House Speaker Nancy Pelosi, D-Calif., speaks to reporters Friday during her weekly press conference ahead of the House’s vote on the Inflation Relief Act of 2022. Although not everything will be achieved Democrats wanted the $737 billion bill to focus on slowing climate change, lower health care costs, a 15% minimum corporate tax, a 1% stock buyback fee and improved IRS enforcement.
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House Speaker Nancy Pelosi, D-Calif., speaks to reporters Friday during her weekly press conference ahead of the House’s vote on the Inflation Relief Act of 2022. Although not everything will be achieved Democrats wanted the $737 billion bill to focus on slowing climate change, lower health care costs, a 15% minimum corporate tax, a 1% stock buyback fee and improved IRS enforcement.
Chip Somodevilla/Getty Images
The House of Representatives gave final approval to Congress on Friday for a spending bill that will try to address climate change, the high cost of prescription drugs and reduce the deficit by about $300 billion. It was passed without any Republican support and now goes to President Biden for his signature.
House Speaker Nancy Pelosi, D-Calif., called it a “glorious day,” adding, “We sent to the president’s desk a monumental bill that will truly be for the people.”
Senate Democrats revived the bill, a year in the making, with the last few weeks of frenetic negotiations mainly between Majority Leader Sen. Chuck Schumer, D-N.Y., and Sen. Joe Manchin of West Virginia. The last major hurdle was a marathon voting session last weekend in the Senate.
The legislation was passed through the budget reconciliation process, which meant that all 50 Democrats in the Senate and a tie-breaking vote from Vice President Harris were needed, as none of the 50 Republican senators voted for the bill. He also limited the measures in the bill to those that directly change federal spending and revenue.
Democrats have argued that the measure will address voters’ top economic concern, calling it the Inflation Reduction Act. Republicans argue that the new spending will worsen inflation. However, the nonpartisan Congressional Budget Office says the bill has a “negligible” effect on inflation in 2022 and 2023.
House Minority Leader Kevin McCarthy, R-Calif., called the bill “tone deaf” before Friday’s vote. “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,” McCarthy added.
Overall, the bill is a much watered-down solution to what many Democrats, including President Biden, had originally sought.
“This bill is far from perfect. It’s a compromise. But that’s often how progress is made,” Biden said at the White House last month. “My message to Congress is this: This is the strongest bill you can pass.”
After the House passed it on Friday, Biden said he would sign the “historic legislation” next week.
Here’s a look at some of what was included in the Democrats’ bill and what wasn’t.
You can see the entire 730-page bill here.
Addressing climate change
More than $300 billion will be invested in energy and climate reform, the largest federal clean energy investment in US history.
The bill has support from many environmental and climate activists, but falls short of the $555 billion that Democrats had originally sought.
This part of the bill includes electricity transmission and generation and includes $60 billion to increase renewable energy infrastructure in production such as solar panels and wind turbines.
It also includes some tax credits for individuals for things like electric vehicles and making homes more energy efficient.
The bill, according to Democrats, would cut greenhouse gas emissions by 40%, based on 2005 levels, by the end of the decade, which is less than the 50% that Biden had originally targeted.
“It puts us within close enough distance that further executive action, government and local government efforts, and private sector leadership can get us to the finish line by 2030,” said Jesse Jenkins of Princeton University, who leads The REPEAT project analyzing the impact. of government action on climate.
Reducing the cost of prescription drugs
As for health reforms, the bill undertakes to make prescription drugs more affordable — but there are some limitations.
The bill includes a landmark measure that allows the federal health secretary to negotiate the prices of some expensive drugs each year for Medicare.
But it won’t affect every prescription drug or every patient, and it won’t take effect quickly. The negotiations will go into effect for 10 drugs covered by Medicare in 2026, increasing to 20 drugs in 2029.
The part of the bill that sought to cap the price of insulin — a drug that is prohibitively expensive in the U.S. compared to other countries — to $35 a month was ruled out by the Senate lawmaker, who ruled that the cap could apply to Medicare. . , a government program, but not for private insurance. So Democrats split the measure between Medicare and private insurance — but Republicans ultimately blocked the measure on private insurance.
The parliamentarian also ruled that a measure in the bill to force drug companies to offer rebates if prescription prices exceed inflation was not fully compliant with budget reconciliation rules; she said it may apply to Medicare patients but not to those with private insurers.
The bill puts a $2,000 cap on out-of-pocket prescription drug costs for people on Medicare, effective in 2025.
There’s also a three-year extension to health care subsidies in the Affordable Care Act originally passed in a pandemic relief bill last year, credited by the government with keeping premiums at $10 a month or lower for the vast majority of people covered by the federal health insurance exchange.
This helps millions of Americans avoid rising health care costs.
Tax reform
The legislation creates a minimum tax of 15% for corporations that have $1 billion or more in revenue, bringing in more than $300 billion in revenue.
One part that was cut, however, is that which narrowed the carried interest tax loophole. Arizona Kyrsten Sinema agreed to sign the bill if the measure, which would have changed the way private equity income is taxed, was cut. Democrats said it would have brought in $14 billion in revenue.
Instead, a 1% excise tax on share purchases was introduced and could bring in roughly five times more revenue than the carried interest measure. However, it will not take effect until next year, raising expectations for a rush of purchases by some companies before 2023 begins.
A major part of the bill that has not been included, due to opposition from West Virginia Senator Joe Manchin, is extending the child tax credit. Manchin argued last year that the cost of issuing the loan was too high, but progressives, including Vermont Sen. Bernie Sanders, continued to push for its inclusion in the bill.