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Schumer, Manchin announce deal on reconciliation bill with tax, climate, energy provisions

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Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.V., on Wednesday announced that they’ve struck a long-awaited deal on laws that goals to reform the tax code, fight climate change and cut health-care costs.

The reconciliation bill would invest greater than $400 billion over 10 years, to be fully paid for by closing tax loopholes on the richest Americans and corporations, the senators said in a joint statement. It would cut back deficits by $300 billion over that decade, the senators said, citing estimates from nonpartisan congressional tax and budget offices.

The package would raise an estimated $739 billion, including:

  • $313 billion through a 15% corporate minimum tax
  • $288 billion through prescription drug pricing reforms, including measures to permit Medicare to barter drug prices and cap out-of-pocket costs to $2,000
  • $124 billion through the IRS enforcement of a reformed tax code
  • $14 billion through closing the carried interest loophole

The bill would also invest a complete of $433 billion:

  • $369 billion from a collection of energy and climate-related programs
  • $64 billion from extending an expanded Reasonably priced Care Act program for 3 years, through 2025

The total Senate will consider the bill next week, Schumer and Manchin said. They hope that the laws will meet the Senate Parliamentarian’s budget reconciliation rules, allowing Democrats to pass it with no need GOP votes.

The Democrats’ razor-thin majority within the Senate includes Sen. Bernie Sanders, I-Vt., who caucuses with the Democrats, and Vice President Kamala Harris’ ability to forged the tie-breaking vote. With a single defection, Democrats’ hopes to pass any laws strictly along party lines disintegrate.

Manchin has flexed that power before: In December, he announced he would refuse to back President Joe Biden’s sweeping $1.75 trillion plan to fund a variety of social and climate issues. The White House on the time accused him of breaking his guarantees to the Biden administration.

Biden, who made the same but more sweeping proposal the centerpiece of his first-term domestic agenda, lauded the senators’ agreement Wednesday.

“That is the motion the American people have been waiting for,” said in an announcement of support.

“This addresses the issues of today – high health care costs and overall inflation – in addition to investments in our energy security for the long run,” the president said.

Schumer and Manchin billed the package as a approach to fight runaway inflation while addressing other Democratic agenda items, including cutting down on carbon emissions by 40% by 2030.

The package was revealed hours after the Senate passed a bipartisan bill aimed toward boosting U.S. competitiveness with China by subsidizing the domestic production of semiconductors.

Senate Minority Leader Mitch McConnell, R-Ky., had previously warned that Republicans wouldn’t back that China competition bill if Democrats continued to pursue unrelated reconciliation laws.

Spokesmen for McConnell didn’t immediately reply to CNBC’s request for comment.

The provisions of the deal got here as a surprise to many after Manchin, just weeks earlier, signaled reluctance to quickly pass the Biden administration’s climate agenda as a consequence of his concerns about inflation. Manchin’s stance infuriated a few of his colleagues who’ve vented frustration in regards to the conservative Democrat’s outsize power within the Senate, which is split 50-50 with Republicans.

Schumer had said earlier this month that Democrats would as an alternative work toward a slimmer bill that addressed drug pricing and health care funding.

That is breaking news. Please check back for updates.

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