WASHINGTON – After months of arduous negotiations, Democrats will push through a climate, tax and health care package that would salvage key elements of President Biden’s domestic agenda.
While the legislation does not meet the ambitious $2.2 trillion Build Back Better Act passed by the House in November, it fulfills multiple long-standing democratic goals, including combating the toll of climate change on a rapidly warming planet, taking steps to lower the cost of prescribing drugs and to revamp parts of the tax code in an effort to make it more equitable.
This is what’s in the final package:
It is the largest US investment to slow global warming.
The bill includes the largest expenditure ever made by the federal government to slow global warming and reduce demand for the fossil fuels primarily responsible for causing climate change.
It would invest nearly $400 billion over a 10-year period in tax credits designed to direct consumers to electric vehicles and spur electric companies to use renewable energy sources such as wind or solar power.
Energy experts said the measure would help the United States cut greenhouse gas emissions about 40 percent below 2005 levels by the end of this decade. That puts the Biden administration a long way from meeting its goal of roughly halving emissions by 2030. Much more will be needed to prevent the planet from warming to dangerously high global temperatures, scientists said, but Democrats viewed it as a momentous first step after decades of inaction.
At the same time, Democrats approved some fossil fuel and drilling facilities as concessions to West Virginia Senator Joe Manchin III, a supporter of a conservative state heavily dependent on coal and gas.
The move would result in new leases for oil drilling in the Gulf of Mexico and the Cook Inlet in Alaska. It would extend tax credits for carbon capture technology, allowing coal- or gas-fired power plants to continue to operate with lower emissions. And it would require the Department of the Interior to continue to hold auctions for fossil fuel leases if it plans to approve new wind or solar projects on federal lands.
The tax credits include $30 billion to accelerate production of solar panels, wind turbines, batteries and critical mineral processing; $10 billion to build facilities to produce things like electric vehicles and solar panels; and $500 million through the Defense Production Act for heat pumps and critical mineral processing.
There is $60 billion to help deprived areas disproportionately affected by climate change, including $27 billion to establish what would be the first national “green bank” to help boost investment in clean energy projects, especially in poor communities. The bill would also force oil and gas companies to pay fees as high as $1,500 per tonne to address excess leaks of methane, a potent greenhouse gas, and would overturn a 10-year moratorium on offshore wind leasing imposed by the president. Donald J. Trump .
Medicare could directly negotiate the price of prescription drugs, driving costs down.
For the first time, Medicare would be allowed to negotiate the price of prescription drugs with drug manufacturers, a proposal that would save the federal government billions of dollars. That would initially apply to 10 drugs, starting in 2026, and then expand to more drugs in the following years.
Opponents argue the plan would stifle innovation and the development of new treatments by slashing the profits drug companies can put into their businesses, while some liberals expressed frustration that the policy would be too slow to take hold. If passed into law, as expected, the package would be the largest expansion of federal health policy since the passage of the Affordable Care Act.
The package would limit the out-of-pocket costs seniors pay for prescription drugs to $2,000 annually, and would ensure seniors have access to free vaccines. Legislators have also included a discount if price increases exceed inflation. (Senate officials, however, said the fine could only apply to Medicare, not private insurers.)
Republicans successfully challenged the inclusion of a $35 price cap on insulin for patients with private insurance during a rapid series of amendment votes early Sunday morning, forcing its removal. But a separate proposal limiting the price of insulin to $35 a month for Medicare patients remained intact.
Comprehensive health care subsidies would be expanded.
As part of the $1.9 trillion pandemic relief bill passed by Democrats last year, lawmakers voted to expand the grants available under the Affordable Care Act. That proposal cut premiums for nearly every American dependent on the program’s market, either by making some plans free for lower-income earners, or to provide support to higher-income earners who previously received no aid.
The package, which could pass the Senate as early as Sunday, would extend those subsidies, which now expire at the end of the year, for another three years. Democrats fear a backlash in November’s midterm elections if they cut subsidies.
Wealthy businesses will see a tax hike while the IRS gets a funding boost.
The tax proposals were formed by Arizona Democrat Senator Kyrsten Sinema, who resisted pressure from her party to raise tax rates on the nation’s wealthiest corporations and individuals.
To avoid the rate hike, which Ms. Sinema opposed, Democrats instead came up with a much more complex tax code change: a new 15 percent minimum tax on profits that companies report to shareholders. It would apply to companies that report more than $1 billion in annual income on their financial statements, but are also able to use credits, deductions and other tax treatments to lower their effective tax rates.
Indeed, Ms Sinema protected a deduction that would benefit manufacturers, a change she successfully demanded before committing Thursday to move forward with the legislation.
She also forced the removal of a proposal supported by Democrats and Republicans that would have reduced a tax break used by both hedge fund and private equity industries to get lower tax rates than their entry-level associates. And she promised to pursue separate legislation outside the budget package, but that would require at least 10 Republicans.
The legislation would also support the IRS with an investment of about $80 billion, hoping to recover additional tax revenue by cracking down on wealthy corporations and wealthy tax evaders.
Republicans, who have traditionally opposed bolstering funds for the agency, have argued that this will increase controls and scrutiny on lower-income households. The IRS, in turn, has dismissed the concerns, telling Congress that “these resources are absolutely not about increasing scrutiny of small businesses or middle-income Americans.”