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After spiking earlier talks, Manchin agrees to a new deal on climate and taxes

Sen. Joe Manchin, D-W.Va., talks with Senate Majority Leader Chuck Schumer of N.Y., on March 15, 2022.
Patrick Semansky
Sen. Joe Manchin, D-W.Va., talks with Senate Majority Leader Chuck Schumer of N.Y., on March 15, 2022.

Updated July 27, 2022 at 9:00 PM ET

Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., have released preliminary details of a bill to address climate change, taxes, health care and inflation.

The agreement is a major reversal for Democrats, who had narrowed their ambitions for the package to address looming lapses in the Affordable Care Act and changes to prescription drug prices after Manchin raised concerns over approving more spending during record inflation.

"After many months of negotiations, we have finalized legislative text that will invest approximately $300 billion in Deficit Reduction and $369.75 billion in Energy Security and Climate Change programs over the next 10 years," the senators said in a joint statement. "The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations."

The legislation — called the Inflation Reduction Act of 2022 — would also continue expansions to the Affordable Care Act that passed during the pandemic though 2025 and allow Medicare to pursue lower drug costs by negotiating directly with drug companies. Democrats say the plan avoids any new taxes on families making $400,000 or less and does not include any new taxes on small businesses.

Read the bill here.

The new agreement aims to "reduce carbon emissions by roughly 40 percent by 2030" and address inflation while also reducing the deficit, according to documents released by Schumer and Manchin. Schumer planned to submit the bill to the Senate parliamentarian for review on Wednesday night in order to start votes on the bill next week. Democrats plan to pass the bill using the budget process known as reconciliation to avoid a Republican filibuster, provided the legislation has unanimous support among Senate Democrats.

Manchin and Schumer say they have also reached an agreement with House Speaker Nancy Pelosi, D-Calif., and President Biden to pass a permitting reform bill by the end of the year, with the goal of easing permits for domestic energy production and transmission.

The agreement is a significant expansion of the very narrow bill Democrats had hoped pass through reconciliation before the midterm elections, though it still falls far short of the broader Build Back Better plan they began negotiating last year. That proposal initially included massive domestic spending to address climate, taxes, health care and social programs.

Manchin became the leading voice of opposition to major spending as inflation concerns grew in the country. He was able to single-handedly drive the talks because Democrats need unanimous support to pass the bill in the evenly divided Senate.

The agreement comes hours after the Senate passed a major bipartisan bill to expand domestic production of critical semiconductor chips that have been in short supply, leading to delays in the delivery of new cars and supply chain issues for smartphones, computers and medical equipment. Senate Minority Leader Mitch McConnell, R-Ky., had threatened to block the semiconductor bill, known as CHIPS, if Democrats continued to pursue climate and tax legislation.

Finalizing the CHIPS bill paved the way for Democrats to reach a deal without the threat of losing support for the semiconductor bill they viewed as a critical economic and political achievement.

The next step will be for the Senate parliamentarian to assess whether the proposals meet strict Senate budget rules that govern the reconciliation process. Once that is done, it will go through a vote-a-rama, a process that would serve to circumvent the 60-vote threshold that bills normally must cross in order to be passed. The House must then pass a similar bill before Biden signs it into law.

In a statement after the deal was announced, Biden praised it as "the action the American people have been waiting for."

"This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future," he said.

Copyright 2023 NPR. To see more, visit https://www.npr.org.

Kelsey Snell is a Congressional correspondent for NPR. She has covered Congress since 2010 for outlets including The Washington Post, Politico and National Journal. She has covered elections and Congress with a reporting specialty in budget, tax and economic policy. She has a graduate degree in journalism from the Medill School of Journalism at Northwestern University in Evanston, Ill. and an undergraduate degree in political science from DePaul University in Chicago.