Sen. Joe Manchin (D-W.Va.) and Senate Majority Leader Charles Schumer (D-N.Y.) agreed on a major tax and climate package Tuesday night, but they kept it a secret. This gave Democrats just enough time to pass a $280 billion chips and science bill that Republicans would have blocked otherwise.
The announcement of the deal, which would raise $739 billion in new tax revenue, fund an array of new climate provisions and pay down $300 billion of the federal deficit, came as a complete surprise to their Senate colleagues.
“I’d say it’s somewhere between a surprise and a shock,” Sen. Chris Murphy (D-Conn.) said after attending a special caucus meeting Thursday morning where Schumer explained the deal.
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It was even more surprising because just two weeks before, Schumer and Manchin’s talks fell apart in a dramatic way when Schumer said he would move forward with a smaller budget reconciliation bill that only included prescription drug reform and a two-year extension of subsidies for the Affordable Care Act.
Manchin admitted Thursday morning that he and Schumer lost their tempers in a heated discussion on July 14 when the Democratic leader accused him of “walking away” from a deal after months of negotiations.
“It got a little bit hot and heated if you will,” he said.
“He said, ‘You’re walking, you’re not going to do this or that,’” Manchin recalled. “I said, ‘Chuck, I’m not walking away from anything, I’m just being very cautious. The people of West Virginia cannot afford higher prices. They can’t afford higher gasoline prices, higher food prices.’
Manchin said the talks collapsed because of his reluctance to enact a big tax and climate bill after the Bureau of Labor Statics reported on July 13 that inflation hit 9.1 percent in June compared to the year before.
“I’ve never been in reverse in my lifetime and I never walked away,” he said.
Manchin said he bumped into Schumer again the following Monday and their tempers had cooled at that point.
He said their staff started working together in earnest the next day, July 19.
Manchin said that his staff and Schumer’s staff picked up the things they were working on before and “started reorganizing that.”
They finally agreed on Tuesday night. They knew they had to announce the package on Wednesday if they wanted it to pass before the long summer break on August 6.
“By Tuesday night, everyone—there weren’t that many of us—had agreed,” he said. “Even those of us who might have had some disagreements.” “We pretty much had the text lined up in that area. So, the text was finished on Wednesday because of this. It was confirmed that it would happen Wednesday morning.
It just so happened that the timing was perfect for Schumer’s plan to hold a vote on the final passage of the chips and science bill at noon on Wednesday.
Republicans who voted for tens of billions of dollars for the domestic semiconductor manufacturing industry and the National Science Foundation were angry and felt betrayed.
Sen. John Cornyn (R-Texas), who was a key player in passing the science and chips bills, said that he got “private assurance from some Democrats, including the staff of the Senate majority leader, that the tax and climate provisions were off the table.” This was something that Republicans said would have to happen before the chips bill could move.
Cornyn spoke out against the secret climate and tax deal in the Senate on Thursday afternoon.
“How can we negotiate in good faith, make concessions when we need to, and work together to get things done when the majority leader and the senator from West Virginia do something like this?” he asked, his frustration growing. “It is completely unacceptable to look you in the eye and tell you one thing and then do another.”
Manchin said Thursday that he and Schumer didn’t try to trick Republicans when they announced the deal on Wednesday afternoon.
“No, I hope they don’t feel like that. He told reporters on a conference call, “I mean, I know they are, but I don’t know why.”
Schumer told reporters Thursday afternoon that he and Manchin announced the deal’s legislative text and summaries as soon as they were done with them.
“Because of the length of the parliamentary birdbath, we wanted to get this done as quickly as possible,” he said, referring to the work that will be done to see if the package can be passed under an obscure budget rule that is being used to avoid a GOP filibuster.
Schumer noted that the talks with Manchin broke down on July 14 but that Manchin “came to visit me” the following week.
“Manchin asked to meet with me on the 18th, and he asked, ‘Can we try to put together a bill together?'” I told him, “As long as we finish it in August, we don’t have to wait until September.
Manchin said that at that point, his staff took the lead.
“I worked on it with my staff and then with Schumer’s staff. It was driven by my staff, and we wrote the bill. “Schumer’s staff would look at it, and we’d talk about it,” he told Hoppy Kercheval, a radio host in West Virginia, on Wednesday morning.
He said that his staff took out $400 billion to $500 billion in tax changes that would have brought in more money.
“There was a lot more money in there before that,” he said, explaining how the bill changed after he and Schumer got mad at each other.
By Tuesday night, they had agreed to give companies with profits over $1 billion a minimum tax of 15%, to make the IRS more strict about tax compliance, and close the carried interest loophole, which lets asset managers pay capital gains tax rates on income from profitable investments.
After last year’s negotiations between Manchin and the White House, which ended in failure and public blame after months of fruitless talks, Manchin kept President Biden out of the picture.
“President Biden was not involved,” he told West Virginia MetroNews.
“I was not going to bring the president in. I didn’t think it was fair to bring him in. This thing could very well have not happened at all,” he said, explaining he didn’t want to involve the president in case talks fell apart again.
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