(CNN)Sen. Joe Manchin on Thursday dealt a devastating blow to Democrats' hopes for sweeping legislative action this year, telling Senate Majority Leader Chuck Schumer and his staff "unequivocally" that he won't support the climate or tax provisions of a Democratic economic package, two sources familiar with the talks tell CNN.
The two had been negotiating for months, and Schumer, a New York Democrat, had made a number of concessions to pare back the climate provisions to appease Manchin, whose support is critical in an evenly decided Senate.
Manchin is open to letting Medicare negotiate prescription drugs prices and to extending enhanced Affordable Care Act subsidies for two years, one of the sources said, which suggests that's all Democrats are likely to get in the package.
But the moderate West Virginia Democrat, who has cited increased federal spending as a main driver of inflation, would not budge on other Democratic priorities, and he told Schumer that he will not consider raising taxes on the wealthy or corporations.
The change in tone of the latest negotiations was abrupt. Manchin had supported those provisions throughout the negotiations with the majority leader, both at the staff and member level, one of the sources familiar said.
News of Manchin's comments to Democratic leadership, first reported by The Washington Post, was met with outrage from climate activists and many fellow Democrats, who have previously seethed over Manchin's refusal to back some of the party's more ambitious spending proposals. In December, Manchin had torpedoed a $1.75 trillion version of Biden's climate and economic bill, known as the Build Back Better Act, angering the White House and Democrats who had pushed for a much larger $3.5 trillion spending plan at the beginning of the Biden administration.
"I'm not going to sugar coat my disappointment here, especially since nearly all issues in the climate and energy space had been resolved," Senate Finance Chair Ron Wyden, whose committee had jurisdiction over the clean energy tax credits and corporate tax provisions, said in a statement.
"This is our last chance to prevent the most catastrophic—and costly—effects of climate change. We can't come back in another decade and forestall hundreds of billions—if not trillions—in economic damage and undo the inevitable human toll," the Oregon Democrat added.
Similarly, climate advocates, many of whom were anticipating seeing climate and energy bill text soon, reacted on Thursday night with shock and outrage.
"This is nothing short of a death sentence," Varshini Prakash, co-founder of youth climate group Sunrise Movement, said in a statement. "It's clear appealing to corporate obstructionists doesn't work, and it will cost us a generation of voters."
"There truly aren't words for how appalled, outraged, and disappointed we are," Tiernan Sittenfeld, senior vice president of government affairs at the League of Conservation Voters, said.
Manchin's office pointed to rising inflation. "Political headlines are of no value to the millions of Americans struggling to afford groceries and gas as inflation soars to 9.1%," Manchin spokeswoman Sam Runyon said in a statement. "Senator Manchin believes it's time for leaders to put political agendas aside, reevaluate and adjust to the economic realities the country faces to avoid taking steps that add fuel to the inflation fire."
Data released Wednesday showed that inflation surged to a new pandemic-era peak in June, with US consumer prices jumping by 9.1% year-over-year -- the highest level in more than 40 years.
But Evergreen Action co-founder Jamal Raad told CNN that Manchin's argument about not spending more to avoid worsening inflation missed the mark when it came to energy and climate.
"He's not even about solving inflation because the major driver of inflation was gas prices, and he decided we should invest more in fossil fuels," Raad said.
Democrats are now pushing to get the Affordable Care Act subsidies extended before the August recess to avoid major rate hikes that will be announced just before the midterm elections in November.
The subsidies were expanded as part of the Democrats' American Rescue Plan Act and made coverage on the Obamacare exchanges more affordable, leading to record enrollment this year. If they are allowed to expire at the end of the year, nearly all of the 13 million subsidized enrollees will see their premiums rise for 2023, according to the Kaiser Family Foundation. More than 3 million people could become uninsured, an Urban Institute analysis found.
Democrats are hoping to avoid the negative publicity of such premium increases. If Congress doesn't act, consumers will learn in the fall just how much more they could have to pay. Open enrollment begins on November 1, a week ahead of Election Day.
This story has been updated with additional information.
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