Cut Inflation Act: Senate passes Democrats’ sweeping health care and climate bill



CNN

On Sunday afternoon, the Senate passed a $750 billion health care, tax and climate bill from Democrats, in a significant victory for President Joe Biden and his party.

The final party line vote was 51 to 50, with Vice President Kamala Harris breaking the tie. The package is the product of painstaking negotiations, and its eventual passage would give Democrats a chance to achieve major political goals ahead of the upcoming midterm elections.

The Democratic-controlled House, which is expected to pass the legislation on Friday, Aug. 12, must approve the bill before Biden can sign it.

The sweeping bill – named the Inflation Reduction Act – would represent the largest climate investment in US history and make major changes to health policy by giving Medicare the power for the first time to negotiate the prices of certain prescription drugs and extending health care subsidies expiring for three years. The legislation would reduce the deficit, be funded by new taxes – including a 15% minimum tax on large corporations and a 1% tax on stock buybacks – and strengthen the collection capacity of the Internal Revenue Service.

It would generate 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 rest new revenue to reduce the deficit.

Senate Democrats, with a narrow 50-seat majority, stood united to pass the legislation, using a special filibuster-proof process to approve the measure without a Republican vote. The final passage came after a marathon series of contentious amendment votes known as “vote-a-rama” that spanned nearly 16 hours from Saturday evening until Sunday afternoon.

West Virginia Democratic Sen. Joe Manchin told CNN the legislation he helped draft is “a good, balanced bill.”

“I think we will all benefit; the country will,” Manchin told CNN. “We have energy security, that’s what we were looking for. And we have the ability to invest in the energy of the future.

Biden praised the Senate for passing the bill in a statement Sunday, thanking House Democrats and touting the legislation’s climate investments and health care provisions.

“Today, Senate Democrats stood with American families for special interests, voting to cut the cost of prescription drugs, health insurance and daily energy costs and reduce the deficit, while forcing the wealthiest corporations to finally pay their fair share,” Biden said.

Senate Democrats had long hoped to pass a signature legislative package that would include key items on the party’s agenda, but struggled for months to reach a deal that won the full support of their caucus.

Manchin played a key role in crafting the legislation – which only moved forward after West Virginia Democrat and Senate Majority Leader Chuck Schumer announced a deal in late July, a major breakthrough for the Democrats after the failure of previous negotiations.

Arizona Senator Kyrsten Sinema offered critical support Thursday night after party leaders agreed to amend new tax proposals, indicating she “could move forward” on the broad economic package.

But Sinema, Manchin and other senators worked all weekend to make crucial changes to the bill.

To avoid a last-minute collapse of the bill on Sunday, Democrats created a plan to win over Sinema, who worried about the impact of the 15% minimum corporate tax on privately owned subsidiaries. . Senate Democrats accepted a narrower tax proposal, but instead paid for it through a State and Local Tax Deduction (SALT) amendment, as suggested by GOP Sen. John Thune of South Dakota Instead, they extended the limit on the amount of losses that businesses can deduct for another two years.

The change was intended to prevent House Democrats in mostly coastal districts, who campaigned to repeal the SALT deduction limits, from breaking the bill when they vote later this week.

After the bill passed the Senate, Sinema said in a statement that it would “help Arizonans build better lives for themselves and their families by lowering prices, making health care more affordable and accessible and securing Arizona’s water and energy future,” while “driving innovation and driving job creation.

In a good sign for the bill to become law, leading House Democrats signaled later Sunday that they would vote for it despite previous demands on SALT.

Representative Josh Gottheimer of New Jersey was part of the “No SALT, no deal” caucus. But he said the bill passes its test because it does not raise personal income tax rates.

Rep. Mikie Sherrill of New Jersey, another member of that caucus, echoed his sentiment: “I will also remain steadfast in my commitment to ensuring that any discussion of the 2017 tax law reforms begins by addressing the SALT. Because this legislation does not increase taxes for families in my district, but in fact significantly reduces their costs, I will vote for it.

Republicans used the “vote-a-rama” weekend to put Democrats on the spot and force politically difficult votes. They also succeeded in removing a key insulin provision to cap the price of insulin at $35 per month in the private insurance market, which the Senate parliamentarian found inconsistent with the reconciliation rules of the Senate. The $35 insulin cap for Medicare beneficiaries remains in place.

Senate Minority Leader Mitch McConnell said in a statement that the bill includes “massive job-killing tax hikes” and amounts to “a war on American fossil fuels.” The Kentucky Republican said Democrats “don’t care about the priorities of middle-class families.”

“And their answer to runaway inflation that they’ve created is a bill that experts say won’t significantly reduce inflation at all,” McConnell said. “The American people are clear on their priorities. Environmental regulations are a 3% problem. Americans want solutions to inflation, crime and the border.

While economists disagree on whether the package would, in fact, live up to its name and reduce inflation, especially in the short term, the bill would have a crucial impact on reducing carbon emissions.

The nearly $370 billion clean energy and climate package is the largest climate investment in US history and the environmental movement’s biggest victory since the historic Clean Air Act. It also comes at a critical time; this summer has seen punishing heat waves and deadly floods across the country, both of which scientists say are linked to global warming.

Analysis from Senate Majority Leader Chuck Schumer’s office — along with multiple independent analyzes — suggests the measure would cut U.S. carbon emissions by up to 40% by 2030. The administration’s tough climate regulations Biden and state action would be needed to get to President Joe Biden’s goal of cutting emissions by 50% by 2030.

The bill also contains numerous tax incentives intended to reduce the cost of electricity with more renewable energy and encourage more American consumers to switch to electricity to power their homes and vehicles.

Lawmakers said the bill represents a monumental victory and is just the start of what is needed to tackle the climate crisis.

“It’s not about the laws of politics, it’s about the laws of physics,” Democratic Sen. Brian Schatz of Hawaii told CNN. “We all knew going into this effort that we had to do what science tells us what to do.”

The bill would empower Medicare to negotiate the prices of certain expensive drugs administered in doctors’ offices or purchased at pharmacies. The Secretary of Health and Human Services would negotiate prices for 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.

This controversial provision is far more limited than what House Democratic leaders have supported in the past. But it would open the door to achieving a long-standing party goal of allowing Medicare to use its weight to cut drug costs.

Democrats also plan to extend enhanced federal grants for Obamacare coverage through 2025, a year later than lawmakers recently discussed. That way they wouldn’t expire right after the 2024 presidential election.

To boost revenue, the bill would impose a minimum tax of 15% on income large corporations return to shareholders, known as accounting income, as opposed to the Internal Revenue Service. The measure, which would raise $258 billion over a decade, would apply to companies whose profits exceed $1 billion.

Concerned about how the provision would affect some businesses, particularly manufacturers, Sinema suggested she had secured changes to the Democrats’ plan to reduce how businesses can deduct impaired assets from their taxes. The details remain unclear.

However, Sinema reversed his party’s efforts to tighten the deferred interest loophole, which allows investment managers to treat much of their compensation as capital gains and pay a capital gains tax rate. long-term capital of 20% instead of income tax rates of up to 37%.

The provision would have extended from three to five years the length of time that investment managers’ profit shares must be held to take advantage of the reduced tax rate. Closing that loophole, which reportedly raised $14 billion over a decade, was a longtime goal of congressional Democrats.

In its place, a 1% excise tax on corporate stock buybacks was added, bringing in an additional $74 billion, according to a Democratic aide.

This story and title have been updated with additional developments.

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