As it turns out, the Democrats’ agenda in Congress is It’s just that most of them died.
The surprise deal announced last month by Sen. Joe Manchin (D-WV) has now finally passed the Senate and looks likely to pass the House later in August. It’s much smaller than Democrats’ grand dreams when President Joe Biden takes office in 2021. But the bill, known as the Inflation Reduction Act, still went a long way. It contains historic provisions to combat climate change and take steps to achieve a long-standing Democratic policy goal: to have Medicare negotiate the prices of some prescription drugs.
The bill could affect which car you buy and how you heat your home. For some people buying personal health insurance, this will prevent prices from rising significantly this year. If you don’t pay taxes, the IRS is more likely to find out.
Here’s what’s in the bill, and what it means for American life in the years ahead.
Biggest effort to tackle climate change – ever
The Reducing Inflation Act would be the biggest thing the US has done to fight climate change, with climate accounting for the lion’s share of the bill’s spending: nearly $370 billion.
That’s smaller than last fall’s House version, and a fraction of Biden’s original vision for climate. Senate Democrats claim the investments are enough to reduce climate pollution by about 40 percent. (That’s not as dramatic as it sounds; the decline is smaller than when emissions peaked in 2005. Even without new policies, the U.S. is still on track to reduce emissions by 20 percent by 2030.)
These policies are generally aimed at driving American consumers and industry away from fossil fuels. The lion’s share of funding goes to tax credits and rebates for a range of renewable technologies – solar panels, wind turbines, heat pumps, energy efficiency and electric vehicles. It includes incentivizing companies to make more of this technology in the United States. The bill would also invest in energy efficiency at industrial sites to help reduce the industry’s massive carbon footprint, while also devoting some money to forest and coastal restoration.
The bill, if passed, would break new ground in other problematic areas of the climate crisis. It set the first methane fee, punishing fossil fuel companies for over-emitting a particularly potent climate pollutant.Another big chunk of funding helps vulnerable communities monitor and clean up pollution, and enhance their resilience to climate impacts.
In addition to reducing climate pollution, clean energy investments can also curb inflation. According to Robbie Orvis, senior director of energy innovation, higher energy prices have contributed to roughly one-third of the 9 percent rise in the overall consumer price index over the past year. By helping Americans reduce their dependence on fossil fuels, these spending helped ease the global oil crisis and cut consumer spending.
Helping people pay for longer health insurance
The climate portion of the bill has received the most attention. But the bill also includes some important health care measures, including support for expanding the Affordable Care Act.
One way Obamacare expanded health care coverage was by creating a marketplace for people to buy insurance and providing federal subsidies to help lower- and middle-income families afford it. Families at 400% of the federal poverty level (approximately $106,000 for a family of four) can get federal help to pay their premiums. After that, they were alone.
But in 2021, Congress removed those caps, saying instead that no household should pay more than 8.5% of their income for Medicare. This change affects people who make up 400% to 600% of the federal poverty level the most (up to $159,000 per year for the same family of four). The changes also make some 7 million people eligible for free health insurance under the ACA, as Vox’s Dylan Scott previously reported.
However, these policies will end by the end of the year, leaving millions facing higher healthcare costs in the future. The Inflation Reduction Act extends these subsidies for three years until the end of 2025, ensuring that people do not face such a surge for now. The extension is expected to cost $64 billion, according to projections from the Congressional Budget Office.
Negotiating prescription drug prices
Democrats have been telling voters for years that they will pursue policies that reduce the cost of prescription drugs, only to be blocked by Republicans from meeting their demands. The bill allows them to finally fulfill a campaign promise by enabling Medicare to negotiate prescription drugs — a major change that could result in significantly lower costs for a small subset of drugs.
Medicare will be able to negotiate a handful of drugs, as outlined in the bill, and those new prices will go into effect in 2026. By 2026, Medicare will only be able to address the cost of 10 drugs; this will increase to 20 drugs over time. The drugs in question will be identified based on a series of criteria, including their price.
These negotiations are expected to save a lot of money for Medicare because prices are currently set by manufacturers.
Senator Elizabeth MacDonough signed the Medicare portion of the bill but rejected a provision that would lower the cost of prescriptions for Americans’ private insurance, which requires Democrats’ approval to move forward with the settlement process.
As a result of the decision, drug companies will be required to issue rebates if they try to raise drug prices faster than inflation. But the requirement only applies to drug prices for Medicare beneficiaries, not those currently covered by private insurance.
MPs also went on strike other Pays $35 per month for out-of-pocket insulin for those with private insurance. Democrats were able to keep the $35 monthly insulin cap for those covered by Medicare.
Give the IRS more money
In fact, raising taxes politically can be difficult. So Democrats are taking a different approach in a way: Getting people to pay more in taxes they already owe. The Reducing Inflation Act agreement increases IRS funding so it can step up enforcement and recover unpaid taxes. Senate Democrats, according to the Congressional Budget Office, estimate It will collect $203 billion by investing $80 billion in the IRS over ten years. It’s also part of a proposal from a Biden administration in 2021.
Internal Revenue Service estimated From 2011 to 2013, the “tax gap” — the difference between what people pay in taxes and what they owe — reached $441 billion a year, or about 16 percent of total tax liability for that year.
one 2019 Papers Natasha Sarin, now at the Treasury Department, and economist Larry Summers, see a tax shortfall of $7.5 trillion from 2020 to 2029, most of which is related to the The rich correspond. They calculated that people who made more than $10 million a year had an underreporting rate five times higher than those who made less than $200,000 a year. Senate Democrats said any funding to the IRS would not be used to increase taxes on people earning less than $400,000 a year.
Closing loopholes to allow companies to pay more taxes
The agreement also includes a 15 percent minimum tax on companies with profits over $1 billion. Senate Democrats point out that while the current corporate tax rate is 21%, dozens of large companies, including AT&T, Amazon and ExxonMobil, pay much less than that. Originally, the provision was expected to raise $313 billion, Although new spin-offs have been addedo Won the vote of Senator Kyrsten Sinema (D-AZ), which gives manufacturers and private equity firms more leeway over the new minimum tax rate. The changes could reduce revenue from the measure.
1% GST on corporate share buybacks, No tax is currently payable at all. It is estimated that the consumption tax will be substantially increased $73 billion in revenue.
Update, August 5th, 12:30pm: This story has been updated to reflect changes in tax policy in the legislation.
Update, August 6, 2:30pm: This story has been updated to reflect the MP’s decision and how drug prices will be affected.
Update, August 7th, 3:20pm: This story has been updated to reflect the Senate passage of the Inflation Reduction Act.