Schumer making last-ditch bid to pass reconciliation bill this summer

Schumer and centrist Sen. Joe Manchin (D-W.Va.) have made progress on proposals to lower the cost of prescription drugs, extend Medicare’s solvency and raise taxes on some high-income earners.

Manchin and Schumer have worked out a proposal to impose a 3.8 percent tax on individuals earning more than $400,000 and couples earning more than $500,000 from pass-through businesses and will give the legislative language to the Senate parliamentarian to review.

The $203 billion raised would extend the solvency of Medicare’s hospital fund from 2028 to 2031.

But several major issues remain unresolved.

Sam Runyon, a spokesperson for Manchin, said her boss is glad that Democrats have agreed on a prescription drug proposal that they could pass with a simple-majority vote under special budget rules.

“Sen. Manchin has long advocated for proposals that would lower prescription drug costs for seniors and his support for this proposal has never been in question. He’s glad that all 50 Democrats agree,” she said.

But the Manchin aide waved off speculation that Schumer and Manchin are close to a deal on a broader reconciliation package that would include bold proposals to tackle global warming, a top priority of Sen. Sheldon Whitehouse (D-R.I.) and other Senate Democrats.

“Suggestions that a reconciliation deal is close are false. Senator Manchin still has serious unresolved concerns and there is a lot of work to be done before it’s conceivable that a deal can be reached he can sign onto,” she said.

That means a budget reconciliation package isn’t likely to reach the Senate floor before that fourth week of the upcoming monthlong work period and Schumer may even keep his colleagues in town for the first week of the August recess, which is supposed to begin Aug. 6.

Schumer wants to get an agreement as soon as possible but has been careful not to lay out a precise timeline for getting it passed.

The budget reconciliation instructions will expire at the end of the fiscal year on Sept. 30, which is the drop-dead deadline.

“It looks like it’s a much more serious set of conversations than two weeks ago or two months ago. That’s really encouraging but until the bill is on the floor, it would be risky to put any odds on it,” said Josh Freed, senior vice president for the climate and energy program at Third Way, a centrist Democratic think tank.

One big question is whether Schumer and Manchin can agree to a package of provisions to fight climate change, including clean energy manufacturing tax credits, a fee on methane emissions and a fee on carbon-intensive imports, such as steel.

Manchin has a proposal with Sen. Debbie Stabenow (D-Mich.) to incentivize the manufacturing of new energy technologies with investments in rural communities, and some Democratic senators feel confident the West Virginia senator will agree to a package of clean energy tax breaks.

Manchin and Senate Environment and Public Works Committee Chairman Tom Carper (D-Del.) have worked on compromise legislation to impose a fee on methane emissions, and Carper has said he thinks Manchin will vote for it.

The third climate proposal under consideration, a carbon border adjustment tax that would impose fees on carbon-intensive imports, is less likely. Whitehouse, the chief sponsor, is pushing hard for the proposal and noted that Manchin praised it as a way to even the playing field with China for U.S. manufacturers at a recent appropriations hearing.

One person familiar with the negotiations said whether the climate piece gets done will depend largely on how many concessions Manchin will insist on for the fossil fuel industry.

“They’re starting sequentially,” the source said, noting that the release of the prescription drug and Medicare solvency components of the package during the recess “allows them to start the scrubbing process with the Republicans,” referring to the review in the parliamentarian’s office.

“The rest of the revenue and taxes are next up and then it’s the energy and climate portion,” the source added, cautioning that “Manchin could walk away at any moment.”

“They’re very committed to get something on the floor in the July work period,” the source said.

Freed, of Third Way, said Schumer and Manchin need to work out how much money to raise for climate programs and how long to set tax breaks for renewable energy technologies.

“The question is, what’s the overall dollar figure?” he said, adding: “Right now the question is as much about lengths of the [tax] creds as about which tax credits are [included].”

Another obstacle is getting a deal on a broader tax reform proposal along the lines of what the White House negotiated with Manchin and fellow centrist Sen. Kyrsten Sinema (D-Ariz.) last year.

The White House framework released in October included a 15 percent corporate minimum tax on companies that earn more than $1 billion in profits, a new 5 percent surtax on income over $10 million and an additional 3 percent surtax on income over $25 million, and closing the Medicare tax loophole on the wealthy.

Schumer, Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Janet Yellen announced in September that the White House and Senate Democrats had agreed on a menu of options that could be used to pay for a reconciliation package.

Manchin has said he wants roughly half of the revenue raised by the reconciliation package to go toward reducing the federal deficit.

The gathering momentum of the budget reconciliation negotiations is good news for Democrats, but it also complicates passage of another of their top legislative priorities, the U.S. Innovation and Competition Act (USICA), which would provide as much as $52 billion to help domestic semiconductor manufacturers.

Senate Minority Leader Mitch McConnell (R-Ky.) threatened to hold up the bill if Democrats move ahead with plans to pass a budget reconciliation bill without any Republican support.

Schumer says he also hopes to schedule a vote on Steve Dettelbach, President Biden’s pick to head the Bureau of Alcohol, Tobacco, Firearms and Explosives, and a bipartisan bill to cap out-of-pocket insulin costs at $35 a month.

The prescription drug reform proposal that Schumer has sent to the parliamentarian’s office does not language capping insulin prices.