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.
Manchin announced the agreement in a joint statement with Senate Majority Leader Chuck Schumer, D-N.Y., after months of negotiations between the two appeared to break down recently. The deal represents a major breakthrough for elements of President Joe Biden's agenda that appeared to be all but dead.
“The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030,” Schumer and Manchin said in a statement. "The bill will finally allow Medicare to negotiate for prescription drugs and lower health care costs for millions of Americans. Additionally, we have reached agreement with President Biden and Speaker Pelosi to pass comprehensive permitting reform legislation before the end of this fiscal year. We urge every member of the U.S. Senate to support this important legislation.”
The two Democrats said the text of the deal will be submitted to the Senate parliamentarian on Wednesday evening "and the full Senate will consider it next week."
The legislation, released by Schumer, still needs the support of all 50 Democratic-voting senators to become law, without hope of winning GOP support. But Manchin, who represents a deeply conservative state, has been the biggest holdout to a major bill for months, giving a version of the proposal strong odds of passing the Senate.
It would also have to pass the House before it reaches Biden’s desk.
Biden praised the deal in a statement.
"This afternoon, I spoke with Senators Schumer and Manchin and offered my support for the agreement they have reached on a bill to fight inflation and lower costs for American families," Biden said, urging speedy passage of the bill. "This is 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."
According to a one-page summary, the bill will include $739 billion in new revenue through a 15% corporate minimum tax, prescription drug savings and added IRS enforcement, and it will limit the so-called carried interest tax break.
The bill will also include $369 billion in spending on energy security and climate change and $64 billion in funding for the Affordable Care Act, for a total of $433 billion in spending.
There will be more than $300 billion in deficit reduction, the one-page summary added.
"By a wide margin, this legislation will be the greatest pro-climate legislation that has ever been passed by Congress," Schumer said in a statement, releasing new summaries of the energy provisions, as well as the tax provisions and drug pricing provisions. “I thank Senator Manchin for his willingness to engage and his commitment to reaching an agreement that can earn the support of all 50 Senate Democrats.”
In a statement of his own, Manchin rebutted suggestions that he deceived Democrats or backed away from proposals he said he favors. Democrats were furious this month when Manchin suggested he would oppose including climate and tax provisions in the deal.
"With respect to my position, I have never and will never walk away from solving the problems facing the nation we all love," Manchin said in a statement. "I strongly support the passage of commonsense policies that reduce inflation and focus on the major challenges confronting America today and in the future."
He added: "For too long, the reconciliation debate in Washington has been defined by how it can help advance Democrats['] political agenda called Build Back Better. Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together."
Two weeks ago, Manchin conveyed to Schumer that he was willing to quickly move on drug pricing and health insurance funding but that he wanted to wait until mid-August to advance major investments in climate change or taxes, sources said at the time.
Manchin's spokesperson, Sam Runyon, said: "Today’s announcement is not a reversal of anything."
The carried interest provision could be a problem for Sen. Kyrsten Sinema, D-Ariz., who last year indicated to party leaders that she opposed closing the tax break, which primarily affects investment managers. Her office declined to immediately comment on the provision or the broader Schumer-Manchin deal Wednesday.
But it represents only a small slice of the larger package, at an estimated $14 billion in revenue, and it is unlikely to prevent a version of the legislation from passing.
Sinema "will have to make a decision, but I know that her concerns were kept in mind when putting this together," Sen. Debbie Stabenow, D-Mich., told NBC News after the deal was announced.
In the House, early progressive reaction was positive.
"If it's all true, and if the language is really — reflects what is what the top lines are, it’s a huge victory for the American people," said Rep. Pramila Jayapal, D-Wash., the leader of the Congressional Progressive Caucus. "It's a really important set of investments in people's health care, keeping costs down, extending the subsidies and climate change."