Democrats Manchin, Schumer agree on $430 billion tax, drugs, energy bill

© Reuters. FILE PHOTO: Chairman U.S. Senator Joe Manchin (D-WV) attends a U.S. Senate Energy and Natural Resources Committee hearing on Capitol Hill in Washington, U.S., July 19, 2022. REUTERS/Elizabeth Frantz

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 and health insurance investments, 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 multi-trillion-dollar spending bill Democrats had envisioned last year. But it still represents a significant advance for Biden's policy agenda ahead of midterm elections 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.

Manchin and Schumer in a statement said 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. But they did not provide specifics.

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, 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.

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 bill on Thursday, but Republicans don't have the votes to block it on their own.

Republicans were quick to criticize the move. "I can’t believe that Senator Manchin is agreeing to a massive tax increase in the name of climate change when our economy is in a recession," Senator Lindsey Graham said.

McConnell also criticized the bill, saying it would "kill many thousands of American jobs."

Schumer said the Senate will take the bill up next week.