Senate Democrats voted on the Inflation Reduction Act that would aim to address climate change, the high cost of prescription pharmaceuticals, and reduce the deficit by almost $300 billion after weeks of haggling to resurrect the heart of their election-year agenda.
Senators voted on amendments to the Democrats’ massive spending bill that addresses taxes, the environment, and health care late on Saturday night and early on Sunday.
Since none of the 50 Republican senators voted for the bill, it was enacted under the budget reconciliation procedure, which required the support of all 50 Democrats and one tie-breaking vote from Vice President Harris. Additionally, it limits the bill’s provisions to those that directly affect federal expenditure and revenue.
Here is a list of some of the things that were and weren’t in the Democratic measure.
The Inflation Reduction Act 2022: Combating Global Warming
The greatest federal clean energy investment in American history would be made, totaling more than $300 billion, in energy and climate policy.
Although many environmental and climate activists favor the package, it falls short of the $555 billion that Democrats had first demanded.
The transportation and electricity generation are addressed in this section of the plan, which also includes $60 billion for expanding renewable energy infrastructure in the production of things like solar panels and wind turbines.
It also contains a number of tax breaks for people on things like buying electric cars and improving the energy efficiency of their homes.
Democrats claim that the plan will reduce greenhouse gas emissions by 40% by the end of the decade, down from the 50% Biden had initially intended for, based on 2005 levels.
The Inflation Reduction Act 2022: Reducing The Price Of Prescription Medications
Making prescription medications more inexpensive is one of the health changes addressed by The Inflation Reduction Act, although there are certain restrictions.
A landmark provision of the bill permits the federal health secretary to haggle annually over the cost of some pricey medications for Medicare.
However, this won’t affect all prescription medications or all patients, and it won’t happen right away. In 2026, 10 medications covered by Medicare will be subject to the agreements; in 2029, that number will rise to 20 medications.
The law caps Medicare beneficiaries’ out-of-pocket expenses for prescription drugs at $2,000 beginning in 2025.
Additionally, the Affordable Care Act includes a three-year extension of healthcare subsidies that were first included in a pandemic relief bill last year. According to government estimates, this extension helped the majority of people with coverage through the federal health insurance exchange keep their monthly premiums at $10 or less.
The Inflation Reduction Act 2022: The Tax Reform
For businesses with incomes of $1 billion or more, the The Inflation Reduction Act establishes a minimum tax of 15%, generating more than $300 billion in revenue.
However, a part that reduced the carried interest tax deduction was cut. Kyrsten Sinema of Arizona consented to sign the package if this provision, which would have altered how private equity income is taxed, was removed. Democrats argued it would have brought in $14 billion in income.
Instead, a 1% excise tax on stock repurchases was put in place; it has the potential to generate around five times as much money as the carried interest policy. Although it wouldn’t go into effect until next year, this has led to concerns that some corporations will hurry to buy back stock before 2023.