After more than a year of negotiations, Senate Democrats have successfully passed a major budget bill that includes massive investments to slow climate change, as well as important new health care and tax policies.
“Today — after more than a year of work — the Senate is making history,” Senate Majority Leader Chuck Schumer said in remarks after the vote. “This bill will usher in the era of affordable clean energy in America. It’s a game changer. It’s a turning point. And it’s been a long time coming.”
Dubbed the Reducing Inflation Act, the bill is a landmark achievement for Democrats, and a central part of President Joe Biden’s policy agenda has finally come to fruition. Although it’s far smaller than the “Rebuild Better Social Spending and Climate Legislation” Democrats had hoped to pass, the measure still includes a huge investment in clean energy tax credits, a major change in Medicare’s role in drug price negotiations, and New minimum tax corporations for many.
All told, the bill is expected to include more than $400 billion in spending and bring in tens of billions of dollars in revenue, significantly reducing the deficit. The legislation could also reduce inflation slightly in the long run, according to economic experts who spoke with Vox.
Democrats passed the bill by a 51-50 vote along party lines, with Vice President Kamala Harris breaking the tie, going through a grueling process known as “vote rama.” As part of that process, Republicans could make amendments to the bill and try to force votes on issues that could make Democrats uncomfortable, including more funding for enforcement and immigration restrictions at the southern border. They successfully pushed through a reform that created a spin-off for private equity firms in a new tax proposal.
Lawmakers approved the bill months before the November midterm elections, when Democrats will grapple with the typical backlash typically faced by the president’s party and demand that voters remain in power. The passage of the legislation — which has made progress without any Republican support — is a much-needed achievement for Democrats that could help them make the case.
what’s on the bill
The main provisions of the Act focus on the following three areas:
- health care, Including allowing Medicare to negotiate prescription drug prices and extending ACA subsidies for three years to 2025. The bill also caps out-of-pocket costs for insulin for Medicare beneficiaries to $35 a month and requires drug companies to offer Medicare rebates if they raise drug prices faster than beneficiaries’ inflation.
- tax, Including a new 15% corporate minimum tax, funding for IRS enforcement, and a new 1% excise tax on stock buybacks. There are exceptions to the corporate minimum tax for certain manufacturers and private equity firms, which basically means they will be able to pay less.
- climate, Includes clean energy tax credits, environmental justice grants, and drought funding.
Vox staff gets a detailed look at how everyone works here.
The next step for the bill is a vote in the House of Representatives, where Democrats need a majority to join, given their narrow House advantage.
so far, some moderate members Previous opponents of a budget bill that did not include restoring state and local income tax (SALT) deductions said they would still support the legislation. Progressive members, who have opposed scaling back in the past, have also widely voiced their support. Support from both groups suggests the package is likely to pass.
“When they send it to us, we pass it,” House Speaker Nancy Pelosi said in a statement. Press conference in late July.
The House of Representatives is scheduled to reconvene this weekend, when lawmakers return to consider the bill from the August recess. If they approve, the legislation will go to Biden’s desk, where he will sign it into law.
Update, August 7th, 3:20pm: This story has been updated to reflect that the Inflation Reduction Act has passed the Senate.