U.S. Senate Majority Leader Chuck Schumer (D-NY) holds his weekly press conference after the Democratic caucus party luncheon at the U.S. Capitol in Washington, Aug. 2, 2022.
Jonathan Ernst | Reuters
The $430 billion Climate Change, Health Care and Tax Bill passed by the US Senate on Saturday represents a major victory for Democrats and will help reduce the carbon emissions that cause climate change while cutting costs for the elderly.
Democrats hope the bill, pushed through the Senate over the unified Republican opposition, will boost their chances in the Nov. 8 midterm elections, when Republicans prefer to regain the majority in at least one chamber of Congress. .
The package, called the Inflation Reduction Act, is a drastically scaled-down version of an earlier bill backed by Democratic President Joe Biden and blocked by maverick Senate Democrats Joe Manchin and Kyrsten Sinema as too expensive.
“It’s what the American people want,” Senate Leader Chuck Schumer told reporters. “We’re prioritizing the middle class, working families, those struggling to reach the middle class, rather than what the Republicans are doing: prioritizing those at the top.”
The Senate partisan 51-50 vote, with the casting vote by Vice President Kamala Harris, forwards the legislation to the Democrat-controlled House of Representatives, which is expected to approve it Friday, after which Biden can pass it as law. sign.
Republicans dismissed the bill as a “wish list” for spending they claimed would harm an economy crippled by inflation, saying it would destroy jobs, increase energy costs and undermine growth at a time when the economy is booming. facing a potential recession.
“Senate Democrats are misinterpreting the outrage of the American people as a mandate for yet another reckless tax and spending wave,” Senate Republican Republican Mitch McConnell said Saturday. “Democrats want to pump through hundreds of billions of dollars in tax hikes and hundreds of billions of dollars in reckless spending — and for what?”
About half of Americans — about 49% — support the bill, including 69% of Democrats and 34% of Republicans, according to a Reuters/Ipsos poll on Aug. 3 and 4. The bill’s most popular element is giving Medicare the power to negotiate drug prices, which 71% of respondents support, including 68% of Republicans.
Economists, who say the legislation could help the Federal Reserve fight inflation, do not expect a major impact on the economy in the coming months.
With $370 billion in climate-focused spending, it would become the most sweeping climate change bill ever passed by Congress.
The bill offers businesses and families billions in incentives to encourage the purchase of electric vehicles and energy-efficient appliances, as well as to encourage new investment in wind and solar energy, reducing the amount of new, clean electricity generation capacity coming online in the future. , would double. United States by 2024, according to models from Princeton University’s Repeat Project.
That would put the US on track to deliver on its pledge to halve its greenhouse gas emissions by 2030 to below 2005 levels done at last year’s climate change summit in Glasgow.
While environmental groups largely embraced the bill, they noted that compromises made by Manchin, who represents coal-producing West Virginia, would extend the use of fossil fuels in the US.
Those provisions include rules that allow the federal government to allow new wind and solar developments on federal land only when it also auctions off rights to drill for oil and natural gas.
The legislation would cut drug costs for the government, employers and patients, said Juliette Cubanski, deputy director of the Medicare program at the Kaiser Family Foundation.
“Perhaps the greatest effect would be for people with prescription drugs through Medicare,” she said.
An important change is the provision that allows the federal Medicare health plan for older and disabled Americans to negotiate lower prices for prescription drugs.
The pharmaceutical industry says price negotiations would stifle innovation. Negotiated prices for 10 of the most expensive Medicare drugs would apply from 2026, and that number will rise until it hits 20 per year by 2029.
The unbiased Congressional Budget Office estimates Medicare would save $101.8 billion in 10 years by negotiating drug prices.
The provision also introduces a $2,000 annual cap on out-of-pocket costs for the elderly through the Medicare program.
The bill also imposes a new tax on share buybacks, a belated amendment after Sinema objected to another provision that would have imposed new taxes on carry interest, currently a tax loophole for hedge fund and private equity. financiers. The provision has expired.
The excise taxes are expected to generate an additional $70 billion annually in tax revenue, lawmakers said. That is more than the carry rate provision had expected to increase.
A report by the impartial Congressional Budget Office released prior to that latest amendment estimated that the measure would reduce the federal deficit by a net $101.5 billion over the next decade.
That was about a third of the $300 billion in deficit reduction forecast by Senate Democrats, but excluding a projected $204 billion gain from increased Internal Revenue Service enforcement.