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Biden on cusp of two legislative wins ahead of midterm elections

President Joe Biden is on the cusp of two back-to-back legislative victories after Congress passed a $280bn package to boost the semiconductor industry while a conservative Democrat unexpectedly swung behind a sweeping tax-and-spend bill.

The House of Representatives on Thursday voted to pass the Chips and Science Act, which includes subsidies for the US semiconductor industry. The legislation cleared Congress just hours after Joe Manchin announced a surprise deal with fellow Senate Democrats on a larger tax, climate and social spending bill.

Manchin had opposed such a package until Wednesday evening on the grounds that it would fuel soaring inflation and his U-turn surprised Senate Republicans and his own party.

If the tax-and-spend bill also makes it through Congress and to the president’s desk, the two pieces of legislation would mark a significant victory for a Biden administration that had appeared to be running out of steam ahead of midterm elections in November.

A gay marriage bill might also garner enough votes from Senate Republicans next week — a third legislative win and an outcome that seemed all but impossible just a few weeks ago.

The larger tax-and-spend agreement includes some of the most significant climate legislation enacted in the US with $369bn of spending on green initiatives and energy reforms as well as $64bn to shore up the Affordable Care Act. It also puts roughly $300bn towards reducing the deficit.

The bill will be paid for by a new 15 per cent corporate minimum tax, tightening a Wall Street tax loophole for carried interest, and allowing the government to negotiate drug prices with manufacturers.

Biden on Thursday said the bill would “lower healthcare costs for millions of Americans” and “be the most important investment . . . we’ve ever made in our energy security”.

Manchin — a frequent critic of the Biden administration — refused to support previous iterations of the president’s flagship economic and social spending plans. His support is vital because the Senate is split 50-50 between Democrats and Republicans, giving Biden’s party the narrowest of majorities with the tiebreaking vote of vice-president Kamala Harris.

However, some lawmakers suggested Chuck Schumer, the Democratic leader in the Senate, and Manchin had engaged in a bait-and-switch manoeuvre to trick Mitch McConnell, the Republican leader in the Senate.

McConnell had said he would not support the Chips act if Democrats passed the tax-and-spend bill using a process known as reconciliation, which allows them to push the legislation through with a simple majority rather than relying on Republican votes.

But just hours after the Senate passed the Chips bill, Manchin announced his about-face on the larger piece of legislation.

Senator John Kennedy, a Republican from Louisiana, told Fox News: “They sucked Republican votes up like a Hoover Deluxe and then got their votes [on the Chips bill] and then bam, announced this new tax increase.

“We look like a bunch of . . . well, I’m not going to say what we look like,” he added.

An outstanding concern for Biden is whether conservative Democratic Senator Kyrsten Sinema, who has been a frequent obstacle to the passage of his legislative agenda, will vote in favour of the bill. She has yet to take a public position.

Manchin said on Wednesday that the new bill would not be called “Build Back Better” — the Biden administration’s name for its ill-fated multitrillion-dollar spending attempt — but rather the “Inflation Reduction Act of 2022”.

He added that it would address “record inflation by paying down our national debt, lowering energy costs and lowering healthcare costs”.

Manchin on Thursday defended the tax rises, saying: “If someone’s upset, they weren’t paying anything, please come forward and tell us why you were able to have this great country protect you and give you these opportunities [without] you [having] to pay anything into it. I didn’t think that was fair.”

Senate Democrats and climate activists expressed shock at the last-minute deal, which had been all but ruled out. “Holy shit,” Senator Tina Smith, a Democrat from Minnesota, wrote on Twitter. “Stunned, but in a good way.”

The commitment to fossil fuel infrastructure is likely to draw opposition from environmental and climate groups, which broadly welcomed the announcement.

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