WASHINGTON — The Senate passed legislation on Sunday that would make the most significant federal investment in history to combat climate change and lower the cost of prescription drugs, as Democrats rallied to push through key pieces of the domestic agenda. President Biden against the united Republican opposition.
The measure, large elements of which appeared dead just weeks ago amid Democratic divisions, would inject more than $370 billion into climate and energy programs. Overall, the bill could allow the United States to cut greenhouse gas emissions by about 40 percent below 2005 levels by the end of the decade.
It would achieve Democrats’ longtime goal of reducing prescription drug costs by allowing Medicare to directly negotiate drug prices for the first time and capping the amount recipients pay out-of-pocket for drugs each year at $2,000 . The measure would also extend larger premium subsidies for health coverage for low- and moderate-income people under the Affordable Care Act for three years.
And it will be paid for through significant tax increases, mostly on large corporations, including establishing a 15 percent corporate minimum tax and imposing a new tax on company share buybacks.
Originally billed as Building Better, a multi-trillion-dollar cradle-to-grave social security plan at the behest of the Great Society, Democrats in recent months scaled back the legislation and renamed it the Deflation Act. It was projected to reduce the federal deficit by up to $300 billion over a decade, although it remains to be seen whether it will counter inflation or reduce costs for Americans in the long run.
The measure’s passage was a major victory for Mr. Biden and Democrats, who are fighting to retain their slim majorities in the House and Senate in November’s midterm congressional elections. Faced with unanimous opposition from Republicans, who used filibusters to block many items on their domestic agenda, Democrats took full advantage of the Senate’s special budget rules to push as many of them as possible with the support of all 50 members of their faction.
The final score was 51 to 50, with Vice President Kamala Harris casting the deciding vote. The House plans to break from its summer recess to reconvene briefly on Friday to flesh out the measure, sending it to Mr. Biden for his signature.
“Today, Senate Democrats sided with American families over special interests, voting to lower the cost of prescription drugs, health insurance, and everyday energy costs and reduce the deficit while making the richest corporations finally are paying their fair share,” Mr. Biden said in a statement.
The Senate vote was the culmination of more than a year of hard-fought negotiations between the party’s progressive core, which demanded a transformation plan that would touch every aspect of American life, and the conservative wing, which sought a much narrower package. Those talks played out against the backdrop of a 50-50 Senate where any defections could kill the effort — and almost did, several times.
“The caucus is mostly focused on what’s in the bill — not what’s not in the bill, although we’d all like more — because what’s in the bill is so amazing,” Sen. Chuck Schumer, N.Y. York, the majority leader, said in an interview. “You should have threaded the needle.”
The approval came after a weekend session that included an all-night, 16-hour voting marathon in which Republicans repeatedly tried and failed to defeat the legislation and Democrats rallied to fend off almost all efforts.
Republicans succeeded in pushing through the removal of the $35 cap on insulin prices for patients with private insurance, challenging it as a violation of Senate voting rules that Democrats are sure to use as a political weapon against them ahead of the midterm elections. The cap on insulin prices for Medicare patients remains untouched in the bill, with the potential to help millions of seniors.
As part of his landmark climate and energy initiative, which would put the Biden administration within reach of its goal of roughly halving emissions by 2030, the bill would offer tax incentives to drive consumers to electric vehicles and entice electric companies to renewable energy sources such as wind or solar energy. It also includes millions of dollars in climate resilience funding for tribal governments and Native Hawaiians, as well as $60 billion to help disadvantaged areas disproportionately affected by climate change.
For Democrats, the measure’s passage capped a remarkably successful six-week period that included final approval of a $280 billion industrial policy bill to strengthen American competitiveness with China and the largest expansion of veterans benefits in more than two decades. But unlike those bills, the tax and climate legislation passed the evenly divided Senate along party lines, condemned by Republicans as federal overreach and reckless spending at a time when prices remain high across the country.
The measure fell well short of Mr. Biden’s original vision for the plan and the $2.2 trillion measure that the House of Representatives passed in November. To address the demands and concerns of two opponents, Sens. Joe Manchin III of West Virginia and Kirsten Sinema of Arizona, Democrats dumped billions of dollars on child care, paid leave and public education and set aside plans to repeal key elements of Republican 2017 tax audit.
Republicans could do little to stop passage after Senators Kirsten Sinema and Joe Manchin III said they would support the bill. Credit… TJ Kirkpatrick for The New York Times
But the final package contained a series of proposals that Democrats had worked to push for decades. If passed, it would be the most significant climate legislation ever enacted in the United States, investing hundreds of billions of dollars over 10 years in manufacturing facility tax credits for things like electric vehicles, wind turbines and solar panels, and $30 billion for additional manufacturing tax credits to accelerate domestic production of solar panels, wind turbines, batteries and processing of critical minerals. It would also impose a fee to penalize excessive emissions of methane, a greenhouse gas.
The legislation would allow Medicare to negotiate the price of up to 10 prescription drugs initially, starting in 2026, and would give seniors access to free vaccines. Combined with a three-year extension of expanded health care subsidies first approved last year as part of the $1.9 trillion pandemic relief law, the package represents the biggest change in national health policy since the passage of the Affordable Care Act.
To fund much of the plan, the measure would introduce a new minimum corporate tax of 15 percent that would apply to the profits that companies report in their financial statements to shareholders, known as book earnings. It would impose a new 1 percent tax on corporate stock buybacks starting in 2023. The measure would also pour $80 billion into the IRS to increase the agency’s enforcement power and crack down on wealthy corporations and tax evaders. This provision is estimated to raise $124 billion over a decade.
“When I finish my service in the Senate, I will look back on the passage of this bill as one of the most significant things I’ve had the opportunity to work on,” said Sen. Tina Smith, Democrat of Minnesota and one of the many climate hawks who pushed for legislation.
Republicans in Congress have framed the bill as a spending package with damaging tax increases that will inflict more pain on the nation’s economy at a perilous time. While outside analyzes suggest the legislation will reduce the federal budget deficit by the end of the decade and have a limited impact on federal spending, Republicans continue to label it a “reckless tax and spend.”
“Democrat policies have destroyed the savings, stability and lifestyle that families worked and sacrificed for years to build,” Sen. Mitch McConnell of Kentucky, the minority leader, said Sunday. “The effect of this one-party government is an economic assault on the American middle class.”
It was the second time in less than two years that Democrats were able to push through a sprawling spending package without any Republican support, after passing the $1.9 trillion pandemic relief package last year. As inflation soared in the months after the measure became law, Republicans warned that Democrats were exacerbating the economic stress facing American families by passing the legislation.
The passage of the legislation was a triumph for Sen. Chuck Schumer, the majority leader, ahead of November’s midterm elections. Credit… Haiyun Jiang/The New York Times
Sen. Lindsey Graham of South Carolina, the top Republican on the budget committee, announced Saturday night that he had “thought long and hard about how to explain this to the American people, and all I can tell you is that insanity is defined as doing the same thing and expecting a different result.
But Republicans could do little to stop passage after Mr. Manchin and Ms. Sinema said they would support it. Democrats moved the bill through the special process known as reconciliation that protects budget measures from filibusters.
But the support of Mr. Manchin and Ms. Sinema came at a price.
Mr. Manchin ensured that his coal-mining state’s interests were reflected in the final bill. In addition to securing separate commitments to complete the construction of a natural gas pipeline in West Virginia and voting on a measure to help expedite permitting for energy infrastructure, he fought to include tax credits for carbon capture technology and requirements for new oil drilling leases in Alaska’s Cook Inlet and…
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