Ag Informer – Energy & Tax Bill Surprisingly Moves Ahead

Sen. Joe Manchin (D-W.Va.) went from being his party’s main holdout on expansive social policy, climate and tax legislation, and instead struck a deal on a domestic spending package that includes climate and energy programs and tax increases.

No official word yet on what changed Manchin’s mind about the package because previously he said he wanted to wait for more information on inflation. As part of the agreement, Senate Majority Leader Chuck Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.) agreed to pass legislation governing energy permits. Manchin said he spoke to Schumer, Pelosi and President Joe Biden on Wednesday.

In a statement, Manchin confirmed his support for the measure. He signaled support for climate and energy programs, as well as some tax provisions, all of which he had previously suggested he could not support because of concerns about inflation.

President Biden said in a statement that he supports the agreement and called for its passage.

“This is the action the American people have been waiting for. This addresses the problems of today — high health care costs and overall inflation — as well as investments in our energy security for the future,” he said. “If enacted, this legislation will be historic, and I urge the Senate to move on this bill as soon as possible, and for the House to follow as well,” Biden added.

Details of the New Proposal 

• The provisions would invest $369.75 billion in Energy Security and Climate Change programs over 10 years.
• Proponents said the package would cut about 40% of the country’s carbon emissions by 2030.
• Package would raise a total of $739 billion in revenue through programs including a 15% corporate minimum tax, prescription drug pricing reform and IRS tax enforcement. The bill would impose a 15% corporate minimum tax, while raising taxes on carried interest, and raising another $124 billion through IRS tax enforcement. Families making less than $400,000 per year would not be affected. Democrats say it would reduce the deficit by $300 billion.
• Besides climate spending, the bill will also spend $64 billion on extending the Affordable Care Act (ObamaCare) subsidies through the 2024 election and the first term of Biden’s presidency, taking a big political headache off the table for Democrats. Manchin said that “helps people because you just can’t throw [increases] on them during inflammatory times like this.”
• For the first time, Medicare would be empowered to negotiate drug prices, something Democrats say would raise $288 billion, and it would cap out-of-pocket costs at $2,000 for drugs.
• Manchin said the final deal does not leave out new incentives for electric vehicles, which he’d resisted in what became a major sticking point in the negotiations. Manchin said the bill gives incentives to make new car batteries in America “and not only be able to assemble them but be able to extract the minerals that we need, critical minerals, in North America.” The deal includes a methane fee as well as a $4,000 tax credit for the purchase of used electric vehicles. The bill also includes efforts to make fossil fuels cleaner, Manchin said, and to increase production to help American allies amid Russia’s invasion of Ukraine, which has limited European fuel supplies.

Includes Climate-Smart Ag and SAF Incentive Provisions 

The new agreement includes ag and biofuel sector provisions including $20 billion to support climate-smart ag practices. It also includes the sustainable aviation fuel (SAF) tax credit of $1.25/gallon.

Additional details include:

• $20 billion to support climate-smart agriculture practices.
• $5 billion in grants to support healthy, fire resilient forests, forest conservation and urban tree planting
• SAF tax credit of $1.25/gallon

It does not include surtaxes on people making more than $10 million a year, ending a push by most Democrats to impose higher rates on the wealthy; nor does it include a global tax deal.