What’s great (and what’s not) about Manchin’s deal with Schumer

As Democratic leaders worked on a rather ambitious package related to health care, climate and taxes, Senate Minority Leader Mitch McConnell came up with a hostage strategy to derail it: Give up on the expansive domestic bill, the Kentucky Republican said, or he’d kill an unrelated measure about microchips, scientific research, and improving American competitiveness.

Two weeks ago, however, the legislative dynamic shifted: Democratic Sen. Joe Manchin appeared to scuttle his party’s reconciliation package, at which point, McConnell and GOP senators saw no need to keep their hostage. It’s one of the reasons the CHIPS and Science Act cleared the chamber yesterday with relative ease — including a “yes” vote from McConnell.

But then a funny thing happened: The ambitious Democratic package that Republicans assumed was dead suddenly sprang back to life — right after Democrats got what they wanted on the other bill. NBC News reported on the newly repackaged Inflation Reduction Act.

In an unexpected breakthrough, Sen. Joe Manchin, D-W.Va., reversed his opposition to quickly moving a broad filibuster-proof bill Wednesday and announced he will support a package that includes major investments in drug pricing, as well as provisions to address climate change and taxes on the wealthy.

The plan, at least for now, is to pass the bill through the Senate next week, ahead of members’ August break.

For those who enjoy digging in on the details, Democratic leaders produced plenty of reading materials last night, including the full legislative text, a one-page summary, a review of the measures related to prescription medication costs, a review of the measures related to taxes, and a review of the measures related to climate and energy policy.

From a Democratic perspective, there’s a lot in this agreement to like. As recently as 24 hours ago, the assumption was that the reconciliation bill would lower medication costs and extend Affordable Care Act subsidies for a couple of years — and that’s it. It’d be an important win, to be sure, but it’d be a narrowly focused one.

The agreement announced late yesterday includes those health care provisions and goes much further, in part on tax policy — the bill would generate over $400 billion in revenue through tax reforms, including a 15 percent corporate minimum tax — but also with some of the most important proposals to address the climate crisis in recent memory. An Associated Press report summarized:

The bill would invest $369 billion over the decade in climate change-fighting strategies including investments in renewable energy production and tax rebates for consumers to buy new or used electric vehicles. It’s broken down to include $60 billion for a clean energy manufacturing tax credit and $30 billion for a production tax credit for wind and solar, seen as ways to boost and support the industries that can help curb the country’s dependence on fossil fuels. For consumers, there are tax breaks as incentives to go green. One is a 10-year consumer tax credit for renewable energy investments in wind and solar. There are tax breaks for buying electric vehicles, including a $4,000 tax credit for purchase of used electric vehicles and $7,500 for new ones.

All told, these policies would put the United States on track to reduce greenhouse gas emissions by 40 percent by the end of this decade.

The package would also reduce the deficit by $300 billion — a top priority for the conservative West Virginia Democrat who helped negotiate the terms of the deal.

So, if that’s the good news, what’s the bad news? There’s still some question as to whether the legislation can pass.

We don’t yet know, for example, whether there will be procedural objections raised by the Senate Parliamentarian’s office. What’s more, if even one Senate Democrat gets Covid and can’t get to the floor, there won’t be a vote.

But perhaps most important is the modest contingent of congressional Democrats who are well to the right of Manchin on tax policy. The new agreement, for example, tackles the carried-interest loophole, which largely benefits investment managers, and which Arizona Sen. Kyrsten Sinema has tried to protect. There are even some centrist House Democrats who’ve voiced tax-related concerns in recent months, and given the party’s margins in the lower chamber, it wouldn’t take much to thwart the entire effort.

That said, there’s a political reality these members will have to consider: If Democratic lawmakers kill this bill, the damage to their political careers would be irreparable.