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Manchin backs Senate deal on tax, spending and climate


Joe Manchin has reached a deal with fellow Senate Democrats on a tax, climate and social spending bill, in a reversal that could hand a significant legislative victory to president Joe Biden ahead of the US midterms.

The agreement will be the biggest climate bill in history and comes as a surprise after Manchin, one of the most moderate Democrats in the Senate and a constant thorn in the administration’s side, repeatedly balked at previous iterations of the president’s flagship economic and social spending package.

On Wednesday, Manchin, who represents West Virginia, said the new bill would not be “Build Back Better” — the Biden administration’s name for its multitrillion-dollar policy plan — but rather the “Inflation Reduction Act of 2022”, which would address “record inflation by paying down [the country’s] national debt, lowering energy costs and lowering healthcare costs”.

The bill includes $300bn in deficit reduction, aided by a new 15 per cent corporate minimum tax and closing the tax loophole on carried interest — the share of investment profits that hedge fund and private equity managers are paid as an incentive to hit higher returns.

These savings will be coupled with $369bn of spending on climate and energy reforms and $64bn on the Affordable Care Act.

“Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together,” Manchin said in a statement.

The legislation will allow Medicare to negotiate lower prescription drug prices, reducing annual health insurance costs for an estimated 13mn Americans by an average of $800 a year. Manchin also cited investments in new technologies to reduce domestic methane and carbon emissions.

The deal could pass as soon as next week before the Senate departs on August recess. If it does, it would represent an eleventh-hour win for the Biden administration, which has been criticised by Democrats for failing to achieve some of the president’s central campaign promises.

“This is the action the American people have been waiting for,” Biden said in a statement released by the White House on Wednesday evening. “This addresses the problems of today — high healthcare costs and overall inflation — as well as investments in our energy security for the future.”

Senate Democrats and climate activists expressed shock at the last-minute deal, which had all but been ruled out.

“Holy shit,” Senator Tina Smith, a Democrat from Minnesota, wrote on Twitter. “Stunned, but in a good way.”

Lori Lodes, executive director of Climate Power, an environmental group, said, the bill, if passed, would “put the United States on a path to lowering emissions in half by 2030”.

“Congress needs to seize on this opening and pass the strongest clean energy and climate provisions possible as soon as possible.”

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