WASHINGTON (AP) — The largest investment in the United States to fight climate change. A hard-won cap on prescription drug spending for seniors in the Medicare program. A new corporate minimum tax to ensure big businesses pay their share.
And billions remain to pay the federal deficit.
Overall, the Democrats’ “Low Inflation Act” may not do much to immediately tame inflationary price spikes. But the package, which is headed for final passage in Congress and the White House for President Joe Biden’s signature, will touch the lives of countless Americans with longstanding party proposals.
Not as robust as Biden’s initial ideas for rebuilding America’s public infrastructure and family support systems, the trade-off between health care, climate change and deficit-reduction strategies is also a stunning election-year twist, smaller but not an inconsequential product brought back into political life after collapsing last year.
Only Democrats support the package, with all Republicans expected to vote against it. Republicans derided the 730-page bill as a major overreach of government efforts and directed particular criticism at its $80 billion investment in the Internal Revenue Service to hire new employees and pursue tax laws.
Voters will be left to decide that in the November election, when control of Congress will be decided.
Here’s what’s in the expected $740 billion package — made up of $440 billion in new spending and $300 billion in deficit relief — that is up for final approval Friday in the House.
LOWER PRESCRIPTION DRUG COSTS
Accomplishing a long-sought goal, the bill would allow the Medicare program to negotiate with drug companies the prices of some prescription drugs, saving the federal government about $288 billion over the 10-year budget window.
The result is expected to lower seniors’ drug costs, including a $2,000 cap on older people who buy prescriptions from pharmacies.
The revenue raised will also be used to provide free vaccinations for the elderly, who are now among the few without guaranteed free access, according to a summary document.
Seniors would also have insulin prices capped at $35 a month.
HELP PAYING FOR HEALTH INSURANCE
The bill would expand subsidies provided during the COVID-19 pandemic to help some Americans who buy health insurance on their own.
Under earlier pandemic relief, the extra aid was due to expire this year. But the bill would allow the aid to continue for three more years, lowering insurance premiums for about 13 million people who buy their own health care policies through the Affordable Care Act.
LARGEST US INVESTMENT ‘EVER’ IN CLIMATE CHANGE
The bill would pour nearly $375 billion over the decade into climate change strategies that Democrats say could put the country on a path to reduce greenhouse gas emissions by 40 percent by 2030 and “would represent the largest climate investment in US history, by far.”
For consumers, that means tax credits for buying electric vehicles — $4,000 for used vehicles and up to $7,500 for new ones, eligible for households with incomes of $300,000 or less for couples or single earners of $150,000 or less.
Not all electric vehicles will be fully eligible for the tax credits, thanks to requirements that component parts be manufactured and assembled in the U.S., and more expensive cars costing more than $55,000 and SUVs and trucks costing more than $80,000 dollars are excluded.
There are also tax breaks for consumers to go green. One is a 10-year consumer tax credit for renewable energy investments in wind and solar power.
For businesses, the bill includes $60 billion in clean energy production tax credits and $30 billion in wind and solar production tax credits, seen as ways to stimulate and support industries that can help limit the country’s dependence from fossil fuels.
The bill also provides tax credits for nuclear power and carbon capture technology, which oil companies such as Exxon Mobil have invested millions of dollars in developing.
The bill would impose a new tax 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. Kirsten Sinema, D-Ariz., and other Democrats in Arizona, Nevada and Colorado, would designate $4 billion to combat the mega-drought in the West, including conservation efforts in the Colorado River Basin, which near 40 million Americans rely on drinking water.
HOW ARE WE GOING TO PAY FOR ALL THIS?
One of the biggest revenue-raisers in the bill is a new 15 percent minimum tax on corporations that earn more than $1 billion in annual profits.
It’s a way to squeeze some 200 US companies that avoid paying the standard 21% corporate tax, including some that end up paying no taxes at all.
The new minimum corporate tax will take effect after the 2022 tax year and will raise more than $258 billion over the decade.
There will also be a new 1% excise tax imposed on share buybacks, which will raise about $74 billion over the decade.
Savings from resolving Medicare negotiations with drug companies are expected to bring in $288 billion over 10 years, according to the nonpartisan Congressional Budget Office.
The bill sticks to Biden’s original promise not to raise taxes on families or businesses making less than $400,000 a year.
Yet money is also raised by encouraging the IRS to pursue tax fraud. The bill proposes an $80 billion investment in taxpayer services, law enforcement and modernization that is expected to raise $203 billion in new revenue — a net gain of $124 billion over the decade.
ADDITIONAL MONEY TO PAY DEFICIENTS
With about $740 billion in new revenue and about $440 billion in new investments, the bill promises to channel the roughly $300 billion gap into deficit reduction.
Federal deficits have soared during the COVID-19 pandemic as federal spending jumped and tax revenue fell as the nation’s economy reeled from shutdowns, office closures and other massive changes.
In recent years, the nation has seen deficits rise and fall. 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’S LEFT BEHIND?
The package, which doesn’t come close to the comprehensive Build Back Better program that Biden once envisioned, remains a significant undertaking and, along with the 2017 GOP’s COVID-19 relief and tax cuts, is among the more substantial bills from Congress in years.
Although Congress passed and Biden signed into law a bipartisan $1 trillion infrastructure bill for highways, broadband and other investments that was part of the White House’s original vision, other big Democratic priorities have slipped.
Gone for now are plans for free preschool and community college, as well as the nation’s first paid family leave program, which would have provided up to $4,000 a month for births, deaths and other basic needs. The Enhanced Child Care Credit, which provided $300 a month during the pandemic, has also been allowed to expire.
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Associated Press writer Matthew Daly contributed to this report.
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