WASHINGTON — After months of grueling negotiations, Democrats will push for a climate, tax and health care package to salvage key elements of President Biden’s domestic agenda.
The legislation, while falling short of the ambitious $2.2 trillion “Building Back Better Act” passed by the House of Representatives in November, achieves several long-term Democratic goals, including tackling the toll of climate change on a rapidly warming planet, Take steps to lower prescription costs and revise some tax laws to make them fairer.
Here’s what’s in the final package:
This is America’s largest investment in slowing global warming.
The bill includes the largest spending the federal government has ever made to slow global warming and reduce demand for fossil fuels, a major contributor to climate change.
It will invest nearly $400 billion over 10 years in tax credits designed to steer consumers toward electric vehicles and prompt power companies to switch to renewable energy sources such as wind or solar.
Energy experts say the measure will help the United States cut greenhouse gas emissions by about 40 percent from 2005 levels by the end of the decade. That puts the Biden administration nowhere close to meeting its goal of cutting emissions by roughly half by 2030. Scientists say more needs to be done to help prevent the planet from warming to dangerously high global temperatures, but Democrats see it as an important first step after decades of inaction.
Meanwhile, Democrats agreed to some fossil fuel and drilling terms as a concession to Sen. Joe Manchin III of West Virginia, a diehard in a conservative state that relies heavily on coal and natural gas.
The measure will secure new oil drilling leases in the Gulf of Mexico and Cook Bay in Alaska. It would expand tax credits for carbon capture technologies that allow coal- or gas-fired power plants to continue to operate with lower emissions. If the Home Office plans to approve new wind or solar projects on federal land, it will force the Home Office to continue holding auctions for fossil fuel leases.
Tax credits include $30 billion to accelerate production of solar panels, wind turbines, batteries, and critical mineral processing; $10 billion to build facilities to produce products such as electric vehicles and solar panels; and passage of the Defense Production Act > $500 million for heat pumps and critical minerals processing.
There is $60 billion to help disadvantaged areas disproportionately affected by climate change, including $27 billion to create the first national “green bank” to help drive investment in clean energy projects—especially in poor communities. The bill would also force oil and gas companies to pay up to $1,500 a ton to address excessive leaks of methane, a powerful greenhouse gas, and would cancel a 10-year offshore mandate enacted by President Donald J. Trump Wind power lease suspension period. .
Medicare can negotiate the price of prescription drugs directly, reducing costs.
For the first time, Medicare will be allowed to negotiate the price of prescription drugs with drugmakers in a proposal expected to save the federal government billions of dollars. This will initially apply to 10 drugs starting in 2026, before expanding to include more in the next few years.
Opponents argue that the plan would stifle innovation and the development of new treatments by cutting into the profits drug companies can put into their operations, while some liberals have expressed frustration that the policy is too slow to implement. If the package becomes law as expected, it would be the largest expansion of federal health policy since the passage of the Affordable Care Act.
The program limits seniors’ out-of-pocket costs for prescription drugs to $2,000 a year and ensures seniors have access to free vaccines. Lawmakers also included rebates if prices rose more than inflation. (However, the top Senate rule official said the penalties may only apply to Medicare, not private insurers.)
In a series of quick amendment votes on Sunday morning, Republicans successfully challenged the $35 cap on insulin prices for privately insured patients, forcing its removal. However, a separate proposal to cap insulin prices for Medicare patients to $35 a month remains unchanged.
Expanded health care subsidies will be extended.
Lawmakers agreed to expand the scope of subsidies under the Affordable Care Act as part of the $1.9 trillion pandemic aid law passed by Democrats last year. The proposal lowers premiums for nearly all Americans who rely on the plan market, either by making some plans free for low-income people or offering some support to higher-income people who previously received no assistance.
The package, which could pass the Senate as early as Sunday, would extend the subsidies now due to expire at the end of the year for another three years. Democrats fear a backlash in November’s midterm elections if the subsidies are allowed to lapse.
Wealthy companies will see tax hikes, and the IRS will get funding.
The tax proposal was crafted by Arizona Democratic Sen. Kyrsten Sinema, who resisted her party’s push to raise taxes on the country’s wealthiest companies and individuals.
To avoid a rate hike, which Ms. Sinema opposed, Democrats instead decided to make a more complicated change to the tax code: a new corporate minimum tax of 15% on profits that companies report to shareholders. It applies to companies that report more than $1 billion in annual revenue in their financial statements but are also able to use credits, deductions and other tax treatments to reduce their effective tax rate.
Ms Sinema did protect a deduction in favor of manufacturers, a change she successfully demanded before she pledged to move forward with legislation on Thursday.
She also forcibly repealed a proposal backed by Democrats and Republicans that would narrow the tax break used by the hedge funds and private equity industry to ensure a lower tax rate than entry-level workers. She has pledged to seek separate legislation outside the budget, but that would require the support of at least 10 Republicans.
The legislation would also support the IRS with about $80 billion in investments, hoping to recoup additional tax revenue by cracking down on wealthy corporations and wealthy tax evaders.
Republicans, historically opposed to funding the agency, argue it would increase audits and scrutiny of low-income households. The IRS, in turn, dismissed such concerns, telling Congress that “these resources are in no way intended to enhance audit scrutiny of small businesses or middle-income Americans.”
