Congress Passes Inflation Reduction Act
(WASHINGTON) — A divided Congress gave final approval Friday to Democrats’ flagship climate and health care bill, handing President Joe Biden a back-from-the-dead triumph on coveted priorities that the party hopes will bolster their prospects for keeping their hold on Congress in November’s elections.
It was passed by the House with a vote of 220 to 207, which only reflects the much larger and more ambitious plan that Biden had in mind for the supercharging environment and other social programs. Even so, Democrats happily declared victory on top-tier goals like providing Congress’ largest ever investment in curbing carbon emissions, reining in pharmaceutical costs and taxing large companies, a vote they believe will show they can wring accomplishments from a routinely gridlocked Washington that often disillusions voters.
“Today is a day of celebration, a day we take another giant step in our momentous agenda,” said House Speaker Nancy Pelosi, D-Calif. She said the measure “meets the moment, ensuring that our families thrive and that our planet survives.”
Continue reading: U.S. Inflation Reduction Act is on the verge of reviving its fortunes Climate Policy and Change the World
Republicans solidly opposed the legislation, calling it a cornucopia of wasteful liberal daydreams that would raise taxes and families’ living costs. They did the same Sunday but Senate Democrats banded together and used Vice President Kamala Harris’ tiebreaking vote to power the measure through that 50-50 chamber.
“Democrats, more than any other majority in history, are addicted to spending other people’s money, regardless of what we as a country can afford,” said House Minority Leader Kevin McCarthy, R-Calif. “I can almost see glee in their eyes.”
Biden’s initial 10-year, $3.5 trillion proposal also envisioned free prekindergarten, paid family and medical leave, expanded Medicare benefits and eased immigration restrictions. After centrist Senator Joe Manchin of West Virginia said the proposal was too costly and used all the leverage available to Democrats in the evenly divided Senate, the plan crashed.
The final legislation was still substantive. The pillar covers approximately $375 billion for 10 years and is intended to encourage consumers as well as industry to switch from carbon-emitting energy to more clean forms. That includes $4 billion to cope with the West’s catastrophic drought.
Tax credits, spending, and loans could be used to boost technology such as solar panels and consumer efforts for better home energy efficiency.
An additional $64 billion will help 13 million Americans pay the premiums in three years’ time for privately purchased health insurance. Medicare will have the ability to negotiate pharmaceutical costs, starting in 2026 with 10 drugs. Medicare beneficiaries’ out-of-pocket prescription costs would be limited to $2,000 starting in 2025, and beginning next year would pay no more than $35 monthly for insulin, the costly diabetes drug.
Continue reading: How the Inflation Reduction Act Can Lower Your Drug Costs
It would generate revenue of approximately $740billion over the next ten years, with more than one third coming from savings by government from lower drug costs. Higher taxes of around $1 billion would bring in more revenue, as well as levies for companies who repurchase stock or stronger IRS tax collection. About $300 billion would remain to defray budget deficits, a sliver of the period’s projected $16 trillion total.
Against the backdrop of GOP attacks on the FBI for its court-empowered search of former President Donald Trump’s Florida estate for sensitive documents, Republicans repeatedly savaged the bill’s boost to the IRS budget. This bill is intended to raise $120 billion of unpaid taxes in the next decade. Republicans misleadingly claimed that the IRS would hire 87,000 agents for average families.
Rep. Andrew Clyde, R-Ga., said Democrats would also “weaponize” the IRS with agents, “many of whom will be trained in the use of deadly force, to go after any American citizen.” Sen. Chuck Grassley, R-Iowa, asked Thursday on “Fox and Friends” if there would be an IRS “strike force that goes in with AK-15s already loaded, ready to shoot some small business person.”
Few IRS personnel are armed, and Democrats say the bill’s $80 billion, 10-year budget increase would be to replace waves of retirees, not just agents, and modernize equipment. They have said typical families and small businesses would not be targeted, with Treasury Secretary Janet Yellen directing the IRS this week to not “increase the share of small business or households below the $400,000 threshold” that would be audited.
Republicans say the legislation’s new business taxes will increase prices, worsening the nation’s bout with its worst inflation since 1981. Although the Inflation Reduction Act has been referred to by Democrats, analysts from non-partisan organizations say that it will only have a minimal impact on the prices.
Additionally, the GOP claims that the bill will increase taxes for lower and middle income families. An analysis by Congress’ nonpartisan Joint Committee on Taxation, which didn’t include the bill’s tax breaks for health care and energy, estimated that the corporate tax boosts would marginally affect those taxpayers but indirectly, partly due to lower stock prices and wages.
The bill caps three months in which Congress has approved legislation on veterans’ benefits, the semiconductor industry, gun checks for young buyers and Ukraine’s invasion by Russia and adding Sweden and Finland to NATO. They all passed unanimously, indicating that Republicans want to showcase their productive side.
It’s unclear whether voters will reward Democrats for the legislation after months of painfully high inflation dominating voters’ attention and Biden’s dangerously low popularity with the public and a steady history of midterm elections that batter the party holding the White House.
After Congress passed a $1.9 trillion bill to counter the economic decline caused by pandemics, in 2021, the bill was born. The new president was encouraged and his party went further.
The $3.5 trillion plan was called Build Back Better. Besides social and environment initiatives, it proposed rolling back Trump-era tax breaks for the rich and corporations and $555 billion for climate efforts, well above the resources in Friday’s legislation.
Manchin opposed these amounts so it was cut to roughly $2 trillion that Democrats passed through the House in November. Exasperated by fellow Democrats on Capitol Hill, he also sank the bill.
The last-gasp negotiations between Manchin, Senate Majority Leader Chuck Schumer (D-N.Y.), seemed futile until they unexpectedly reached an agreement on the new package.
Manchin was awarded billions of dollars for carbon capture technology to support the fossil fuel industries that he supports. He also lobbied for increased oil drilling on federal land and faster project approvals. D-Ariz. centrist senator Kyrsten Silena also received concessions. These included the elimination of higher taxes planned for hedge fund managers as well as helping to win the drought funds.
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