Democrats in the United States have passed a $430 billion bill aimed at climate change, lowering drug prices and raising some corporate taxes, in a major victory for President Joe Biden.
The package, known as the Inflation Relief Act, passed the Senate on Sunday by a 51-50 party line vote, with Vice President Kamala Harris casting the tiebreaking vote.
“The Senate is making history,” said an excited Senate Majority Leader Chuck Schumer, after Democrats cheered and fist pumped in the air as their staff responded to the standing ovation.
“For Americans who have lost faith that Congress can do great things, this bill is for you,” he said. “This bill will change America for decades.”
Schumer said the legislation contained “the boldest clean energy package in American history” that cuts consumer spending on energy and some medicines to fight climate change.
The act sends it to the House of Representatives for a vote, likely on Friday when representatives plan to reconvene briefly during summer recess. They are expected to pass it, which would then send the bill to the White House for Biden’s signature. In a statement, Biden said he looks forward to signing the bill into law.
Democrats hope the bill’s passage will help the party’s House and Senate candidates in the Nov. 8 midterm elections at a time when Biden is suffering from weak public approval ratings amid high inflation.
Senators engaged in a round-the-clock marathon of voting that began on Saturday and lasted till late Sunday. Democrats shot down about three dozen Republican amendments designed to torpedo the law.
Conservative lawmakers have criticized the bill as wasteful spending, with top Republican Senator Mitch McConnell accusing Democrats of voting for it to “double down on their fiscal disaster.”
‘Largest climate investment in US history’
The law aims to reduce carbon emissions and shift consumers to green energy, cut prescription drug costs for the elderly, and tighten taxes on corporations and the wealthy.
About $375 billion will be invested over a decade in policies to fight climate change, including renewable energy generation and tax incentives for consumers to buy new or used electric vehicles.
That is broken down to include $60bn for clean energy production tax credits and $30bn for wind and solar production tax credits to boost and support industries that can help reduce the country’s dependence on fossil fuels. The bill also provides tax credits for nuclear power and carbon capture technologies that oil companies such as Exxon Mobil have invested millions of dollars in.
For consumers, there are tax breaks as an incentive to go green. One is a 10-year consumer tax credit for renewable energy investments in wind and solar. There are tax incentives for purchasing electric vehicles, including a $4,000 tax credit for used electric vehicle purchases and $7,500 for new ones.
Overall, Democrats believe the strategy could put the country on track to reduce greenhouse gas emissions by 40 percent by 2030 and “represent the largest climate investment in US history”.
“This is a historic achievement,” said Gregory Wetson, president of the American Council on Renewable Energy.
“This represents the first time in the United States that we’ve seen Congress make a serious effort to address a climate problem. And this bill, the programs that it includes, we’ve been supporting for years and I think will have a huge impact by allowing the clean energy transition that we know we need to address climate change,” he told Al Jazeera. .
Lower prescription drug costs
On the healthcare front, the bill would allow the Medicare program to negotiate prescription drug prices with pharmaceutical companies for the first time, saving the federal government about $288bn over a 10-year budget window.
That new revenue will be plowed back into lower drug costs for seniors, including a $2,000 out-of-pocket cap for older adults who buy prescriptions from pharmacies. It also extends expiring subsidies that help 13 million people afford health insurance.
The final cost of the bill was being recalculated, but overall it would raise more than $700bn over a decade. The money would come from a 15 percent minimum tax on a handful of corporations with annual profits above $1bn, a 1 percent tax on companies that repurchase their own stock, increased IRS tax collections and government savings from lower drug costs.
With about $740bn in new revenue and about $440bn in new investment, the bill promises to leave a gap of about $300bn in deficit reduction.
The latest package is more than a tenth of the size of Biden’s initial 10-year, $3.5 trillion rainbow of progressive aspirations in his Build Back Better initiative. It abandons earlier proposals for universal preschool, paid family leave and expanded child care assistance. The plan collapsed after conservative Senator Joe Manchin, a Democrat, opposed the plan, saying it was too expensive and would increase inflation.
Nonpartisan analysts said the inflation-reducing legislation would have little effect on rising consumer prices.
Republicans said the bill would weaken 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,” McConnell, the Senate minority leader, argued.
He said the spending and tax hikes in the legislation would eliminate jobs and have a negligible impact on inflation and climate change.