House Passes Sweeping Climate, Tax and Health Care Package (2023)


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The passage of the bill, which appeared dead just weeks ago, caps a Democratic effort to deliver on major components of President Biden’s agenda.

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House Passes Sweeping Climate, Tax and Health Care Package (1)

By Emily Cochrane

(Video) House passes sweeping climate, health and tax package

WASHINGTON — Congress gave final approval on Friday to legislation that would reduce the cost of prescription drugs and pour billions of dollars into the effort to slow global warming, as House Democrats overcame united Republican opposition to deliver on key components of President Biden’s domestic agenda.

With a party-line vote of 220 to 207, the House agreed to the single largest federal investment in the fight against climate change and the most substantial changes to national health care policy since passage of the Affordable Care Act. The bill now goes to Mr. Biden for his signature.

The legislation would inject more than $370 billion into climate and energy programs aimed at helping the United States cut greenhouse gas emissions by an estimated 40 percent below 2005 levels by the end of the decade. It would also extend for three years subsidies to help people afford insurance under the Affordable Care Act, as well as fulfill a long-held Democratic goal to lower the cost of prescription drugs by allowing Medicare to directly negotiate prices and capping recipients’ annual out-of-pocket drug costs.

The package would be financed largely by tax increases, including a new tax on company stock buybacks and a 15 percent corporate minimum tax for wealthy companies. Initial analyses of the legislation found that it could reduce the nation’s deficit by as much as $300 billion over a decade.

It is most likely the last major legislative package to become law before the November elections, handing Democrats a significant victory before they defend their narrow congressional majorities. The vote came just days after Mr. Biden signed both a $280 billion industrial policy bill that will shore up America’s chip manufacturing in an effort to better compete with China and legislation that will expand medical benefits for veterans exposed to trash fires that burned on military bases, the latest in a string of legislative successes.

“Today is really a glorious day for us,” Speaker Nancy Pelosi, Democrat of California, said on Friday. She declared that “this legislation is historic, it’s transformative and it is really a cause for celebration.”

Republicans slammed the bill, saying it was excessive and too expensive at an uncertain economic moment. Representative Kevin McCarthy, Republican of California and the minority leader, used a nearly hourlong speech on the House floor to make the case for electing a Republican majority that would work to undo the policies.

What’s in the Inflation Reduction Act

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A substantive legislation. The $370billion climate,taxand health care packagethat President Biden signed on Aug. 16 could have far-reaching effectson the environmentand the economy. Here are some of the key provisions:

(Video) Democrats move closer to sweeping tax, climate change and health care bill

Auto industry. Until now, taxpayers could get up to $7,500 in tax credits for purchasing an electric vehicle, but there was a cap on how many cars from each manufacturer were eligible. The new law will eliminate this capand extend the tax credit until 2032; usedcars will also qualify for a credit of up to $4,000.

Energy industry. The legislation will provide billions of dollars in rebatesfor Americans who buy energy efficient and electric appliances. Companies will get tax credits for building new sources of emissions-free electricity. The package also includes $60 billion set aside to encourage clean energy manufacturing and penalties for methane emissions that exceed federal limits starting in 2024.

Health care. For the first time, Medicare will be allowed to negotiate with drugmakers on the price of some prescription medicines. The law also extends subsidies available under the Affordable Care Act, which were set to expire at the end of the year, for an additional three years.

Tax code. The law introduces a new 15 percent corporate minimum taxon the profits companies report to shareholders, applying to companies that report more than $1 billion in annual income but are able to use credits, deductions and other tax treatments to lower their effective tax rates. The legislation will bolster the I.R.S. with an investment of about $80 billion.

Low-income communities. The package includes over $60 billion in support of low-income communities and communities of color that are disproportionately burdened by climate change. Among the provisions are grants for zero-emissions technology and money to mitigate the negative effects of highways and other transportation facilities.

Fossil fuels industry. The legislation requires the federal government to auction off more public space for oil drillingand expand tax credits for coal and gas-burning plants that rely on carbon capture technology. These provisions are among those that were added to gain the support of Senator Joe Manchin III, Democrat of West Virginia.

(Video) Senate Passes Sweeping Health Care And Climate Bill

West Virginia. The law is expected to bring big benefits to Mr. Manchin’s state, the nation’s second-largest producer of coal, makingpermanent a federal trust fund to support miners with black lung disease and offeringnew incentives to build wind and solar farms in areas where coal mines or coal plants have recently closed.

“I urge my colleagues to remember this day — remember this day because it will be the last time the House operates so recklessly and irresponsibly,” he said.

Torunn Sinclair, a spokeswoman for House Republicans’ campaign arm, said that “vulnerable Democrats continue to show voters they have no clue how to fix the economic disaster they created.”

But Democrats hope to capitalize on the win, emphasizing that they have delivered on long-held promises, even though it could take years to see the benefits from some of the longer-term proposals.

“They’re seeing Democrats as the party that’s actually getting this stuff done and everyone else is trying to start a culture war or attacking the F.B.I.,” said Representative Tim Ryan, an Ohio Democrat who is running for the Senate. “The contrast in the last few months is becoming very stark.”

Approval of the legislation capped an arduous stretch of negotiations for Democrats. With Republicans unanimously opposed, Democrats focused on their own ranks and worked to find a compromise that would not only appease a left flank eager to pass an expansive plan that would transform the nation’s social safety net, but that also would secure the votes of key centrist holdouts reluctant to endorse billions in new spending as inflation climbed.

Democrats used the fast-track budget reconciliation process to navigate the legislation through both chambers, allowing them to sidestep the filibuster — the same tactic they used last year with the $1.9 trillion pandemic aid package. Cut entirely out of the process, Republicans fumed that the climate and health bill would do little to address inflation and criticized it for raising taxes and federal spending. (Many economists agree the bill is likely to dampen inflation, though modestly and not immediately.)

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The bill falls far short of the $2.2 trillion Build Back Better Act, which Ms. Pelosi wrangled to passage in the House in November. That bill included far more substantial changes to the tax code, as well as billions of dollars to create a federal paid leave program, provide support for most families with children, and expand housing, home care and public education. The social spending plan’s fate was initially tied to passage of the $1 trillion bipartisan infrastructure law, and it teetered repeatedly on the brink of failure, as centrists in the Democratic Party demanded that the party whittle it down.

But the package stalled in the Senate a month later, when Senator Joe Manchin III of West Virginia, a centrist Democrat, rejected it as exorbitant and walked away from talks. Though negotiations between Mr. Manchin and Senator Chuck Schumer, Democrat of New York and the majority leader, resumed this spring, they faltered again last month, leaving Democrats to grapple with the prospect of enacting just a health care package.

(Video) Senate passes Inflation Reduction Act, Biden's sweeping health care and climate bill

“You’re reminded of how difficult legislating is even when you have big majorities, never mind when you have a tiny one,” said Representative Richard Neal of Massachusetts, the chairman of the House Ways and Means Committee, who like other Democrats dangled the possibility of revisiting more tax increases and other priorities should the party retain and expand their majority.

Every congressional Democrat ultimately backed the final product, called the Inflation Reduction Act. It was largely shaped by Mr. Manchin, Mr. Schumer and Senator Kyrsten Sinema, Democrat of Arizona, another centrist holdout, who resisted many of the tax increases most of her colleagues championed. The package jettisoned most of the spending that would have gone toward expanding the nation’s social safety net, and reined in plans to undo elements of the 2017 tax law that passed during the Trump administration.

But the bill will help move the Biden administration toward fulfilling its pledge to cut emissions roughly in half by 2030, though scientists and climate activists warn that more congressional and executive action will be needed to meet that goal. The legislation aims to use the tax code to encourage consumers and companies to purchase and invest in electric vehicles, solar panels and other renewable energy sources like wind or solar power, as well as the facilities needed to build more of those items domestically.


House Passes Sweeping Climate, Tax and Health Care Package (3)

The package includes millions of dollars in climate resiliency funding for tribal governments and $4 billion to address droughts in the Western states, and it introduces penalties for fossil fuel companies with excessive emissions of methane, a greenhouse gas.

As part of a longstanding effort to expand health care access across the country, Democrats included a three-year extension of expanded health care subsidies first approved last year as part of the $1.9 trillion pandemic aid law. The bill would also give seniors access to free vaccines, allow Medicare to negotiate the cost of up to 10 prescription drugs initially, beginning in 2026, and cap annual out-of-pocket drug costs for Medicare recipients at $2,000. It would also cap insulin costs at $35 per month for enrollees.

To pay for the package, the measure would impose a new 15 percent minimum tax on companies that report more than $1 billion in book income to their shareholders, the profits that companies report to shareholders, and it would institute a 1 percent tax on corporate stock buybacks beginning in 2023. The legislation would also invest $80 billion in the I.R.S., which Democrats say would bolster the historically underfunded agency and help with cracking down on wealthy tax evaders and corporations. That provision is estimated to raise $124 billion over a decade.

Republicans have trained much of their ire on the provision, warning that it amounts to a heavy-handed attack on lower- and middle-class taxpayers. In response to the criticism, Janet L. Yellen, the Treasury secretary, instructed the agency this week to ensure that there would not be an uptick in audit rates for small businesses or families that make less than $400,000.

“This legislation represents a dramatic turnaround from misguided efforts in the last 18 months to pass sweeping, ill-designed legislation that tried to accomplish too many things through budget gimmicks,” said Representative Jared Golden of Maine, the only Democrat who opposed the $2.2 trillion package in November, in a statement.

Some progressives acknowledged that they were disappointed that many of the priorities had been left out. But on Capitol Hill, they argued that without their influence, the package would have shrunk further and that it could now be used as a promise for what a larger Democratic majority could accomplish in Washington.

“We insisted that this Democratic majority deliver,” said Representative Pramila Jayapal, Democrat of Washington and the chairwoman of the Congressional Progressive Caucus, speaking at a jubilant news conference. She added, “We just need a couple of Democratic senators to make the rest of that agenda a reality.”

Catie Edmondson, Lisa Friedman and Alan Rappeport contributed reporting.


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