Progressives Embrace Climate and Tax Deal, Despite Disappointments

WASHINGTON — With enactment of a major piece of Democrats’ domestic agenda in sight within days, progressives in Congress are rallying, grudgingly but decisively, around a climate, health and tax package that is a shadow of the ambitious cradle-to-grave social policy overhaul they once demanded.

Bowing to the realities of their party’s thin majorities in the House and Senate, liberals appear poised to embrace a package that has been written, slashed and rewritten again to suit the centrists in their ranks — then presented to them as the only option to achieve even a sliver of their aspirations while Democrats still control the government.

“It’s a gun to your head,” Senator Bernie Sanders, independent of Vermont and the chairman of the Budget Committee, said in an interview on Friday. He lamented that two Democratic holdouts — Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona — had insisted on vastly scaling back the spending and tax increases before they would agree to the package.

“Am I disappointed in that? I surely am,” he said, declining to commit to vote for the final product. “On the other hand, what you’ve got to weigh is that the future of the Earth is at stake.”

The measure, which faces a crucial test vote on Saturday and is on track to clear Congress by the end of next week over unanimous Republican opposition, will fulfill some long-sought Democratic priorities, delivering the party and President Biden a victory going into the midterm congressional elections. With nearly $400 billion in climate and energy proposals, it is the largest single federal investment in the effort to slow the heating of the planet — “nothing to sneeze at,” Mr. Sanders conceded.

It would also extend expanded Affordable Care Act subsidies and make changes in the tax code intended to make it more equitable. And the legislation would hand the pharmaceutical industry a notable defeat by allowing Medicare, for the first time in its history, to negotiate the prices of prescription drugs directly with drugmakers, potentially saving some older Americans thousands of dollars each year.

“The American people are on our side,” Senator Chuck Schumer, Democrat of New York and the majority leader, proclaimed at a news conference on Friday. “The American people know we’ve been pushing these priorities, and they overwhelmingly support what Democrats are doing.”

But the measure does not have any of the proposals to invest in public education and expand the nation’s safety net for parents by providing child care, paid leave or a monthly payment to most families with children.

Sitting in a conference room on Friday, Mr. Sanders — who had pushed to spend as much as $6 trillion — ticked through some of those omissions, characterizing most parts of the legislation as modest steps forward. He has taken to the Senate floor in recent days to describe his dismay at what he sees as the bill’s inadequacies and has vowed to force votes in the coming days to try to bulk it up.

There have also been additions that have angered progressives. Mr. Manchin secured several concessions for his coal-producing state and the fossil fuel industry, including tax credits for carbon capture technology and a requirement that the federal government auction off more public waters and lands for drilling. He also won a separate pledge to complete a contested pipeline in West Virginia.

What’s in the Democrats’ Climate and Tax Bill

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A new proposal. The $369 billion climate and tax package that Senate Democrats proposed in July could have far-reaching effects on the environment and the economy. Here are some of the key provisions:

Auto industry. Currently, taxpayers can get up to $7,500 in tax credits for purchasing an electric vehicle, but there is a cap on how many cars from each manufacturer are eligible. The new bill would eliminate this cap and extend the tax credit until 2032; used cars would also qualify for a credit of up to $4,000.

Energy industry. The bill would provide billions of dollars in rebates for Americans who buy energy efficient and electric appliances and tax credits for companies that build new sources of emissions-free electricity, such as wind turbines and solar panels. It would also set aside $60 billion to encourage clean energy manufacturing in the United States. It would also require businesses to pay a financial penalty per metric ton for methane emissions that exceed federal limits starting in 2024.

Low-income communities. The bill would invest over $60 billion to support low-income communities and communities of color that are disproportionately burdened by effects of climate change. This includes grants for zero-emissions technology and vehicles, as well as money to mitigate the negative effects of highways, bus depots and other transportation facilities.

Fossil fuels industry. The bill would require the federal government to auction off more public lands and waters for oil drilling and expand tax credits for coal and gas-burning plants that rely on carbon capture technology. These provisions are among those that were added to gain the support of Senator Joe Manchin III, Democrat of West Virginia.

West Virginia. The bill would also bring big benefits to Mr. Manchin’s state, the nation’s second-largest producer of coal, making permanent a federal trust fund to support miners with black lung disease and offering new incentives for companies to build wind and solar farms in areas where coal mines or coal plants have recently closed.

Ms. Sinema jettisoned a proposal aimed at narrowing a tax break enjoyed by wealthy businesspeople, including private equity executives and hedge fund managers, that allows them to pay a much lower tax rate on some income than other taxpayers.

Mr. Schumer noted on Friday that while some lawmakers were disappointed to see that proposal scrapped, several liberal senators were pleased that it had been replaced in the bill with a new tax on company stock buybacks.

Still, the acceptance of the plan by progressives reflects a substantial shift in their posture. With Democrats newly in control of Washington last year, liberals in the party had envisioned a transformative domestic policy plan that would spend as much as $3.5 trillion, funded through tax hikes on corporations and the wealthiest Americans, to provide child care and parental leave, shore up care for the elderly and disabled, and expand public education.

They flexed their muscles at crucial moments, at one point refusing to support a $1 trillion bipartisan infrastructure package that was a major piece of Mr. Biden’s agenda until they could be assured of the success of the social policy and climate plan. But with Republicans solidly opposed, Democratic leaders had no room to maneuver in the 50-50 Senate, giving Mr. Manchin and Ms. Sinema effective veto power over the package.

Mr. Manchin, a defender of coal and oil, said he feared exacerbating inflation by overspending. Ms. Sinema embraced investments in the fight against climate change but balked at plans to overhaul the tax code and increase tax rates on corporations and the wealthy. Negotiations dragged on for months, and only weeks ago they appeared to have cratered, leaving the climate and tax measures stalled. But in the space of a week, Mr. Manchin and Ms. Sinema both came around after substantial changes to win them over.

Liberals said the resulting package was less than they wanted but a clear indication of their influence on Capitol Hill and at the White House, where, they argued, their strong advocacy for a more ambitious bill helped prevent the plan from shrinking even further.

“You have to acknowledge that this is a huge step forward and this is a huge progressive win,” Representative Pramila Jayapal of Washington, the chairwoman of the Congressional Progressive Caucus, said in an interview. “And that’s not to say that everything is a progressive win.”

The measure could still change. Senators on Friday announced plans to include $4 billion for fighting drought in the parched Western states, while the Senate’s rules officials were reviewing whether the bill adhered to the arcane requirements of the budget reconciliation process. Those rules, which shield the measure from a Republican filibuster, could force revisions in the coming days.

Senator Bernie Sanders lamented that two Democratic holdouts had insisted on vastly scaling back spending and tax increases.Credit…Haiyun Jiang/The New York Times

While liberals set their ambitions high, particularly after successfully muscling through the $1.9 trillion pandemic aid bill in March 2021 without Republican votes, some Democrats said that the rise in inflation in recent months had tamped down enthusiasm for substantially more federal spending.

“Looking back, the $3.5 trillion package was too aggressive — I know others would disagree,” Senator Mark Warner, Democrat of Virginia, said in an interview. “But when you’ve got a 50-50 Senate, the idea that we could fix everything in one bill was, again, probably too aggressive.”

Mr. Warner, who helped negotiate the $3.5 trillion budget blueprint that allowed Democrats to begin work on the package and worked closely with Mr. Manchin and Ms. Sinema to assuage their concerns, conceded that the legislation had its disappointments. “This has been, you know, obviously, a long and winding road, but I think there’s a pretty darn good product,” he added.

Liberals have focused in particular on the investment in climate change, pointedly crediting young activists and voters for pushing their party to act.

“This is a once-in-a-lifetime opportunity — the Finance Committee has never done anything like it,” said Senator Ron Wyden of Oregon, the committee’s chairman.

Democratic leaders said they believed they had enough support from Democrats in both chambers to push the measure through Congress over the next week. In an indication of that confidence, House Democratic leaders asked lawmakers to prepare to return to Washington on Aug. 12 for final passage of the measure.

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