Democrats hope the bill, which they want to push through the Senate despite united opposition from Republicans, will boost their chances in the Nov. 8 midterm elections, when Republicans are likely to regain a majority in at least least one House of Congress.
The package, called the “Inflation Reduction Act,” is a significantly scaled-down version of an earlier bill backed by Democratic President Joe Biden, which was blocked by Senate Democrats Joe Manchin and Kyrsten Sinema because of its excessive cost. lev.
“This is what the American people want,” Senate Majority Leader Chuck Schumer told reporters. “We are prioritizing the middle class, working families, those struggling to reach the middle class, instead of what Republicans are doing: prioritizing those at the very top.”
If the Senate passes the bill, which will likely require a decisive vote by Vice President Kamala Harris, it will send the legislation to the Democratic-controlled House of Representatives, which intends to consider it on Friday, after which Biden could sign it into law.
Republicans have slammed the bill as a “wish list” of spending that they say would hurt an inflation-burdened economy, saying it would kill jobs, raise energy costs and undermine growth at a time when the economy is facing a potential recession.
“The latest fiscal and spending spree of the Democrats is suffering a serious political whiplash,” Republican Senator Chuck Grassley said on Saturday. “The last thing businesses and families need right now are tax hikes and a series of ill-reviewed policies creating even more confusion and uncertainty in the economy.”
About half of Americans – some 49% – support the bill, including 69% of Democrats and 34% of Republicans, according to a Reuters/Ipsos poll conducted Aug. 3-4. The most popular element of the bill is giving Medicare the power to negotiate drug prices, which 71% of respondents support, including 68% of Republicans.
Economists, who say the legislation could help the Federal Reserve fight inflation, don’t expect a big impact on the economy in the coming months.
CLIMATE FOCUS
With $370 billion in climate-focused spending, this bill would become the most significant climate change law ever passed by Congress.
The bill offers businesses and families billions of dollars in incentives to encourage the purchase of electric vehicles and energy-efficient appliances, as well as spur new investments in wind and solar energy that would double the quantity of new clean electricity generation capacity brought online in the United States by 2024, according to the model of the Repeat Project of Princeton University.
This would help put the US on track to meet its pledge to halve its greenhouse gas emissions by 2030 below 2005 levels, pledged at last year’s Glasgow Climate Summit.
Although environmental groups broadly embraced the bill, they pointed out that the compromises reached by Mr. Manchin, who represents West Virginia, a coal-producing region, would prolong the use of fossil fuels in the United States.
These provisions include rules that would only allow the federal government to allow new wind and solar power developments on federal lands when it also auctions drilling rights for oil and natural gas.
DRUG COST
The legislation would reduce drug costs for the government, employers and patients, said Juliette Cubanski, deputy director of the Medicare program at the Kaiser Family Foundation.
“Perhaps the biggest effect would be for people with prescription drug coverage through Medicare,” she said.
A key change is the provision allowing the federal Medicare health plan for elderly and disabled Americans to negotiate lower prices for prescription drugs.
The pharmaceutical industry claims that price negotiation would stifle innovation. Negotiated prices for 10 of Medicare’s most expensive drugs would apply starting in 2026, with that number increasing until it caps 20 per year in 2029.
The nonpartisan Congressional Budget Office estimates that Medicare would save $101.8 billion over 10 years by negotiating drug prices.
The provision also introduces a $2,000 annual cap on out-of-pocket expenses for the elderly under the Medicare program.
TAX PROVISIONS
The bill also imposes a new excise tax on share redemptions, a late change after Sinema raised objections to another provision that would have imposed new levies on carried interest, currently a tax loophole. for hedge fund and private equity financiers. The provision has been abandoned.
The excise tax is expected to generate $70 billion in additional tax revenue annually, according to lawmakers. That’s more than the deferred interest provision was supposed to earn.
A report by the nonpartisan Congressional Budget Office, released before the latest change, estimated that the measure would reduce the federal deficit by a net $101.5 billion over the next decade.
That was about a third of the $300 billion deficit reduction projected by Senate Democrats, but excluded a projected $204 billion revenue gain from increased enforcement by the Internal Revenue Service.