Senate Democrats’ tax-and-spend deal includes spending $369 billion on climate, energy

The $433 billion spending deal struck by Senate includes $369 billion for climate and energy measures over the next decade, drawing praise from environmentalists and scorn from Republicans over what they call frivolous.

The package, cobbled together after Sen. Joe Manchin III, West Virginia Democrat, dropped his opposition to new spending over inflation concerns, would include tax hikes on the wealthy and large corporations, as well as health care provisions.

Senate Majority Leader Charles E. Schumer, a New York Democrat who brokered the deal with Mr. Manchin, said the Senate will move swiftly to pass the legislation likely next week along party lines.

The $369 billion for climate and energy that drew the most GOP criticism includes:

• A $4,000 consumer tax credit for lower/middle income individuals to buy used electric vehicles and a tax credit of up to $7,500 to buy new electric vehicles.

• $1 billion for electric heavy-duty vehicles, like school and transit buses and garbage trucks.

• $5 billion for forest conservation and urban tree planting.

• $60 billion for environmental justice that prioritizes disadvantaged communities.

The bill’s passage in Congress would be a long-sought win for President Biden, whose agenda has largely crumbled thanks to Mr. Manchin’s rejection of previous tax-and-spend bills. That includes Mr. Biden’s roughly $2 trillion social welfare and climate bill known as Build Back Better.

Green groups hailed the wide-ranging climate and energy measures in the spending agreement as “historic.”

Jamal Raad, the director of Evergreen Action Executive Director called the deal an opportunity for a “major breakthrough in America’s fight against climate change.”

“With $369 billion for climate and energy provisions, this bill has the potential to be the single largest investment in clean energy in American history,” he said.

Democrats estimate that the climate portion of the bill will slash greenhouse gas emissions by 40% by 2030.

Republicans derided the new spending and tax hikes.

“Democrats have already crushed American families with historic inflation. Now they want to pile on giant tax hikes that will hammer workers and kill many thousands of American jobs,” said Senate Minority Mitch McConnell, Kentucky Republican. “First, they killed your family’s budget. Now they want to kill your job too.”

Citing estimates from the Joint Committee on Taxation and the nonpartisan Congressional Budget Office, Democrats said the package would reduce the deficit by at least $300 billion by bringing in nearly $740 billion over the next 10 years to pay for the $433 billion in spending.

The legislation includes money for “all fuel types” — hydrogen, nuclear, renewables, fossil fuels and energy storage — a major priority for Mr. Manchin, who has emphasized that the U.S. must “not arbitrarily shut off our abundant fossil fuels.”

Other measures include:

• $9 billion for consumer home energy rebate programs to electrify home appliances and energy-efficient retrofits.

• 10 years of tax credits to make homes energy efficient with clean energy, heat pumps, rooftop solar, and electric HVAC and water heaters.

• $10 billion tax credit for clean technology manufacturing facilities to make electric vehicles, wind turbines and solar panels.

• $2 billion to transition existing gas-powered auto manufacturing facilities to produce electric vehicles.

• $2 billion to national labs for clean energy research.

• Methane emissions reduction program to reduce leaks from natural gas extraction and production.

• The $60 billion for environmental justice measures that target underserved communities includes $3 billion to improve public health by reducing pollution; $3 billion to improve public transportation systems; and $1 billion for school and transit buses, as well as garbage trucks, to go electric.

• $20 billion for climate-smart agriculture practices.

• Tax credits and grants for domestic production of biofuels.

• $2.6 billion to conserve and restore coastal habitats.

As a condition of approval, Mr. Manchin secured assurances from Mr. Biden and Democratic leaders on Capitol Hill that Congress will pass “comprehensive permitting reform legislation” for energy projects before the end of September.

The energy industry has long called for cutting bureaucratic red tape to streamline new oil and natural gas projects. Although it could also help clean energy production, permitting reform is considered a concession from Democrats, who want to move away from fossil fuels.