U.S. Senate Majority Leader Chuck Schumer (D-NY) holds a weekly news conference after the Democratic Caucus luncheon at the U.S. Capitol in Washington on August 2, 2022.
Jonathan Ernst | Reuters
A $430 billion climate change, health care and tax bill passed by the U.S. Senate Saturday delivered a major victory for Democrats and will help reduce carbon emissions that contribute to climate change while lowering costs for seniors.
Democrats hope that passage of a bill they united with the opposition in the Senate will boost their chances in the Nov. 8 midterm elections, when Republicans are expected to regain their majority in at least one House of Congress.
The package, known as the Reducing Inflation Act, is a sharply scaled-down version of a previous bill backed by Democratic President Joe Biden and swept up by maverick Senate Democrats Joe Manchin and Kirsten Sinen Mary blocked because the bill was too expensive.
“This is what the American people want,” Senate Majority Leader Chuck Schumer told reporters. “We’re prioritizing the middle class, working families, those who are trying to get into the middle class, not what the Republicans do: Prioritize the people at the top.”
The Senate voted 51-50 and Vice President Kamala Harris voted to pass the bill, which will go to the Democratic-controlled House of Representatives, where it is expected to pass on Friday, after which Biden can pass it. Sign into law.
Republicans have slammed the bill as a spending “wish list” that they say will hurt an inflation-laden economy, saying it will kill jobs, raise energy costs and undermine growth at a time when the economy faces a potential recession.
“Senate Democrats are misreading the outrage of the American people as the mandate for another reckless tax and spending binge,” Senate Republican Leader Mitch McConnell said Saturday. “Democrats want to pass hundreds of billions of dollars in tax increases and hundreds of billions of dollars in reckless spending — for what?”
About half of Americans, about 49 percent, support the bill, including 69 percent of Democrats and 34 percent of Republicans, according to a Reuters/Ipsos poll conducted Aug. 3-4. The most popular element of the bill, which gives Medicare the power to negotiate drug prices, is supported by 71 percent of respondents, including 68 percent of Republicans.
Economists say the legislation could help the Fed fight inflation, and they don’t expect a huge impact on the economy in the coming months.
At $370 billion in climate-focused spending, it will be the most significant climate change bill Congress has ever passed.
The bill provides billions of dollars in incentives for businesses and households to buy electric vehicles and energy-efficient appliances, and spurs new investments in wind and solar power that will double the amount of new clean electricity generated. U.S. by 2024, according to modeling from Princeton University’s Repeating Project.
This will help the US meet its pledge at last year’s Glasgow climate summit to halve greenhouse gas emissions from 2005 levels by 2030.
While environmental groups have largely embraced the bill, they noted that the compromise made on behalf of Coal-producing West Virginia’s Manchin would prolong America’s use of fossil fuels.
The rules include rules that only allow the federal government to authorize the development of new wind and solar energy on federal land when it auctions oil and gas drilling rights.
Juliette Kubanski, deputy director of the Kaiser Family Foundation’s Medicare Program, said the legislation would lower drug costs for governments, employers and patients.
“Perhaps the biggest impact will be on people who get prescription drug coverage through Medicare,” she said.
A key change is a rule that allows Medicare to negotiate lower prescription drug prices for older Americans and Americans with disabilities.
The pharmaceutical industry says price negotiations stifle innovation. Negotiated prices for Medicare’s 10 most expensive drugs will apply from 2026, and that number will rise until it reaches 20 a year in 2029.
The nonpartisan Congressional Budget Office estimates Medicare will save $101.8 billion over 10 years by negotiating drug prices.
The provision also places a $2,000 annual cap on out-of-pocket costs for seniors through Medicare plans.
The bill also imposes a new excise tax on share buybacks, a late change after Sinema objected to another provision that would have imposed a new tax on carried interest, currently a hurdle for hedge funds and private equity financiers. Tax loopholes. The clause was cancelled.
The excise tax is expected to raise an additional $70 billion in tax revenue annually, lawmakers said. This exceeded the expected carried interest provision.
A report released by the nonpartisan Congressional Budget Office before the last revision estimated the measure would reduce the federal deficit by a net $101.5 billion over the next decade.
That’s about a third of the $300 billion in deficit reduction projected by Senate Democrats, but doesn’t include a projected $204 billion in revenue gains from increased IRS enforcement.