House passes Inflation Reduction Act, sending climate and health bill to Biden

House Democrats on Friday approved a sprawling bill to lower
prescription drug costs, address global warming, raise taxes on some
billion-dollar corporations, and reduce the federal deficit, sending
to President Biden the long-delayed, last component of his economic
agenda in time for this year’s elections.

The 220-to-207 vote marked the culmination of roughly a year and a
half of debate that at times pitted the party’s lawmakers against each
other, revealing Democrats’ fierce ideological divides. In the end,
though, the often-fractious caucus banded together to overcome
unanimous Republican opposition, adopting a measure to improve
Americans’ finances originally premised on Biden’s 2020 campaign
pledge to “build back better.”

The bill, known as the Inflation Reduction Act of 2022, secures the
largest-ever investment to tackle climate change, with roughly $370
billion dedicated to curbing harmful emissions and promoting green
technology. The bill also moves to cap and lower seniors’ drug costs
while sparing about 13 million low- and middle-income Americans from
increases in their insurance premiums that otherwise would occur next
year.

To pay for the spending, Democrats rely on revisions to tax laws,
including a new minimum tax on some billion-dollar corporations that
now pay nothing to the U.S. government. That change — along with
another new tax on stock buybacks and fresh funding for the Internal
Revenue Service to pursue tax cheats — is expected to cover the costs
of the bill. Democrats say it also can reduce the federal deficit by
about $300 billion, but they have yet to furnish a final fiscal
analysis.

The winding, tumultuous path to passage began soon after Biden entered
the White House. As the pandemic savaged the U.S. economy last spring,
the president put forward a series of policy blueprints that aimed to
re-envision the role of government in Americans’ lives. Biden’s plans
left virtually no portion of the country untouched, seeking to rethink
tax laws, rehabilitate the nation’s aging infrastructure, and spend
massive sums on health care, education and climate.

Democrats eventually adopted a $1.9 trillion American Rescue Plan to
respond to the coronavirus last March, then secured bipartisan support
to invest $1.2 trillion in the nation’s roads, bridges, pipes, ports,
and internet connections last fall. But the president’s party warred
with itself in the months to follow over the final piece of Biden’s
agenda, which targeted federal safety-net benefits and longer-term
challenges such as global warming.

It took a string of uncomfortable public clashes — seemingly
intractable fights between party liberals and moderates including Sen.
Joe Manchin III (W.Va.) — before Democratic leaders reached a delicate
truce. The deal chiefly brokered between Manchin and Senate Majority
Leader Charles E. Schumer (N.Y.) last month forced party lawmakers to
accept what many saw as agonizing compromises, as they had no choice
but to jettison plans to expand Medicare, offer free universal
prekindergarten, and authorize a raft of new aid for low-income
families.

But Democrats on Friday still hailed the accomplishment, however
unlikely it once might have seemed, by stressing it delivers on many
of their past promises.

“It’s not anything that anybody, three months ago, would have said is
a possibility,” House Speaker Nancy Pelosi (D-Calif.) said in an
interview, later emphasizing on the chamber floor that the bill
“expands the promise of health and financial security for generations
to come.”

Democrats erupted in raucous applause as soon as they reached the
votes required for passage. Shortly after that, Biden tweeted that he
would sign it into law next week, saying: “Today, the American people
won. Special interests lost.”

House Republicans, meanwhile, mounted a stiff, united opposition. They
attacked the measure as a tax increase on families, even though it
does not raise individuals’ rates. And in speeches, they insisted it
would allow the government to hire tens of thousands of new IRS agents
to “snoop around in your bank account, your Venmo, your small
business, and then the government will shake you down for every last
cent,” as House Minority Leader Kevin McCarthy (R-Calif.) said.

McCarthy’s comments — at one point describing the “guns” in the
possession of the tax agency — misstated the full purpose of the
proposed IRS funds. Still, he described the fuller spending measure as
the “largest tone-deaf bill” he had ever seen.

“Today the people’s house should be working to answer our country’s
call to address the rising price of gas, groceries, and just about
anything else,” McCarthy said.

For Democrats, the vote Friday clinched an achievement they long have
seen as essential toward preserving their majorities in November.
Anything less risked angering voters who were sold in 2020 on the
promise that Democrats would pursue dramatic economic change. The
victory particularly emboldened the party’s liberals, many of whom
promised Friday to continue fighting for the provisions abandoned in
the name of compromise.

“We insisted the Democratic majority deliver,” said Rep. Pramila
Jayapal (D-Wash.), the leader of the Congressional Progressive Caucus,
a major force in crafting the original $2 trillion proposal last year.

“We have won the argument for the president’s full economic agenda
that we passed in the Build Back Better bill,” she said at a news
conference. “Now we just need a couple more Democratic senators to
make the rest of that agenda a reality.”

Democrats now face a test in selling the accomplishment at a moment of
mixed economic signals and vast political uncertainty. Inflation is
trending down, yet prices are still high, while the threat of a
recession looms large despite recent strong growth in the labor
market. Biden’s popularity is low in some polls, even after Democrats
notched a wide array of legislative victories in recent weeks,
including laws to restrict gun purchases, expand veterans’ health care
and manufacture much-needed computer chips.

Adding to the challenge, a new analysis released Friday by the Penn
Wharton Budget Model offered a mixed review of the bill: The report
found it would reduce the deficit by about $264 billion over the next
decade, less than some Democrats hoped, with an effect on inflation
that is “statistically indistinguishable from zero.”

“Americans are suffering. Are we here debating how to alleviate that
suffering? No,” said Rep. Jason T. Smith (Mo.), the top Republican on
the House Budget Committee, adding the bill would not “put out the
fire of inflation.”

Republicans have suggested in recent days that a GOP majority in the
next Congress could try to roll back the legislation, much as it tried
repeatedly to do to the Affordable Care Act adopted under President
Barack Obama in 2009. Rep. Steve Scalise (R-La.), the House minority
whip, pledged this week that his party would soon be “rolling out an
agenda that will reverse” the bill.

But Democrats seemed to welcome such a threat. In a briefing with
reporters on Thursday, a senior White House official said the outcome
would help the party hone its new message to voters: Democrats are
helping ordinary Americans, while Republicans are extremists beholden
to special interests and former president Donald Trump.

Pelosi, meanwhile, told The Washington Post that the upcoming
elections would offer Democrats a “big contrast” with the GOP. She
later added: “This is the path we’re on. The Republicans want to take
us off this path.”

The Inflation Reduction Act for the first time allows the U.S.
government to negotiate the price of some medicines on behalf of
seniors on Medicare — a novel system set to take effect in 2026. The
bill also caps these seniors’ annual out-of-pocket prescription
expenses at $2,000 a year beginning in 2025 and limits insulin co-pays
to $35 starting in 2023 for Medicare patients.

Taking aim at drug manufacturers, the proposal further imposes
penalties on those that raise the price of Medicare beneficiaries’
medicines faster than the rate of inflation. While the “inflation
rebate” does not apply to prescriptions written for Americans on
private insurance — a casualty of the way Democrats moved the bill in
the Senate — lawmakers see the measure as a major victory after years
of staunch pharmaceutical industry opposition.

“For as long as I have been running for office, people have been
coming to me with concerns about the price of prescription drugs. The
fact I can say, ‘We have heard you, we have taken a step forward,’ is
important,” said Rep. Abigail Spanberger (D-Va.), a moderate running
in a competitive race this November.

On climate change, the bill includes $161 billion in new tax credits
to incentivize clean electricity and about $80 billion to encourage
consumers to purchase new or used electric vehicles and improve the
energy efficiency of their homes. It also approves $1.5 billion to cut
down on methane, a potent greenhouse gas.

A number of Republicans took to the floor Friday to lambaste
Democrats’ programs to respond to global warming. Rep. Lauren Boebert
(Colo.) at one point said lawmakers were “sacrificing American
families at the altar of climate change.”

In total, though, Democrats stressed their climate-related spending
would reduce emissions by 40 percent below 2005 levels by the end of
the decade. And they pointed to a raft of extreme weather events as
they made the case for aggressive action.

“All of the experts are saying we’re very close to the point of no
return. If we don’t do something soon, we might not be able to save
the planet,” said Rep. Robert C. “Bobby” Scott (D-Va.), chairman of
the Education and Labor Committee.

To win Manchin’s vote, however, Democrats also agreed to mandate new
oil and gas leasing in the Gulf of Mexico and off the coast of Alaska,
while backing a future bill to streamline permitting for pipelines and
other infrastructure. The concessions troubled some lawmakers,
including Rep. John Yarmuth (D-Ky.), who expressed alarm that
Democrats had catered too much to Manchin and another moderate
holdout, Sen. Kyrsten Sinema (D-Ariz.).

“What bugs me to this day is that ultimately Kyrsten Sinema and Joe
Manchin are going to get credit for doing something where they put
their own interest in front of everybody else’s,” Yarmuth, the leader
of the House Budget Committee, said in an interview.

Only eight months earlier, though, it seemed unfathomable that
Democrats might pass any bill at all — stymied by divisions that saw
Manchin walk away from talks in December.

The battle began in the spring after Biden introduced the proposal
known as the American Families Plan. Soon, Democrats on Capitol Hill
began translating the president’s vision into a bill that could be
passed under the process known as reconciliation, which in the Senate
allowed the party to overcome a GOP filibuster. Congressional budget
leaders — Yarmuth along with Sen. Bernie Sanders (I-Vt.) — eventually
clinched an outline that allowed Democrats to spend up to $3.5
trillion on their agenda.

In the months to follow, every major House committee produced reams of
pages of legislative text toward the massive spending bill, which
Democrats likened to the “Great Society” reforms enacted under Lyndon
B. Johnson — an analogy Biden himself favored. Their resulting
proposal aimed to expand Medicare benefits, invest billions of dollars
in child care and free prekindergarten, authorize new paid family and
medical leave, and raise taxes on wealthy Americans and corporations.

But their ambitions quickly collided with the political reality.
Liberals led by Jayapal favored sizable new federal investments while
the party had rare control of Congress and the White House. But they
clashed with moderates, including Manchin and Sinema, who took a more
cautious fiscal view. Without all 50 Senate Democrats, the party had
no way to shepherd their bill through the chamber, leaving the debate
at a standstill.

The tensions came to a head in late September, as failed negotiations
stalled the entirety of Biden’s legislative agenda, including his
infrastructure bill. That prompted a rare intervention from Biden, who
made a personal appeal to his party on Capitol Hill to find common
ground.

House Democrats eventually settled on a $2 trillion package, which
they adopted over GOP opposition in November. But Manchin scuttled it
a month later out of concern it might worsen inflation, infuriating
liberals, who felt the party had been held hostage by a sole outlier.
Even Biden, who once preached compromise, expressed outrage at the
collapse, sparking days of public sniping between the White House and
Manchin.

Talks resumed this spring between the moderate West Virginian and
Schumer, a set of intensely private discussions that often seemed on
the verge of another disappointment. Even as Democrats shaved billions
of dollars, and shelved some of their most prized plans to aid
low-income Americans, Manchin remained troubled by its cost — and at
one point, last month, walked away from climate and tax policies he
had once supported.

But Schumer and Manchin ultimately forged a deal by the end of the
month, opening the door for the Senate to adopt it this month.
Reflecting on the compromises Democrats made on the eve of the House
vote, Pelosi said in an interview that she had urged her members to
“respect the bill for what it does” rather than “make judgments about
it for what it does not.”

“But live to negotiate further,” she added.

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