Aug. 7, 2022, 1:33 p.m. ETAug. 7, 2022, 1:33 p.m. ET
Emily Cochrane and Lisa Friedman
A petrochemicals refinery unit in Port Arthur, Texas. Legislation on the verge of Senate passage would be the largest single U.S. investment in fighting climate change.
WASHINGTON — After months of painstaking negotiations, Democrats are set to push through a climate, tax and health care package that would salvage key elements of President Biden’s domestic agenda.
The legislation, while falling far short of the ambitious $2.2 trillion Build Back Better Act that the House passed in November, fulfills multiple longstanding Democratic goals, including countering the toll of climate change on a rapidly warming planet, taking steps to lower the cost of prescription drugs and to revamping portions of the tax code in a bid to make it more equitable.
Here’s what’s in the final package:
It is the largest single American investment to slow global warming.
The bill includes the largest expenditures ever made by the federal government to slow global warming and to reduce demand for the fossil fuels that are primarily responsible for causing climate change.
It would invest nearly $400 billion over 10 years in tax credits aimed at steering consumers to electric vehicles and prodding electric utilities toward renewable energy sources like wind or solar power.
Energy experts said the measure would help the United States to cut greenhouse gas emissions about 40 percent below 2005 levels by the end of this decade. That puts the Biden administration in striking distance of meeting its goal of cutting emissions roughly in half by 2030. Far more will be needed to help keep the planet from warming to dangerously high global temperatures, scientists said, but Democrats considered it a momentous first step after decades of inaction.
At the same time, Democrats agreed to a number of fossil fuel and drilling provisions as concessions to Senator Joe Manchin III of West Virginia, a holdout from a conservative state that is heavily dependent on coal and gas.
The measure would assure new oil drilling leases in the Gulf of Mexico and Alaska’s Cook Inlet. It would expand tax credits for carbon capture technology that could allow coal or gas-burning power plants to keep operating with lower emissions. And it would mandate that the Interior Department continue to hold auctions for fossil fuel leases if it plans to approve new wind or solar projects on federal lands.
The tax credits include $30 billion to speed the production of solar panels, wind turbines, batteries and critical minerals processing; $10 billion to build facilities to manufacture things like electric vehicles and solar panels; and $500 million through the Defense Production Act for heat pumps and critical minerals processing.
There is $60 billion to help disadvantaged areas that are disproportionately affected by climate change, including $27 billion for the creation of what would be the first national “green bank” to help drive investments in clean energy projects — particularly in poor communities. The bill would also force oil and gas companies to pay fees as high as $1,500 a ton to address excess leaks of methane, a powerful greenhouse gas, and it would undo a 10-year moratorium on offshore wind leasing established by President Donald J. Trump.
Medicare could directly negotiate the price of prescription drugs, pushing down costs.
For the first time, Medicare would be allowed to negotiate with drugmakers on the price of prescription medicines, a proposal projected to save the federal government billions of dollars. That would apply to 10 drugs initially, beginning in 2026, and then expand to include more drugs in the following years.
Opponents argue that the plan would stifle innovation and the development of new treatments by cutting into the profits that drug companies can plow into their business, while some liberals expressed frustration that the policy would be too slow to take hold. Should the package become law, as expected, it would be the largest expansion of federal health policy since passage of the Affordable Care Act.
The package would cap the out-of-pocket costs that seniors pay annually for prescription drugs at $2,000, and would ensure that seniors have access to free vaccines. Lawmakers also included a rebate should price increases outpace the rate of inflation. (Top Senate rules officials, however, said that penalty could apply only to Medicare, not private insurers.)
Republicans successfully challenged the inclusion of a $35 price cap on insulin for patients on private insurance during a rapid-fire series of amendment votes early Sunday morning, forcing its removal. But a separate proposal that caps the price of insulin at $35 per month for Medicare patients remained intact.
Expanded health care subsidies would be extended.
As part of the $1.9 trillion pandemic aid law that Democrats muscled through last year, lawmakers agreed to broaden subsidies available under the Affordable Care Act. That proposal lowered premiums for almost every American who relies on the program’s marketplace, either making some plans free for lower-income people or extending some support to higher-income people who previously did not receive any aid.
The package, which could pass the Senate as early as Sunday, would extend those subsidies, now set to expire at the end of the year, for an additional three years. Democrats fear a backlash in the November midterm elections if they allow the subsidies to lapse.
Wealthy corporations will see a tax hike, while the I.R.S. will get a funding boost.
The tax proposals were shaped by Senator Kyrsten Sinema, Democrat of Arizona, who resisted her party’s push to increase tax rates on the country’s wealthiest corporations and individuals.
To avoid the rate increase Ms. Sinema opposed, Democrats instead settled on a far more complex change to the tax code: a new 15 percent corporate minimum tax on the profits companies report to shareholders. It would apply to companies that report more than $1 billion in annual income on their financial statements but that are also able to use credits, deductions and other tax treatments to lower their effective tax rates.
Ms. Sinema did protect a deduction that would benefit manufacturers, a change she successfully demanded before committing on Thursday to moving forward with the legislation.
She also forced the removal of a proposal supported by Democrats and Republicans that would have narrowed a tax break used by both hedge fund and private equity industries to secure lower tax rates than their entry-level employees. And she committed to pursuing separate legislation outside of the budget package, but that would require at least 10 Republicans to support it.
The legislation would also bolster the I.R.S. with an investment of about $80 billion, hoping to recover additional tax revenue by cracking down on wealthy corporations and wealthy tax evaders.
Republicans, who have historically opposed shoring up funds for the agency, have argued that this will increase audits and scrutiny on lower-income households. The I.R.S., in turn, has dismissed the concern, telling Congress that “these resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans.”
Source: nytimes.com
