Joe Manchin makes U-turn on tax and climate bill as US edges closer to recession – live

Majority leader Chuck Schumer told Senate Democrats at a private caucus meeting this morning they had an opportunity to achieve two “hugely important” priorities on health care and climate change, by approving the Inflation Reduction Act he brokered with Joe Manchin.

Schumer warned colleagues that final passage of the $739bn package will be hard in the 50-50 senate, according to the Associated Press, quoting an source granted anonymity to relay his private comments.

He said they would need to be disciplined in messaging and focus, but he believes they can get it done, the person added.

Two Democrats told the agency the Senate would vote on the wide-ranging measure next week, setting up Joe Biden and Democrats for an unexpected victory in the run-up to November’s midterm elections if the bill overcomes what will almost certainly be unanimous Republican opposition.

Joe Biden is speaking with China’s Xi Jinping, the fifth conversation of their presidencies, as the two leaders chart the future of their complicated relationship at a time of simmering economic and geopolitical tensions, the Associated Press reports.

We’re waiting for the White House to reveal details of the call, which began at 8.33am, but the agency said Biden is seeking new ways to work with the rising global power as well as strategies to contain China’s influence around the world.

There’s also tension over Nancy Pelosi’s proposed upcoming trip to Taiwan, which has angered Chinese leadership.

We’ll bring you more information as we learn it.

Joe Manchin has been defending his unexpected U-turn on climate and tax policy that resulted in the Inflation Reduction Act.

West Virginia’s Democratic senator, who is in isolation following a positive test for Covid-19, told Punchbowl that it wasn’t a reversal at all.

And he said that he had endured months of criticism from progressive Democrats and others for derailing much of Joe Biden’s ambitious first-term agenda – or “one hell of an ass-kicking” as he eloquently described it.

Of his secretive negotiations with Democratic Senate majority leader Chuck Schumer that led to last night’s announcement, Manchin said:

I never gave up.

The smart thing politically for me [to] do once Build Back Better was done and I walked away was to let a sleeping dog lie.

But when you get a moment in time, and if you know in your heart something needs to be done, it’s the right thing.

Manchin also said the reconciliation bill was born of his resistance to Biden’s flagship $1.8tn Build Back Better spending package, which he scuppered because he didn’t like the cost. He told Punchbowl:

Remember when I told you I didn’t walk away? I never walked away. I’ve never walked away from anything.

And I’ve been trying to tell people that. The bottom line was inflation scared the bejesus out of me at 9.1%. I said, ‘I’m gonna go back and re-scrub that bill.’ And then, you know, Chuck and I have a little bit of a relationship, if you will. Good, bad, indifferent at times, but it’s always been respectful and he got mad…

So Monday, I said, ‘Chuck, I’m not walking away, never have, my people are still working. If you want to see if we can basically scrub everything and make sure it’s not inflationary.’ That’s just how this went.

And he says, ‘Yeah, we’re willing to engage again.’ And I said, ‘OK, if you want to engage again.’ I said, ‘We haven’t stopped, we’re going through everything, taking out anything that we think could be inflammatory.’

And I gotta give him credit, they were OK. And we went through the whole thing.

Now the reconciliation bill is announced, Democrats have to get it passed. They will need all 50 votes of their votes in the Senate, and Arizona’s Kyrsten Sinema is a notable tax-hike skeptic. Her office said she won’t comment until she reads the bill.

Another potential headache: Illinois Democrat Dick Durbin tested positive today for Covid-19 and is isolating, but is expected to be back for any Senate vote.

Over in the House, meanwhile, where Democrats hold a slim four-seat majority, there are questions over New Jersey representatives Josh Gottheimer and Mikie Sherill, and Tom Suozzi of New York, who say they won’t support tax changes without certain concessions.

We’ll hear more from Manchin at 10.45am in a hastily arranged press call.

Good morning politics blog readers and happy Thursday. If you didn’t see it last night, you’re waking to news of a stunning reversal by senator Joe Manchin on tax and climate policy, and his agreement with Democratic Senate majority leader Chuck Schumer for a comprehensive new bill, following weeks of stealthy negotiations.

The concession by the rebel West Virginia Democrat, who almost single handedly has thwarted much of Joe Biden’s ambitious first-term agenda, surprised and angered congressional Republicans, who in an immediate apparent act of revenge – and self-sabotage – then blocked a bipartisan Senate bill expanding healthcare access for certain military veterans.

We’ll have more analysis of Manchin’s unexpected reversal, and the consequences of it, coming up.

Here’s what else we’re looking at today:

• Joe Biden is scheduled to speak on the state of the economy at 2.15pm, following this morning’s depressing data showing it has shrunk two quarters in a row and pushed the US closer to recession. The president is meeting chief executives of key sectors and industries this morning for updates.
• We’ll have more news about Donald Trump’s actions surrounding the January 6 insurrection, which are the subject of inquiries by a House panel and the department of justice.
• Speaker Nancy Pelosi is hosting an event about reproductive health care at 11am.
• White House press secretary Karine Jean-Pierre’s daily briefing is listed for 3.15pm, but she has been running up to an hour late on other days this week.
• Republicans and Democrats can work out their grievances on the diamond in the annual congressional baseball game at 7pm.