WASHINGTON (Reuters) - U.S. Democratic Senator Joe Manchin said on Wednesday he has reached a deal with Senate Democratic leader Chuck Schumer on a bill to increase corporate taxes, reduce the national debt, invest in energy technologies and lower the cost of prescription drugs.
Manchin has often been a roadblock to President Joe Biden's policy goals, including those specifically addressed in the bill. He previously said he wanted to address high U.S. prescription drug costs, but was concerned more government spending could increase inflation.
The bill includes $430 billion in new spending on energy, electric vehicle credits and health insurance, and more than pays for itself by raising minimum taxes for big companies and enforcing existing tax laws, Schumer and Manchin said in a statement.
The measure is substantially smaller than the multitrillion-dollar spending bill Democrats had envisioned last year. But it still represents a significant advance for Biden's policy agenda ahead of midterm elections on Nov. 8 that could determine whether Democrats retain control of Congress.
Schumer plans to pass the measure through a Senate maneuver called reconciliation that allows him to proceed with just a 51-vote majority, bypassing normal rules that require 60 of the 100 senators to agree to most legislation. That could allow him to pass the bill with only Democratic votes, if necessary, if every Democrat is on board.
Schumer said he expects the Senate Parliamentarian will rule in the coming days whether the bill qualifies for reconciliation under the chamber's rules. He said the Senate will vote on the legislation next week.
Manchin and Schumer said in the statement that the bill would reduce the nation's deficit by about $300 billion, lower carbon emissions by about 40% by the year 2030 and allow the government's Medicare health plan to negotiate prescription drug prices.
Older and lower-income Americans could benefit, as well as some electric vehicle companies and green energy companies.
Out-of-pocket drug costs for recipients of Medicare, the U.S. health insurance for seniors and the disabled, would be capped at $2,000 a year and vaccines for seniors would be available for free, according to a summary of the bill.
It also includes a new $4,000 tax credit for used electric vehicles for lower-income people and new tax credits and grants for automakers to retool factories to build greener cars. [L1N2Z9027]
The new agreement will be paid for by raising the corporate minimum tax on big companies to 15%, ramping up Internal Revenue Service tax enforcement by adding $80 billion to its budget over a decade, lowering the price government agencies pay for prescription drugs and closing a loophole that lets some ultra-wealthy pay less tax, Schumer and Manchin said.
"I have worked diligently to get input from all sides on the legislation my Democratic colleagues have proposed and listened to the views of my Republican friends to find a path forward that removes inflationary policies so that Congress can respond to Americans’ suffering from high prices," Manchin said.
Senator Kyrsten Sinema of Arizona, another Democrats who has at times blocked Biden's agenda, declined immediate comment on news of the agreement.
In a letter to colleagues, House of Representatives Speaker Nancy Pelosi called the bill "a remarkable achievement" and "welcome news for House Democrats."
CROSSING MCCONNELL
News of the agreement came hours after the Senate passed sweeping legislation to subsidize the domestic semiconductor chip industry with several Republican votes.
Last month, top Senate Republican Mitch McConnell promised to block the "Chips bill" as it is known, unless Democrats abandoned their plans for a reconciliation bill like the one Manchin and Schumer outlined. The House will vote on the "Chips bill" on Thursday, but Republicans don't have the votes to block it on their own.
McConnell criticized the reconciliation bill on Wednesday, saying it would "kill many thousands of American jobs."
The reconciliation bill does not include an expansion of a federal deduction for taxes paid to states and local entities. Expanding the deduction, known as SALT for State and Local Taxes, has been a demand of lawmakers in higher-tax states such as California, New Jersey and New York, especially in suburbs where Democrats seek to retain control in the November elections.