Schumer and Manchin struck a deal on a reconciliation package, the Inflation Reduction Act of 2022, that would, in their eyes, “address record inflation by paying down our national debt, lowering energy costs and lowering healthcare costs.”
The two Democrats said that the bill would lower deficits by $300 billion over ten years, spend $369.8 billion on climate change programs, and extend enhanced Affordable Care Act (ACA) subsidies for three years.
The measures would also include a provision to allow Medicare to negotiate the price of drugs, which would save money for the climate change and Obamacare portions of the bill. Allowing Medicare to negotiate the price of drugs would reportedly save $288 billion. The legislation would also “close tax loopholes on wealthy individuals and corporations.”
Indeed, the legislation would have a 15 percent minimum corporate tax that is estimated to raise $313 billion. The legislation would also raise $124 billion from enhanced tax enforcement by the IRS.
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Sen. Ron Wyden (D-OR) floated increasing IRS audits to pay for the enhanced Obamacare subsidies contained in a potential reconciliation package. The enhanced Obamacare subsidies, first created under President Joe Biden’s $1.9 trillion American Rescue Plan, or his coronavirus aid bill, would expire this year.
Senate Democrats hope to bring the reconciliation package to the Senate floor next week. Since the bill uses budgetary reconciliation, it would require only 50 votes, or the Democrat majority, to pass the bill.
It remains unclear whether Sen. Kyrsten Sinema (D-AZ) would support the bill.
“We do not have comment as she will need to review the text,” a spokesperson for Sinema said.
The Schumer and Manchin proposal contains a provision to limit the carried interest deduction, a proposal that Sinema did not want altered during previous Build Back Better negotiations.
Biden appeared to grant his blessing after speaking with Manchin and Schumer earlier this afternoon:
The deal may imperil the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, a $280 billion package that would boost domestic semiconductor chip manufacturing and high-tech research.
The House will vote on it tomorrow, as Senate Republicans just gave Democrats the vote to pass the bill on Wednesday.
Republicans across the spectrum revolted at the idea of passing the CHIPS bill as Democrats appear ready to pass their climate change and Obamacare package.
“In light of this deal, whether Republican Members support CHIPS or not (I don’t), we must ALL vote no. Passing CHIPS will pave the way for the radical Build Back Broke plan. The time to fight is now,” Rep. Kevin Hern (R-OK), said in reaction to the deal.
Rep. Kevin Brady (R-TX), the ranking member of the House Ways and Means Committee, said Senate Democrats were deceitful in announcing a reconciliation deal after getting Republicans to back the CHIPS bill.