Final passage of the bill would give Democrats a chance to achieve important policy goals ahead of the upcoming midterm elections, at a critical time when the party is struggling to maintain control of its narrow majorities in Congress. The sweeping bill — called the Inflation Reduction Act — would represent the largest climate investment in U.S. history and would make major changes to health policy by giving Medicare the power for the first time to negotiate the prices of some prescription drugs and extend expiring health care subsidies for three years. The legislation would reduce the deficit, be paid for through new taxes — including a 15 percent minimum tax on large corporations and a 1 percent tax on stock buybacks — and strengthen the Internal Revenue Service’s collection capacity. It would raise more than $700 billion in government revenue over 10 years and spend more than $430 billion to reduce carbon emissions and expand health insurance subsidies under the Affordable Care Act, and use the remaining new revenue to deficit reduction. Speaker Nancy Pelosi pledged to pass the bill through the House in a recent letter to Democratic colleagues. “On Friday, House Democrats will vote and send the landmark inflation-reduction bill to the President,” Pelosi wrote. “This life-changing legislation increases the leverage of the public interest over the special interest.”
House to act after Senate Democrats pass bill
The House takes up the legislation after it passed the Senate after a marathon overnight session of contentious amendment votes. In the Senate, the bill passed on a final, party-line vote of 51-50, with Vice President Kamala Harris breaking the tie. Senate Democrats, who control only a narrow 50-seat majority, ultimately held together to pass the legislation. And they used a special, watertight process known as reconciliation to pass the measure without Republican votes. The passage of the bill on the floor marked a major milestone for Senate Democrats, who had long hoped to pass a signature legislative package but had struggled for months to reach a deal that would have the full support of their caucus. Sen. Joe Manchin played a key role in crafting the legislation — which moved forward only after the West Virginia Democrat and Senate Majority Leader Chuck Schumer announced a deal in late July, a breakthrough for Democrats after previous deadlocks negotiations. Arizona Democratic Sen. Kirsten Sinema was also at the center of the effort to pass the bill — and Sinema, Manchin and other senators worked through the weekend making changes to the bill. The vote in the Senate came after a long series of amendment votes known as “vote-a-rama” that lasted nearly 16 hours from late Saturday night to Sunday afternoon. Republicans used the “vote-a-rama” weekend to put Democrats on the spot and force politically tough votes. They also succeeded in removing a key provision capping the price of insulin at $35 a month on the private insurance market, which the senator ruled did not comply with Senate reconciliation rules. The $35 insulin cap for Medicare beneficiaries remains in place. In the end, Republicans lined up to oppose the bill. Senate Minority Leader Mitch McConnell said in a statement that the bill included “huge job-killing tax increases” and amounted to a “war on America’s fossil fuels.” The Kentucky Republican said Democrats “don’t care about the priorities of middle-class families.”
How the bill addresses the climate crisis
While economists disagree about whether the package would actually live up to its name and reduce inflation, particularly in the short term, the bill would have a critical impact on reducing carbon emissions. The nearly $370 billion clean energy and climate package is the largest climate investment in US history and the biggest win for the environmental movement since the landmark Clean Air Act. Analysis by Schumer’s office — as well as several independent analyzes — suggests the measure would cut U.S. carbon emissions by as much as 40 percent by 2030. It would require strong climate regulations from the Biden administration and action by states to meet Biden’s goal of reducing emissions by 50% by 2030. The bill also contains several tax incentives intended to lower the cost of electricity with more renewable energy and encourage more American consumers to switch to electricity to power their homes and vehicles.
Basic health care and tax policy in the bill
The bill would authorize Medicare to negotiate the prices of certain expensive drugs that are dispensed in doctor’s offices or bought at the pharmacy. The Health and Human Services secretary would negotiate the prices of 10 drugs in 2026 and another 15 drugs in 2027 and again in 2028. The number would increase to 20 drugs per year for 2029 and beyond. The controversial provision is much narrower than what House Democratic leaders have previously advocated. But it would open the door to fulfilling a long-held party goal of allowing Medicare to use its weight to lower drug costs. Democrats also plan to extend enhanced federal premium subsidies for Obamacare coverage through 2025, a year later than lawmakers recently discussed. That way, they won’t expire right after the 2024 presidential election. To boost revenue, the bill would impose a minimum tax of 15 percent on the income that big companies report to shareholders, known as accounting income, unlike the Internal Revenue Service. The measure, which would raise $258 billion over a decade, would apply to companies with more than $1 billion in revenue. Worried about how that provision would affect some businesses, particularly manufacturers, Sinema suggested she won changes to the Democratic plan to limit how companies can deduct depreciated assets on their taxes. Details remain unclear. But Sinema blasted her party’s bid to close the carried interest loophole, which allows investment managers to treat much of their compensation as capital gains and pay a long-term capital gains tax rate of 20% instead of income tax rates of up to 37 %. The provision would have extended the length of time investment managers must hold their profit interest from three to five years to benefit from the lower tax rate. Addressing that gap, which would have raised $14 billion over a decade, has been a long-term goal of congressional Democrats. In its place, a 1 percent excise tax was added on corporate stock buybacks, raising another $74 billion, according to a Democratic aide. CNN’s Alex Rogers, Ella Nilsen, Tami Luhby, Katie Lobosco and Matt Egan contributed to this report.
