August 7, 2022
“The yeas are 50; the nays are 50. The Senate being equally divided, the vice president votes in the affirmative, and the bill, as amended, is passed.”
So spoke Vice President Kamala Harris this afternoon as, after an all-night session, her vote passed the Inflation Reduction Act of 2022 through the Senate. It will now go to the House, where it is expected to pass.
The measure devotes more than $300 billion to addressing climate change and energy reform, the largest federal investment in climate change in U.S. history. It will make it easier and cheaper to get electric cars and to heat and cool homes without fossil fuels—Environmental Protection Agency administrator Michael Regan says families will save an average of $500 a year on energy costs—while also creating new jobs in these fields.
It extends for three years the subsidies for healthcare under the Affordable Care Act that Congress originally passed during the pandemic.
It will invest about $300 billion toward reducing the deficit.
The money for these programs will come from several places. The bill will lower the cost of certain prescription drugs by enabling the government to negotiate the prices of expensive drugs for Medicare, a policy most nations already have. It also caps the cost of insulin at $35 a month for people on Medicare (Republicans stripped out of the bill a similar protection for those on private insurance).
It makes corporations making $1 billion or more in income pay a 15% minimum tax, and it will tax stock buybacks at 1%.
And it will invest more than $100 billion in enforcing the existing tax laws on the books, laws that are increasingly ignored as the IRS has too few agents to conduct audits of large accounts.
Senate Democrats passed the measure by using the process of budget reconciliation, which covers certain revenue measures and which cannot be filibustered. Although the pieces of the measure have bipartisan support in the country, every Republican voted against the bill; Senate minority leader Mitch McConnell (R-KY) called it an “economic disaster” that will exacerbate inflation (the nonpartisan Congressional Budget Office disagrees).
Republicans used reconciliation to pass their own signature measure in December 2017: the Tax Cuts and Jobs Act of 2017. This law cut the corporate tax rate from about 35% to 21% with the now-traditional Republican expectation that such a cut would spur economic growth, although the Congressional Budget Office estimated the measure would add about $2 trillion to the national debt over ten years. The Tax and Jobs Act did not increase employment or wages as the Republicans expected; those actually dipped slightly as corporations used the tax cuts primarily to buy back their stock, making it more valuable. That measure was the signature piece of legislation during the Trump administration.
In contrast, in the past 18 months, Democrats have rebuilt the economy after the pandemic shattered it, invested in technology and science, expanded the North Atlantic Treaty Organization (NATO) to stand against Russia’s invasion of Ukraine, eliminated al-Qaeda leader Ayman al-Zawahiri, pulled troops out of Afghanistan, passed the first gun safety law in almost 30 years, put a Black woman on the Supreme Court, reauthorized the Violence Against Women Act, addressed the needs of veterans exposed to toxic burn pits, and invested in our roads, bridges, and manufacturing. And for much of this program, they have managed to attract Republican votes.
Now they are turning to lowering the cost of prescription drugs—long a priority—and tackling climate change, all while lowering the deficit.
Washington Post columnist E.J. Dionne noted accurately today that what these measures do is far more than the sum of their parts. They show Americans that democracy is messy and slow but that it works, and it works for them. Since he took office, this has been President Joe Biden’s argument: he would head off the global drive toward authoritarianism by showing that democracy is still the best system of government out there.
At a time when authoritarians are trying to demonstrate that democracies cannot function nearly as effectively as the rule of an elite few, he is proving them wrong.
This is a very big deal indeed.
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Notes:
https://www.brookings.edu/research/searching-for-supply-side-effects-of-the-tax-cuts-and-jobs-act/
https://www.washingtonpost.com/nation/2022/08/07/insulin-cap-budget-congress/
https://www.cbsnews.com/news/senate-passes-inflation-reduction-act-vote/
Brava, Heather, and thank you for this brilliant overview of today’s highlights! I feel terrible though that because of the significance of this news you didn’t give yourself a Sunday off to rest and get an early night ... perhaps tomorrow.
A perfect conclusion.
“At a time when authoritarians are trying to demonstrate that democracies cannot function nearly as effectively as the rule of an elite few, he is proving them wrong.
This is a very big deal indeed.”
Congratulations to the Democrats and to the Biden White House. It is not perfect, but it is a big step forward. And it got done despite the political land mines. A good start to the upcoming season.