The Senate on Sunday afternoon passed Democrats’ Inflation Reduction Act, a $750 billion health care, tax and climate bill, in a significant victory for President Joe Biden and his party. The final, party-line vote was 51-50, with Vice President Kamala Harris breaking the tie. The package is the product of painstaking negotiations, and its final passage would give Democrats a chance to achieve major policy objectives ahead of the upcoming midterm elections. The Democrat-controlled House, which is expected to take up the legislation on Friday, August 12th, must approve the bill before President Biden can sign it into law.
The vote occurred after a marathon vote-a-rama session that started Saturday continued into Sunday afternoon, with senators voting on a number of amendments to the 755-page legislation, including a failed provision offered by Senator Raphael Warnock (D-Georgia) that would have capped the cost of insulin products at $35 per month for those with private insurance. The legislation invests nearly $400 billion in energy security and climate change proposals and would help reduce carbon emissions by approximately 40% by 2030. To incentivize consumers to purchase technologies to lower emissions and energy prices, the bill includes $9 billion in consumer home energy rebate programs, a $4,000 consumer tax credit to purchase used electric vehicles and a $7,500 tax credit to buy new clean vehicles, both of which are available only to lower and middle income individuals. The bill’s energy section invests $30 billion in production tax credits to speed U.S. production of solar panels, wind turbines, batters and critical minerals processing; $10 billion in tax credits to build clean technology manufacturing facilities, such as those that make electric vehicles and solar panels; and $500 million through the Defense Production Act for heat pumps and critical minerals processing. It also imposes a charge of up to $1,500 per metric ton on oil and gas companies for methane emissions and reinstates oil and gas lease sales in the Gulf of Mexico and Alaska.
The new legislation also includes a policy that allows Medicare to negotiate for the price of prescription drugs starting in 2023, a top Democratic priority that is expected to save hundreds of billions of dollars over the next 10 years. It also sets an annual cap of $2,000 on out-of-pocket costs for Medicare patients enrolled in drug plans. Under the legislation, enhanced Affordable Care Act subsidies would also be extended through 2025. The premium subsidies were included in the $1.9 trillion COVID-19 relief package enacted last year and were set to lapse at the end of the year.
Democrats’ tax revenue piece has two components: a 15% corporate minimum tax imposed on most corporations that make more than $1 billion each year, and nearly $80 billion for stricter tax enforcement and compliance by the Internal Revenue Service. The enhancement of tax enforcement resources will bring in an additional $204 billion in revenue over a decade, according to the Congressional Budget Office. Democrats’ package will reduce federal budget deficits by $102 billion over 10 years, the agency found, an estimate that did not factor in the new revenue from beefed-up IRS enforcement.
The Senate is now in recess until 3:00 P.M. on Tuesday, September 6th but will hold brief pro forma sessions on Tuesday, August 9th at 9:00 a.m.; Friday, August 12th at 9:00 a.m.; Tuesday, August 16th at 8:00 a.m.; Friday, August 19th at 2:30 p.m.; Tuesday, August 23rd at 10:30 a.m.; Friday, August 26th at 10:00 a.m.; Tuesday, August 30th at 10:00 a.m.; and Friday, September 2nd at 9:00 a.m.
The House remains in recess until Tuesday, September 13th, but will reconvene briefly this Friday, August 12th to pass the Inflation Reduction Act.
