
US Senate Majority Leader Chuck Schumer (D-NY) holds his weekly news conference after the Democratic Caucus Party luncheon at the US Capitol on August 2, 2022 in Washington.
Jonathan Ernst | Reuters
The $430 billion climate change, health care and tax bill passed Saturday by the US Senate provides a major victory for Democrats, and will help reduce the carbon emissions driving climate change while cutting costs for the elderly .
Democrats hope the bill, which they pushed through the Senate over a combined Republican opposition, will boost their chances in the November 8 midterm elections, when Republicans favor regaining a majority in at least one chamber of Congress. .
The package, called the Inflation Reduction Act, is a dramatically scaled-back version of an earlier bill backed by Democratic President Joe Biden that was described by maverick Senate Democrats Joe Manchin and Kirsten Cinema as too expensive.
“That’s what the American people want,” Senate Majority Leader Chuck Schumer told reporters. “We are prioritizing middle class, working families who are struggling to move into the middle class, rather than what Republicans do: prioritize those who are at the very top.”
The Senate’s partisan 51-50 vote, with a tiebreaking vote coming from Vice President Kamala Harris, sends legislation to the Democratic-controlled House of Representatives, which is expected to pass Friday, after which Biden can sign it into law.
Republicans blasted the bill as a spending “wish list”, which they argued would hurt an inflation-hit economy, saying it would kill jobs, raise energy costs and undermine growth at such times. when the economy is facing a possible slowdown.
Top Senate Republican Mitch McConnell said Saturday, “Senate Democrats are misinterpreting the American people’s outrage as a mandate for another reckless tax and spending spree.” “Democrats want to wade through hundreds of billions of dollars in tax hikes and hundreds of billions of dollars in reckless spending — and for what?”
Nearly half of Americans – some 49% – support the bill, including 69% Democrats and 34% Republicans, according to a Reuters/Ipsos poll conducted on August 3 and 4. The most popular element of the bill is paying Medicare. The power to negotiate drug prices, which is supported by 71% of respondents, including 68% of Republicans.
Economists, who say the legislation could help the Federal Reserve tackle inflation, do not expect a major impact on the economy in the coming months.
climate focus
With $370 billion in climate-focused spending, it would become the most consequential climate change bill ever passed by Congress.
The bill offers billions in incentives to encourage businesses and households to purchase electric vehicles and energy-efficient equipment, as well as to encourage new investments in wind and solar power that will help drive new, clean electricity generation capacity coming online. Will double the quantity. United States by 2024 as per modeling by Repeat Project at Princeton University.
This will help the US meet its pledge to reduce its greenhouse gas emissions by half from 2005 levels by 2030, made at last year’s Glasgow climate summit.
While environmental groups largely adopted the bill, they noted that the agreement secured by Manchin, which represents coal-producing West Virginia, would prolong US use of fossil fuels.
Those provisions include rules that would allow the federal government to authorize new wind and solar power development on federal land only when it is auctioning off drill rights for oil and natural gas.
drug cost
Juliet Kubansky, deputy director of the Medicare program at the Kaiser Family Foundation, said the law would lower drug costs for the government, employers and patients.
“Probably the biggest impact will be for people with prescription drug coverage through Medicare,” she said.
A key change is the provision that allows the federal Medicare health plan for older and disabled Americans to negotiate lower prescription drug prices.
Pharmaceutical industry says price talks will stymie innovation. Negotiable prices for 10 of the most expensive drugs for Medicare will apply from 2026 until that number rises to 20 a year in 2029.
The nonpartisan Congressional Budget Office estimates that Medicare will save $101.8 billion over 10 years by negotiating drug prices.
This provision also introduces a $2,000 annual cap on out-of-pocket costs for the elderly through the Medicare program.
tax provision
The bill also imposes a new excise duty on stock buybacks, a late change after Cinema objected to another provision that imposed a new levy on interest, currently a tax hedge for hedge funds and private equity financiers. is the way. The provision was dropped.
The lawmakers said the excise duty is expected to increase tax revenue by an additional $70 billion per year. This is higher than the borne interest provision which was projected to increase.
A report from the nonpartisan Congressional Budget Office released before that final change estimated the measure would reduce the federal deficit by $101.5 billion over the next decade.
This was about a third of the $300 billion in deficit reduction projected by Senate Democrats, but excluded an estimated $204 billion in revenue gains from increases in Internal Revenue Service enforcement.