The Washington PostDemocracy Dies in Darkness

Democrats see hope for spending deal with Manchin as Congress returns

With early progress on health care, tax loopholes and climate, party leaders are ramping up efforts to pass Biden’s stalled economic agenda

Sen. Joe Manchin III (D-W.Va.) talks to a reporter at the Capitol on May 26. (J. Scott Applewhite/AP)

Senate Democrats are redoubling their efforts to finalize a new spending package that could lower health-care costs and combat climate change, hoping to hammer out a long-elusive deal with Sen. Joe Manchin III (D-W.Va.) and bring it to the chamber floor later this month.

A new sense of optimism — and urgency — has set in among party lawmakers nearly seven months after their last attempt to pass a sweeping bill ended in stunning defeat. Piece by piece, Democratic leaders in recent days have started reconstructing their economic ambitions as they race to deliver on a staple element of President Biden’s agenda before the midterm elections in November.

So far, top Democrats have worked out with Manchin new agreements that would cut drug costs for seniors, improve the financial health of Medicare and close a tax loophole that benefits the wealthy. They even have advanced talks around addressing the challenges posed by a faster-warming planet, raising the prospect that they can secure a limited initiative to penalize methane emissions.

Those early agreements have set the stage for Senate Democrats to make an upbeat return to the Capitol on Monday. Manchin is expected to have his next private meeting with Senate Majority Leader Charles E. Schumer (D-N.Y.) early in the week, according to two people familiar with the matter, who spoke on the condition of anonymity to describe the deliberations. They are set to discuss climate as Democrats try to bring one of their thorniest fights with the moderate West Virginian to an end.

Plenty remains unresolved, including the fate of a key program that lowers insurance costs for millions of Americans, raising the prospect that the latest round of talks could collapse much as they did before. Adding to the challenge, Republicans have intensified their opposition in recent days, hoping to apply enough political pressure on Manchin that he walks away from the talks again.

“To my friend Joe Manchin from West Virginia, whose vote is going to be necessary for this, I would remind him Joe Biden’s popularity in that state is as low as it is in Wyoming, only 17 percent,” Sen. John Barrasso (R-Wyo.), leader of the Senate Republican Conference, said during an interview on “Fox News Sunday.” He added that Manchin “shouldn’t walk the plank for Joe Biden” politically.

Even if Manchin and members of his party manage to strike a deal, it is guaranteed to be far smaller than Democrats’ original, roughly $2 trillion package, known as the Build Back Better Act, which the senator scuttled last year. The cuts might have been unthinkable earlier in the debate, but many Democrats have come to acknowledge them as the costs of compromise — and feel more hopeful than ever that there is now a pathway to achieve it.

“We’re making real progress, we’re picking up steam, and the central reason is we’re focused on cutting costs and addressing these real pocket book issues on the minds of Americans,” said Sen. Ron Wyden (D-Ore.), chairman of the tax-focused Finance Committee.

“I’m not saying it’s all done, it’s all over and the like,” Wyden later added, “but I do feel more confident about the progress that has been made.”

The debate seemed intractable only months earlier, when Manchin announced on a Sunday news talk show that he could not vote for the original $2 trillion bill to overhaul the country’s health-care, education, immigration, climate and tax laws. Even the White House attacked the senator in response, arguing in unusually stark terms in December that Manchin had made a “breach of his commitments” to Biden.

How the White House lost Joe Manchin, and its plan to transform America

By spring, however, Democrats had begun the long slog to rethink their agenda — realizing the stakes of failure after they swept into power in Washington on promises to improve Americans’ economic fortunes. A frenzied bout of private meetings began, as Schumer stepped in to negotiate on behalf of Democrats on a smaller deal with Manchin.

The senator’s cost concerns soon left Democrats no choice but to whittle down their aspirations, forcing them to shelve plans for free prekindergarten, paid family and medical leave and tax benefits for low-income families. In a sign of the sensitivity, Schumer convened most of those conversations in secret, out of view even from top party lawmakers. And party leaders took special care to distance their legislative work even from the name Build Back Better, which had been Biden’s 2020 campaign slogan.

“Senator Manchin has repeatedly expressed his concerns about rising inflation, a pending recession and the state of American energy security,” Sam Runyon, a spokesperson for the lawmaker, said in a statement. “He continues to work in good faith to see if there is a pathway forward to shore up domestic energy production and reduce emissions, lower health care costs for seniors and working families, and ensure everyone is paying their fair share of taxes.”

The early fruits of their labors became apparent in late June, when Schumer and Manchin worked out a revised proposal to lower seniors’ drug prices. The policy aims to empower Medicare to negotiate some drugs’ costs and penalize pharmaceutical giants that raise their rates faster than inflation. In doing so, it saves the government money, reducing the deficit by roughly $287 billion over 10 years, the Congressional Budget Office reported Friday.

“People sometimes can’t afford the medicines they need to stay alive,” Sen. Richard J. Durbin (D-Ill.), the majority whip, said on “Fox News Sunday.” He added: “All of us are working toward bringing down these prices.”

Manchin has long said that he supports drug pricing reforms, but Democratic aides still took the development as a positive sign, since party leaders were finally readying legislative text for a floor debate. The development allowed Democrats to present their proposal to the Senate’s parliamentarian last week, a critical step in the legislative process known as budget reconciliation.

The tactic allows lawmakers to adopt bills in the Senate with only 51 votes. That enables Democrats to overcome a guaranteed Republican filibuster, since they hold 50 seats and can count on Vice President Harris to break a tie. But reconciliation also subjects legislation to specific spending rules, and it won’t work unless Democrats remain present and united — a challenge brought into sharp relief by the recent recovery by Sen. Patrick J. Leahy (D-Vt.) from hip surgery. The timing of his return is unclear.

Missing from the drug pricing proposal was a key plan that aimed to cap the price of insulin at $35, which Democrats sought to do as part of the Build Back Better plan last year. But lawmakers said they are hoping still to address the matter on a bipartisan basis, after Sens. Jeanne Shaheen (D-N.H.) and Susan Collins (R-Maine) released a broader insulin bill earlier this summer. The duo faces an uphill battle to secure at least 10 Republican votes for it to pass, though Schumer has committed to putting the measure on the Senate floor in the weeks ahead.

“I think it’s in everybody’s interest, both individual senators and the country’s, to try to get things done that are going to be important to the people of America,” Shaheen said in an interview, adding the “high cost of insulin” is “not a Democratic or Republican issue.”

Along with the prescription drug plan, Schumer and Manchin last week also worked out another agreement that aims to close a tax loophole for high-income Americans who own pass-through businesses. The policy essentially would allow the government to raise more money for the Medicare trust fund, extending its solvency for an extra three years — and addressing one of Manchin’s top concerns.

And Democrats appeared to make progress around climate policy, one of the fiercest areas of division between them and Manchin, who represents coal-heavy West Virginia. Lawmakers for months have haggled over ideas including new fees on producers of methane gas, a major contributor to global warming. In recent days, though, Democrats have discussed scaling back the penalties to a smaller number of energy producers, as Manchin has sought.

Democrats race to clinch deal on climate, energy with Manchin

The two sides remain divided over Democrats’ plans to pay the producers of clean energy, a policy known as direct pay, and give tax credits to people who buy electric vehicles. To assuage Manchin, party leaders recently have sought to scale back earlier initiatives on direct pay to cover only nonprofits and state-owned facilities. And they have weighed whether to restrict any tax credits for EVs so that they don’t benefit high earners. In the end, the talks could yield a climate package around $300 billion to $350 billion, two people familiar with the matter, who spoke on the condition of anonymity, said. The sources added they hope to complete negotiations around climate policy this week.

That would be a marked departure from the roughly $550 billion in new spending Democrats initially preferred. But even some of the fiercest advocates for funding to fight climate change said in recent days they had tried to reset their expectations.

“You could look at this entire package, [and] you can compare it to what we were working on last year,” said Sen. Tina Smith (D-Minn.), who initially had proposed a widely backed package to incentivize green energy and penalize polluters. “You can compare it to that, or you can compare it to zero.”

Smith acknowledged she had not seen details of any deal with Manchin, but she added: “I’m quite confident this is going to be better than zero.”

Even more serious tensions surround the fate of tax credits that currently reduce health insurance premiums for roughly 13 million Americans. Manchin privately has rejected Democrats’ initial plans to extend them, one of the people familiar with the matter said, though the two sides have discussed paring back eligibility on the basis of income as a way to lower costs.

Without action, all 13 million beneficiaries will see increases in monthly costs next year. The prospect prompted 13 Democrats in recent weeks to urge Schumer and House Speaker Nancy Pelosi (D-Calif.) to “prioritize making permanent” the tax credits, which cover insurance purchased through exchanges under the Affordable Care Act.

Sensing a potentially changing tide, Republicans in recent days have tried to spoil Democrats’ new dealmaking. A day after the prescription drug plan became public when it was reported by The Washington Post, Senate Minority Leader Mitch McConnell (R-Ky.) issued a new threat: He said he would block a bipartisan science and technology bill unless Democrats stood down on reconciliation.

Publicly, Democrats in Congress and top aides to Biden quickly blasted McConnell for doing the bidding of the pharmaceutical industry. Privately, they wondered if he had the support of his members to spoil the bill, which includes roughly $50 million in new investments for high-demand computer chips. The measure, known as USICA, cleared the Senate last year with 68 votes — including McConnell’s. Talks have been long underway on reconciling the measure with the version that later passed the House.

But McConnell in recent days has kept up the attack. Appearing at an event in Kentucky last week, McConnell blamed Democrats for “rampant inflation,” adding of their broader spending ambitions: “If they bring that back, it will only make all of this considerably worse.”

correction

A previous version of this article misspelled Manchin spokesperson Sam Runyon's last name. The article has been corrected.

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