It doesn’t seem possible. After floundering for most of the past year and challenging emboldened voters to make them pack their bags, Democrats in Congress have produced important legislation to address pressing issues and perhaps even improve people’s lives.
Many Americans tune out Congress for good reason. The legislative process is cryptic and no institution in the country has a higher BS ratio. Still, every once in a while, Congress produces something that gets attention — as it did now.
The first key bill is the CHIPS+ Act, which Congress passed on July 28 and President Joe Biden will soon sign. This bill provides subsidies and other powerful incentives to revive semiconductor manufacturing in the United States, which was once the world leader in chip production but is now a minor player. Detractors on both the left and right denounce these $52 billion in subsidies as “corporate welfare,” and they’re not entirely wrong. Yet virtually all countries with significant chip production subsidize it, leaving the United States little choice but to do the same if it wants to retain a stake in one of the most important industries of the future.
Right behind the CHIPS+ Act is the “Lower Inflation Act,” which includes pieces of the Democrats’ “make it better” legislation that failed last year. The IRA famously shocked almost everyone who follows Congress because there were no public signals that a BBB reboot was in the works. But Democratic spoiler Joe Manchin, the centrist senator from West Virginia who said he could not vote for the BBB bill last year, is working with other Senate Democrats to tailor a package of green energy incentives and other elements that do not have require deficit spending or impose large new taxes at a time when the economy is slowing sharply.
WASHINGTON, DC – JULY 28: Senate Majority Leader Chuck Schumer (D-NY) speaks to reporters during a news conference at the US Capitol on July 28, 2022 in Washington, DC. Schumer discussed the CHIPS legislation and science, as well as his recent agreement with Sen. Joe Manchin (D-WV) on the Inflation Relief Act of 2022. (Photo: Drew Angerer/Getty Images)
The IRA includes $369 billion for investments in wind, solar and other green energy, making it the largest congressional effort to address climate change to date. It would expand health care subsidies for some Affordable Care Act participants and allow Medicare to negotiate the prices of some drugs with manufacturers, passing some of the savings on to seniors. New revenue will come from a 15% minimum tax on the income of large companies and increased tax collection aimed mainly at the wealthy tax evaders. The bill also requires the executive branch to expedite approvals for natural gas pipelines and other types of fossil fuel infrastructure.
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Completely missing from the IRA is any of the welfare programs that Biden wanted as part of his expansive Build Better program last year, such as free preschool, free community college, child care subsidies and affordable housing, and more -generous tax credit for children. In fact, you can’t even describe the IRA as a Biden bill, even though he supports it. Biden has never called for faster resolution of fossil fuels and is actually moving in the opposite direction, through regulations. And he has never publicly abandoned his welfare plans. The minimum corporate tax would raise about $31 billion in new revenue annually, but the IRA includes no increase in the corporate tax rate and no new taxes on the wealthy, as Biden wants.
Biden ‘ready to claim big climate win’
Manchin has enormous influence over the Democratic agenda because of the party’s one-vote majority in the Senate. Democrats can bypass the filibuster on a budget-related bill, but only if every Democrat in the Senate votes in favor. Manchin opposed the BBB legislation last year because its huge $2 trillion cost would increase the deficit. Another Democratic opponent, Sen. Kirsten Sinema of Arizona, said she would not vote for a bill with big new tax increases.
U.S. Sen. Kristen Sinema, D-Arizona, speaks during a hearing on the nominations of Shalanda Young for director and Nani Coloretti for deputy director of the Office of Management and Budget at the U.S. Capitol in Washington, DC on February 1, 2022. (Photo by BONNIE CASH / POOL / AFP) (Photo by BONNIE CASH/POOL/AFP via Getty Images)
IRAs will actually reduce the deficit by a bit, and the corporate minimum tax will only affect large companies that use extensive tax breaks to lower their tax bills. The green energy package will at least fund some Democratic priorities, making it a reasonable compromise.
Political analysts believe the bill could pass and give Biden a much-needed achievement to tout as the midterm elections approach.
“After a year of disappointing Build Back Better failures, President Joe Biden’s administration is poised to claim a major climate victory with the likely passage of the Deflation Act,” Eurasia Group wrote in a July 29 analysis. Eurasia estimates the chances of passage at 75%.
There will be a lot of grumbling. The Lib Dems don’t like concessions to fossil fuel producers. Some Republicans supported the CHIPS+ Act on the supposed condition that Democrats would not pursue a reconciliation bill like the IRA. They feel burned, but if the Democrats end up voting unanimously for the IRA, it won’t matter.
If the bill does pass, it would allow Biden to tout action on climate change that a majority of Americans support without having to explain the accompanying welfare programs, which are more controversial. Liberal Democrats insist that Americans want more government help for everyday problems, but the evidence is insufficient. When the Extended Child Tax Credit expired at the end of last year, for example, there were no valid claims for its reinstatement.
The IRA may even give Biden political leeway to walk away from other controversial moves, such as student debt forgiveness. Biden said he supports up to $10,000 in student debt forgiveness, but only if Congress does so through legislation. There are no votes for it, so liberal Democrats are pushing for Biden to write off student debt through executive action. With no other accomplishments to claim in the run-up to midterms, Biden may feel he has to act on student debt. But with a few big legislative wins, maybe not.
Biden’s approval rating is still a dismal 39%, but as I argued two weeks ago, the bottom may be in. Gasoline prices have fallen more than 70 cents a gallon in the past six weeks, and other types of inflation may be improving as well. Meaningful action in Congress won’t cause a wave of euphoria to wash over voters, but it might soften the gloom a bit. Not everything is broken, always.
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