion on climate change initiatives, and renew enhanced Affordable Care Act (ACA) subsidies for three years.
The bill would also include a provision that allows Medicare to negotiate the price of medicines, which will save money for the Obamacare and climate change components of the legislation. Allowing Medicare to negotiate drug prices would save $288 billion, according to reports. The bill will also “end tax loopholes on wealthy individuals and businesses.”
It’s also worth noting that the legislation would impose a 15 percent minimum corporate tax, which is expected to generate $313 billion in revenue. By beefing up IRS enforcement, the bill will raise $124 billion.
Sen. Wyden suggested raising IRS audits in order to pay for the larger Obamacare subsidies included in a possible reconciliation package. The enhanced Obamacare subsidies, first enacted under President Biden’s $1.9 trillion American Rescue Plan or his coronavirus aid bill, would be phased out this year.
Senate Democrats are working to bring the reconciliation package to the Senate floor as soon as possible. Because this legislation is using budgetary reconciliation, it will only require a bare majority of 50 votes, which is all that’s needed for the bill to pass in the Senate.
It’s uncertain whether Sen. Kyrsten Sinema (D-AZ) will back the bill.
“We don’t have anything to say since she’ll have to go through the text,” Sinema’s spokesperson added.
During previous Build Back Better negotiations, Kyrsten Sinema opposed a provision to limit the carried interest deduction, which is included in the Schumer-Manchin plan.
After speaking with Schumer and Manchin earlier this afternoon, Biden appeared to give his approval:
BIDEN on the Schumer-Manchin reconciliation deal
"I want to thank Senator Schumer and Senator Manchin…
If enacted, this legislation will be historic, and I urge the Senate to move on this bill as soon as possible, and for the House to follow as well." pic.twitter.com/L6ii8HFvRK
— Alayna Treene (@alaynatreene) July 27, 2022
The agreement may put the $280 billion Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act in jeopardy, which would increase domestic semiconductor manufacturing and high-tech research.
Tomorrow, the House will debate and vote on it; as Senate Republicans just handed Democrats a majority to pass the bill.