Joe Biden’s $740 billion climate, deficit and health care package that just passed the Senate and is almost certain to become law is a far cry from his even grander initial ambitions, but it still represents a major triumph for the president.
The bill – the Inflation Reduction Act – was virtually dead in the water before a last-minute U-turn by the conservative Democratic West Virginian Joe Manchin saw him suddenly resurrected.
He then endured another round of political haggling as he navigated the choppy waters of a 50-50 split Senate. But, carried by a decisive vote by Biden’s vice president, Kamala Harris, he emerged virtually intact. And, after a vote in the House later this week, it is expected to land on Biden’s Oval Office desk.
Here’s what it contains and what it means:
The estimated $740 billion package is loaded with Democratic priorities. These include capping prescription drug costs at $2,000 for seniors, helping Americans pay for private health insurance, and Democrats call for the largest investment in history to tackle the climate crisis: $375 billion over the decade.
Nearly half of the funds raised, $300 billion, will be used to reduce federal deficits.
It is largely paid for with new corporate taxes, including a 15% minimum tax on large corporations to ensure they pay no taxes, as well as planned federal savings from lower costs. Medicare drugs.
It’s not at all clear that the 755-page bill will significantly ease inflationary pressures, though millions of Americans should see some relief in health care and other costs.
What does this mean for Biden?
For Biden, passage of the bill offers a much-needed national victory at a time when his popularity has plummeted and a key midterm election looms in November.
Although the bill has been stripped of much of its original ambitious agenda, it remains a major achievement. Biden can now go to the polls and present himself as a president who can get things done even in the difficult political circumstances of a deeply divided country.
The bill would invest nearly $375 billion over the decade in climate change strategies, including investments in renewable energy generation and tax cuts for consumers to buy vehicles new or used electrics.
It breaks down to include $60 billion for a clean energy manufacturing tax credit and $30 billion for a wind and solar power production tax credit, seen as ways to stimulate and to support industries that can help reduce the country’s dependence on fossil fuels. The bill also grants tax credits for nuclear power and carbon capture technology that oil companies such as ExxonMobil have invested millions of dollars to advance.
The bill would impose a new levy on excess methane emissions from oil and gas drilling while giving fossil fuel companies access to more leases on federal lands and waters.
A late addition pushed by Sen. Kyrsten Sinema and other Democrats in Arizona, Nevada and Colorado would designate $4 billion to fight a mega-drought in the west, including conservation efforts in the river basin Colorado, on which nearly 40 million Americans depend for drinking water. .
For consumers, there are tax breaks like incentives to go green. One is a 10-year consumption tax credit for renewable energy investments in wind and solar. There are tax breaks for the purchase of electric vehicles, including a tax credit of $4,000 for the purchase of used electric vehicles and $7,500 for new vehicles.
In total, Democrats believe the strategy could put the country on a path to reducing greenhouse gas emissions by 40% by 2030, and “would represent by far the biggest climate investment in history. the United States “.
Prescription Drug Costs
Launching a long-sought goal, the bill would allow the Medicare program to negotiate prescription drug prices with pharmaceutical companies, saving the federal government $288 billion over the 10-year budget window.
These new revenues would be reinvested in reducing drug costs for seniors, including a $2,000 cap for seniors buying prescriptions at pharmacies.
Seniors would also see the price of insulin capped at $35 per dose. A provision to extend this price cap on insulin to Americans with private health insurance did not comply with Senate budget rules, and Republicans deleted it from the final bill.
The bill would expand subsidies given during the pandemic to help some Americans who buy health insurance themselves.
Under previous pandemic relief, additional aid was due to expire this year. But the bill would allow the aid to continue for three more years, reducing insurance premiums for people who buy their own health care policies.
How is it paid?
The biggest source of revenue in the bill is a new 15% minimum tax on corporations that make more than $1 billion in annual profits. The new minimum corporate tax would take effect after the 2022 tax year and would raise more than $258 billion over the decade.
Revenues would have been higher, but Sinema insisted on a change to the 15% minimum for businesses, allowing a capital cost allowance used by manufacturing industries. This reduces total revenue by approximately $55 billion.
To win over Sinema, Democrats scrapped plans to close a tax loophole long enjoyed by the wealthiest Americans — so-called deferred interest, which under current law taxes wealthy hedge fund managers and others. at a rate of 20%.
Money is also collected by strengthening the IRS to fight tax evaders. The bill proposes an $80 billion investment in taxpayer services, enforcement and modernization, which is expected to generate $203 billion in new revenue, a net gain of $124 billion over the decade.
The Associated Press contributed to this report