Senate passes Inflation Reduction Act; House to vote next

Washington D. C — Democrats pushed their election-year economic package to pass the Senate on Sunday, a tough compromise less ambitious than President Joe Biden’s original domestic vision but still fulfilling the party’s deeply held goals of slowing global warming, controlling pharmaceutical costs and taxing huge corporations.

The roughly $740 billion package lies ahead of the House, where lawmakers are poised to deliver on Biden’s priorities, a stunning turnaround of a lost and doomed effort that has suddenly roared back into political life. Democrats were unanimous, 51-50, with Vice President Kamala Harris casting the tiebreaking vote.

“It’s been a long, hard and winding road, but finally, we’re there,” Senate Majority Leader Chuck Schumer, DN.Y., said before the final vote. said

“The Senate is making history. I am confident that the De-Inflation Act will stand as one of the defining legislative measures of the 21st century.”

Senators engaged in a round-the-clock marathon of voting that began on Saturday and lasted until Sunday afternoon. Democrats shot down about three dozen Republican amendments designed to torpedo the law. Faced with unanimous GOP opposition, 50-50 Democratic unity in the chamber puts the party on course for a morale-boosting victory three months from the election when control of Congress is at stake.

“I think it’s going to end,” Biden told reporters early Sunday morning before leaving the White House to travel to Rehoboth Beach, Delaware, and end his COVID-19 isolation. The House looked likely to approve the final Congress after returning briefly from summer recess on Friday.

The bill hit a snag in the afternoon over objections to a new 15% corporate minimum tax, which private equity firms and other industries dislike, forcing last-minute changes.

Despite the momentary setback, the “Inflation Reduction Act” gives Democrats an amp-season showcase to act on coveted goals. It includes the largest federal effort ever on climate change — nearly $400 billion — increases drug costs for seniors on Medicare by $2,000 and increases expiring subsidies that help 13 million people afford health insurance. By raising corporate taxes, the entire package is delivered with about $300 billion in additional revenue to reduce the deficit.

Just over one-tenth the size of Biden’s initial 10-year plan, the $3.5 trillion rainbow of progressive aspirations in his Build Back Better initiative, the new package abandons earlier proposals for universal preschool, paid family leave and expanded child care assistance. That plan collapsed after conservative Sen. Joe. Manchin, DW.Va. opposed it and said it was too expensive and would increase inflation.

Non-partisan analysts said the “deflationary act” would have little effect on rising consumer prices.

Republicans said the measure would hurt an economy that policymakers are struggling to prevent from slipping into recession. He said the bill’s business taxes would hurt job creation and send prices skyrocketing, making it harder for people to cope with the nation’s worst inflation since the 1980s.

“Democrats have already robbed American families once with inflation, and now their solution is to rob American families a second time,” Senate Minority Leader Mitch McConnell, R-Ky. argued. He said the spending and tax hikes in the law would kill jobs, while inflation and climate change would have a negligible impact.

In the ordeal imposed on all budget bills like this one, the Senate endured an overnight “vote-a-rama” of rapid-fire amendments. Schumer, progressives, Manchin and the hawkish centrist Sen. Kirsten Sinema, D-Ariz., each tested the Democrats’ ability to negotiate a compromise.

Progressive Sen. Bernie Sanders, I-Vt. offered amendments to further expand the law’s health benefits, and those efforts failed. Most of the votes were forced by Republicans, and many were designed to make Democrats look soft on US-Mexico border security and gasoline and energy spending, and like bullies who want to strengthen IRS tax law enforcement.

Before debate began on Saturday, the bill’s cap on prescription drug prices was watered down by a partisan member of the Senate. Elizabeth McDonough, who answers questions about the chamber’s practices, said a provision that would impose expensive penalties on drugmakers whose prices exceed inflation for private insurers should be dropped.

The bill’s main protection is for the 180 million people with private health coverage they buy through work or on their own. Under a special procedure that allows Democrats to pass their bill with a simple majority, without the usual 60-vote margin, its provisions must focus more on dollars-and-cents budget numbers than policy changes.

But the emphasis on the language of their drug prices remained. They include letting Medicare negotiate what it pays for drugs for its 64 million elderly recipients, penalizing manufacturers for over-inflation of drugs sold to Medicare, and capping out-of-pocket drug costs to beneficiaries at $2,000 a year.

The bill also covers Medicare patients’ costs of insulin, an expensive diabetes drug, at $35 a month. Democrats wanted to raise the $35 cap on private insurers but that ran afoul of Senate rules. Most Republicans voted to remove it from the package, although in a sign of the political strength of health spending, seven GOP senators joined Democrats in trying to preserve it.

The final cost of the measure was being recalculated to reflect late changes, but overall it would raise more than $700 billion over a decade. The money would come from a 15% minimum tax on a handful of corporations with annual profits above $1 billion, a 1% tax on companies that repurchase their own stock, a boost to IRS tax collections from lower drug costs, and government savings.

Cinema forced Democrats to drop a plan to prevent wealthy hedge fund managers from paying less than the personal income tax rate on their earnings. She also joined with other Western senators to win $4 billion to fight drought in the region.

Several Democratic senators joined a GOP-led effort to exclude some companies from the new corporate minimum tax.

The package follows Biden’s pledge not to raise taxes on those making less than $400,000 a year.

The compromise between the progressives and champions of fossil fuels and the coal industry in their state was most evident on the energy and environmental side.

Clean energy will be boosted with tax credits for buying electric vehicles and building solar panels and wind turbines. There will be home energy rebates, funding to build factories that produce clean energy technologies, and money to promote climate-friendly farming practices and reduce pollution in minority communities.

Manchin won billions to help power plants reduce carbon emissions, as well as requiring more government auctions for oil drilling on federal lands and waters. Party leaders have promised to push separate legislation this fall to speed up permits for energy projects, which Manchin wants to include a nearly completed natural gas pipeline in his state.

Copyright © 2022 by The Associated Press. All rights reserved.

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