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Democrats see hope for spending deal with Manchin as Congress returns

Senator Joe Manchin, a West Virginia Democrat, headed to the Senate floor for a vote on Capitol Hill in Washington, May 12.Tom Brenner/NYT

WASHINGTON — Senate Democrats are redoubling their efforts to finalize a new spending package that could lower health care costs and combat climate change, hoping to hammer out a long-elusive deal with Senator Joe Manchin III and bring it to the chamber floor later this month.

A new sense of optimism, and urgency, has set in among party lawmakers nearly seven months after their last attempt to pass a sweeping bill ended in defeat. Piece by piece, Democratic leaders in recent days have started reconstructing their economic ambitions as they race to deliver on a staple element of President Biden’s agenda before the midterm elections in November.

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So far, top Democrats have worked out new agreements with Manchin, a West Virginia Democrat, that would cut drug costs for seniors, improve the financial health of Medicare, and close a tax loophole that benefits the wealthy. They even have advanced talks around addressing the challenges posed by a faster-warming planet, raising the prospect that they can secure a limited initiative to penalize methane emissions.

Those early agreements have set the stage for Senate Democrats to make an upbeat return to the Capitol on Monday. Manchin is expected to have his next private meeting with Senate majority leader Chuck Schumer, a New York Democrat, early in the week, according to two people familiar with the matter, who spoke on the condition of anonymity to describe the deliberations. They are set to discuss climate as Democrats try to bring one of their thorniest fights with the moderate West Virginian to an end.

Plenty remains unresolved, including the fate of a key program that lowers insurance costs for millions of Americans, raising the prospect that the latest round of talks could collapse much as they did before. Adding to the challenge, Republicans have intensified their opposition in recent days, hoping to apply enough political pressure on Manchin that he walks away from the talks again.

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“To my friend Joe Manchin from West Virginia, whose vote is going to be necessary for this, I would remind him Joe Biden’s popularity in that state is as low as it is in Wyoming, only 17 percent,” said Senator John Barrasso, a Wyoming Republican, leader of the Senate Republican Conference, during an interview on “Fox News Sunday.” He added that Manchin “shouldn’t walk the plank for Joe Biden” politically.

The cuts might have been unthinkable earlier in the debate, but many Democrats have come to acknowledge them as the costs of compromise — and feel more hopeful than ever that there is now a pathway to achieve it.

“We’re making real progress, we’re picking up steam, and the central reason is we’re focused on cutting costs and addressing these real pocketbook issues on the minds of Americans,” said Senator Ron Wyden, an Oregon Democrat and chairman of the tax-focused Finance Committee.

"I'm not saying it's all done, it's all over and the like," Wyden later added, "but I do feel more confident about the progress that has been made."

The debate seemed intractable only months earlier when Manchin announced on a Sunday news talk show that he could not vote for the original $2 trillion bill to overhaul the country’s health care, education, immigration, climate, and tax laws. Even the White House attacked the senator in response, arguing in unusually stark terms in December that Manchin had made a “breach of his commitments” to Biden.

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By spring, however, Democrats had begun the long slog to rethink their agenda — realizing the stakes of failure after they swept into power in Washington on promises to improve Americans’ economic fortunes. A frenzied bout of private meetings began, as Schumer stepped in to negotiate on behalf of Democrats on a smaller deal with Manchin.

The senator’s cost concerns soon left Democrats no choice but to whittle down their aspirations, forcing them to shelve plans for free prekindergarten, paid family and medical leave, and tax benefits for low-income families. In a sign of the sensitivity, Schumer convened most of those conversations in secret, out of view even from top party lawmakers. And party leaders took special care to distance their legislative work even from the name Build Back Better, which had been Biden’s 2020 campaign slogan.

The early fruits of their labors became apparent in late June, when Schumer and Manchin worked out a revised proposal to lower seniors' drug prices. The policy aims to empower Medicare to negotiate some drugs' costs and penalize pharmaceutical giants that raise their rates faster than inflation. In doing so, it saves the government money, reducing the deficit by roughly $287 billion over 10 years, the Congressional Budget Office reported Friday.

Manchin has long said that he supports drug pricing reforms, but Democratic aides still took the development as a positive sign, since party leaders were finally readying legislative text for a floor debate. The development allowed Democrats to present their proposal to the Senate's parliamentarian last week, a critical step in the legislative process known as budget reconciliation.

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The tactic allows lawmakers to adopt bills in the Senate with only 51 votes. That enables Democrats to overcome a guaranteed Republican filibuster, since they hold 50 seats and can count on Vice President Kamala Harris to break a tie. But reconciliation also subjects legislation to specific spending rules, and it won’t work unless Democrats remain present and united — a challenge brought into sharp relief by Vermont Senator Patrick Leahy’s recent recovery from hip surgery. The timing of his return is unclear.

Missing from the drug pricing proposal was a key plan that aimed to cap the price of insulin at $35, which Democrats sought to do as part of the Build Back Better plan last year. But lawmakers said they are hoping still to address the matter on a bipartisan basis, after Senators Jeanne Shaheen, a New Hampshire Democrat, and Susan Collins, a Maine Republican, released a broader insulin bill earlier this summer. The duo faces an uphill battle to secure at least 10 Republican votes for it to pass, though Schumer has committed to putting the measure on the Senate floor in the weeks ahead.

Along with the prescription drug plan, Schumer and Manchin last week also worked out another agreement that aims to close a tax loophole for high-income Americans who own pass-through businesses. The policy essentially would allow the government to raise more money for the Medicare trust fund, extending its solvency for an extra three years — and addressing one of Manchin’s top concerns.

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And Democrats appeared to make progress around climate policy, one of the fiercest areas of division between them and Manchin, who represents coal-heavy West Virginia. Lawmakers for months have haggled over ideas including new fees on producers of methane gas, a major contributor to global warming. In recent days, though, Democrats have discussed scaling back the penalties to a smaller number of energy producers, as Manchin has sought.