Senate Majority Leader Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) announced Wednesday that they have reached a long-awaited agreement on legislation that touches upon climate change, tax revenues, drug prices, health care subsidies and 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 lawmakers said in a joint statement. “The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations.”
The legislation — dubbed the Inflation Reduction Act of 2022 — would provide a revenue increase of $739 billion over 10 years, and spending of $433 billion.
Revenue sources include a 15% minimum corporate income tax, providing an estimated $313 billion; a reduction in drug prices paid by the federal government ($288 billion); enhanced IRS enforcement ($124 billion); and closing a tax loophole on carried interest ($14 billion).
On the spending side, the legislation would provide $369 billion to address “energy security & climate change,” and another $64 billion to extend Obamacare subsidies.
Overall, the legislation would provide about $300 billion in deficit reduction. But there is still some uncertainty about how the proposal will play out.
“Timing & details are very much in flux,” says Chris Krueger of Cowen Research. “Schumer is submitting the bill to the Parliamentarian tonight to begin the ‘Byrd Bath.’ None of these proposals is new — they have all been central components of the fiscal Frankenstein menu for over a year, so in theory the procedural wheels could turn quickly.”
The bottom line: After many, many, many month of fumbling and frustration, Democrats may be on the verge of securing a pre-election win that’s substantially narrower than their grand initial plans but is still significant and gives them something to tout on the campaign trail.