Inflation Reduction Act: Biden looks for win as Manchin backs plan

President says agreement on taxes, climate and health care reached in Senate 'a huge step forward'

President Joe Biden speaks about the Inflation Reduction Act in the White House. AP

US President Joe Biden on Thursday heralded an unexpected development in a bill aimed at tackling inflation and climate change, after conservative Democratic Senator Joe Manchin gave the legislation a surprise endorsement.

Democrats have for months been working to pare back Mr Biden's original Build Back Better agenda after Mr Manchin blocked it owing to its high price point and climate measures.

But on Wednesday, Mr Manchin reached agreement on a reconciliation bill with Senate Majority Leader Chuck Schumer.

This version is now being called the Inflation Reduction Act. If it passes, it would mark a much-needed legislative win for Mr Biden and the Democrats before the November 8 midterm elections.

“This is the strongest bill you can pass to lower inflation, cut the deficit, reduce healthcare costs, tackle the climate crisis and promote energy security all while reducing the burdens facing working class and middle class families,” Mr Biden said.

“So pass it, pass it for the American people.”

The Senate is currently split 50-50 between Republicans and Democrats, but the Democrats hold a razor-thin majority because Vice President Kamala Harris can break a tie.

Legislation often requires 60 votes, but Mr Schumer hopes to push the Infrastructure Reduction Act through using a parliamentary procedure called reconciliation that only requires a simple majority.

However, even 50 votes are not yet guaranteed.

Senator Kyrsten Sinema, another Democrat who balked at the original Build Back Better plans, was not involved in the negotiations with Mr Manchin. It is not clear where her support stands currently.

With the US battling levels of inflation not seen in 40 years — which has influenced aggressive Federal Reserve rate hikes — the Manchin-Schumer agreement would contribute more than $300 billion in a down payment on deficit reduction.

“This bill will in fact reduce inflationary pressure on the economy,” Mr Biden said. “It's a bill that cost will cut your cost of living and reduce inflation, and far lowers the deficit. It strengthens our economy in the long run as well.”

It includes measures to address the climate crisis, lower medical prices for Americans, and introduce taxes on the wealthy.

Mr Biden called the healthcare measures in the agreement “literally a godsend for many families”.

The tax changes would introduce a 15 per cent corporate minimum tax for companies that make more than $1 billion, and it would not allow tax increases on Americans making less than $400,000 a year.

The Manchin-Schumer agreement is projected to reduce emissions by 40 per cent, Mr Schumer said in another tweet.

Mr Biden called the move the “most significant legislation in history to tackle the climate crisis”.

Mr Biden has passed infrastructure legislation, gun control measures, and the semiconductor bill with bipartisan support in his presidency.