By Lisa Mascaro
WASHINGTON (AP) — The largest investment ever made in the United States to fight climate change. A hotly contested cap on prescription drug costs for Medicare beneficiaries. A new minimum corporate tax to ensure that big business pays its share.
And the remaining billions to pay off federal deficits.
All told, the Democrats’ “Cut Inflation Act” may not do much to bring inflationary price hikes under control immediately. But the package that won final congressional approval in the House on Friday and is heading to the White House for President Joe Biden’s signature will touch countless American lives with longstanding party proposals.
Not as robust as Biden’s initial ideas to rebuild America’s public infrastructure and family support systems, the compromise of health care, climate change and deficit reduction strategies is also a stunning election year turnaround. , a smaller but not substantial product brought back to political life after collapsing last year.
Only Democrats supported the package, while Republicans lined up against it. Republicans deride the 730-page bill as a big government overreach and particularly criticize its $80 billion investment in the IRS to hire new employees and tackle tax evasion.
Voters will have to settle the issue in the November election, when congressional control is decided.
Here’s what’s in the estimated $740 billion package — made up of $440 billion in new spending and $300 billion to cut deficits — which is due to be approved in the House on Friday.
REDUCED PRESCRIPTION DRUG COSTS
Launching a long-sought goal, the bill would allow the Medicare program to negotiate certain prescription drug prices with pharmaceutical companies, saving the federal government some $288 billion over the 10-year budget window.
The result is expected to lower drug costs for seniors, including a $2,000 cap for seniors buying prescriptions at pharmacies.
The revenue collected would also be used to provide free vaccinations to senior citizens, who are now among the few not guaranteed free access, according to a summary document.
Seniors would also see the price of insulin capped at $35 per month.
HEALTH INSURANCE PAYMENT ASSISTANCE
The bill would expand subsidies given during the COVID-19 pandemic to help some Americans who purchase health insurance themselves.
Under previous pandemic relief, additional aid was due to expire this year. But the bill would allow aid to continue for three more years, reducing insurance premiums for some 13 million people who buy their own health care policies through the Affordable Care Act.
LARGEST US INVESTMENT “BY FAR” IN CLIMATE CHANGE
The bill would inject nearly $375 billion over the decade into climate change strategies that Democrats say could put the country on a path to lower greenhouse gas emissions. by 40% by 2030, and “would represent the largest climate investment in US history, by far.”
For consumers, this means tax rebates for the purchase of electric vehicles – $4,000 for the purchase of used vehicles and up to $7,500 for new ones, eligible for households with an income of 300,000 $ or less for couples, or single people with an income of $150,000 or less.
Not all electric vehicles will be fully eligible for tax credits, thanks to requirements that components must be manufactured and assembled in the United States.
There are also tax breaks for consumers to go green. One is a 10-year consumption tax credit for renewable energy investments in wind and solar.
For businesses, the bill provides $60 billion for a clean energy manufacturing tax credit and $30 billion for a wind and solar energy production tax credit, considered ways to stimulate and support industries that can help reduce the country’s dependence on fossil fuels.
The bill also grants tax credits for nuclear power and carbon capture technology that oil companies such as Exxon Mobil have invested millions of dollars to advance.
The bill would impose a new levy on excess methane emissions from oil and gas drilling while giving fossil fuel companies access to more leases on federal lands and waters.
A late addition pushed by Sen. Kyrsten Sinema, D-Arizona, and other Democrats in Arizona, Nevada and Colorado would designate $4 billion to fight a mega-drought in the West, including conservation efforts in the Colorado River Basin, which nearly 40 million Americans depend on for drinking water.
HOW TO PAY ALL THIS?
One of the bill’s biggest revenue streams is a new 15% minimum tax on corporations that make more than $1 billion in annual profits.
It’s a way to crack down on some 200 U.S. companies that avoid paying the standard 21% corporate tax rate, including some that end up paying no tax at all.
The new minimum corporate tax would take effect after the 2022 tax year and would raise more than $258 billion over the decade.
A new 1% excise tax will also be imposed on share buybacks, bringing in some $74 billion over the decade.
Savings from Medicare negotiations with drug companies are expected to yield $288 billion over 10 years, according to the nonpartisan Congressional Budget Office.
The bill respects Biden’s original pledge not to raise taxes on families or businesses earning less than $400,000 a year.
Yet money is also raised by strengthening the IRS to fight tax evaders. The bill proposes an $80 billion investment in taxpayer services, enforcement and modernization, which is expected to generate $203 billion in new revenue, a net gain of $124 billion over the decade.
EXTRA MONEY TO PAY DEFICITS
With some $740 billion in new revenue and about $440 billion in new investment, the bill promises to allocate about $300 billion of the difference to deficit reduction.
Federal deficits soared during the COVID-19 pandemic when federal spending skyrocketed and tax revenues plummeted as the country’s economy went through shutdowns, closed offices and other massive changes.
The nation has seen deficits rise and fall in recent years. But overall federal budgeting is on an unsustainable path, according to the Congressional Budget Office, which recently released a new report on long-term projections.
WHAT IS REMAINING?
The package, a far cry from the sweeping Build Back Better program envisioned by Biden, remains a sizable undertaking and, along with COVID-19 relief and the 2017 GOP tax cuts, is among the most important bills Congress has passed since. years.
As Congress passed and Biden signed into law a $1 trillion bipartisan infrastructure bill for highways, broadband and other investments that were part of the White House’s original vision, the other top priorities Democrats slipped away.
Gone, for now, are free pre-kindergarten and community college plans, as well as the nation’s first paid family leave program that would have provided up to $4,000 a month for births, deaths and other critical needs. The Enhanced Child Care Credit that provided $300 a month during the pandemic is also allowed to expire.
Associated Press writer Matthew Daly contributed to this report.