The US House of Representatives passed the Inflation Reduction Act of 2022 on Friday, clearing the way for President Biden to sign the largest climate change investment in the nation’s history.
The legislation was an unexpected resurrection of some parts of Biden’s Build Back Better agenda, brought together in a surprise deal by Senate Majority Leader Chuck Schumer and Sen. Joe Manchin, DW.Va., the most conservative member of the Democratic caucus. The bill moved quickly: the deal was announced on July 27, passed the Senate on August 7 and approved the House just days later.
President Biden and House Speaker Nancy Pelosi look on as Senate Majority Leader Chuck Schumer speaks during a signing ceremony on the South Lawn of the White House, August 9, 2022. (Saul Loeb/AFP via Getty Images)
With four House Republicans not voting, the bill passed with unanimous support from House Democrats but no Republicans. The Senate vote was also split along party lines 50-50, with all Republicans in opposition and Vice President Kamala Harris casting the deciding vote.
The Inflation Reduction Act would allocate $369 billion to mitigate climate change over 10 years by making electric vehicles more affordable, developing clean energy and improving energy efficiency in everything from household appliances to industrial processes. It also fulfills a longtime Democratic campaign promise to lower prescription drug prices by allowing Medicare to negotiate directly with drug companies, which would limit out-of-pocket drug costs for older Americans.
It would also provide subsidies for Obamacare premiums due to expire, which would lower health care costs for many Americans.
IRS headquarters in Washington, D.C. (Al Drago/Bloomberg via Getty Images)
Funding for the bill would come from raising taxes on certain corporations that make more than $1 billion a year in profits, taxing corporate stock buybacks and funding the Internal Revenue Service to better monitor tax fraud. The overall legislative package is projected to reduce the federal deficit by up to $300 billion over the next decade. By reducing the deficit and lowering energy and prescription drug costs, Democrats hope the bill will also reduce inflation.
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Because of Republican opposition, Democrats failed to cap insulin prices for Americans with private insurance. Sen. Bernie Sanders tried to add an expansion of the Expanded Child Tax Credit — which lifted millions of children out of poverty in 2021 — and to give Medicare recipients dental, vision and hearing coverage, but was voted down.
Other plans dropped from Biden’s original proposal include paid family leave and free preschool. To win the vote of Sen. Kirsten Sinema, D-Ariz., her fellow Democrats rejected a change that would have made managers of hedge and private equity funds pay the same tax rate on their income as other employees, closing a loophole that in now allows them to pay a lower tax rate on capital gains.
Workers prepare to install solar panels on the roof of a house in Hayward, California (David Paul Morris/Bloomberg via Getty Images)
The Inflation Reduction Act, or IRA, is the first significant climate change legislation ever passed by the United States, which is the world’s largest cumulative source of global warming greenhouse gases. It will try to reduce emissions through a variety of means, the biggest of which will be a heavy investment in tax credits for consumers who buy electric vehicles, solar panels and more efficient appliances that can replace gas or oil burners.
Most of these programs target low- and moderate-income households. A family that takes advantage of every available rebate and credit can enjoy a total of $28,500 in incentives to reduce their carbon footprint and save an average of $1,800 per year in reduced gas, energy and heating costs.
There will also be billions of dollars in grants for state and local governments to shift their fleets to electric vehicles and help utilities transition from gas or coal-fired power plants to clean energy like wind or solar. To win Sinema’s support, there will also be $4 billion for projects to help Southwest residents conserve water to deal with the region’s ongoing climate change-related megadrought.
Senator Joe Manchin leaves the Capitol building on August 7 after a series of votes on amendments to the Inflation Reduction Act. (Kent Nishimura/Los Angeles Times via Getty Images)
The IRA will spend $20 billion on promoting climate-smart agricultural practices and $5 billion on forest conservation and urban tree planting.
However, all these victories came at a price. To win the support of Manchin, who comes from a state rich in coal and gas, Democrats agreed to require the Interior Department to lease 2 million acres on federal lands and 60 million offshore acres annually for oil production and gas. That would break Biden’s own pledge to end new federal fossil fuel leasing. Manchin also secured a commitment from Schumer to try to pass legislation that would speed up the federal permitting process for energy development projects.
Most environmental experts and activists approved the bill, saying the compromise was generally acceptable. Former Vice President Al Gore, who has been outspoken on the issue for four decades, called the IRA “transformative” and said it was “a long time coming”.
However, some activists more focused on opposing fossil fuel production—including many local activists from communities near oil and gas wells and pipelines—were outraged by the fossil fuel extraction regulations.
Still, at a time when gasoline prices have soared and there are fears that money spent on oil is benefiting oil dictators like Russian President Vladimir Putin, the bill is expected to reduce oil dependence and the U.S.’s vulnerability to oil supply shocks and gas like this caused by Russia’s invasion of Ukraine.
Emissions from smokestacks at a coal-fired power plant near Emmett, Kan. (Charlie Riedel/AP)
Overall, the IRA is expected to help reduce annual U.S. greenhouse gas emissions by between 37% and 41% from 2005 levels by 2030 and prevent between 3,700 and 3,900 premature deaths annually thanks to reduced air pollution. air, according to modeling developed by the Energy Innovation think tank. The group also found that every ton of emissions generated by the new oil and gas lease would be offset by at least 24 tons of emissions reduced by the other bill’s provisions.
However, the bill alone will not fulfill Biden’s pledge to cut emissions by 50% by 2030. Climate activists continue to call on Biden to help close the gap between the emissions target and what the IRA will achieve by issuing new regulations on pollution generated by the burning of fossil fuels.
Some Republicans say the bill would bring nearly 100,000 new IRS agents to target middle-class Americans, but there’s nothing in the bill’s text to indicate that fact-checkers say some of the funding will go to revamping the aging office of the agency technology. Republicans also say the bill contains tax increases on working-class Americans, but no one making less than $400,000 will be directly affected. However, the new 15% minimum tax for much larger corporations could increase costs for consumers.
A Yahoo News/YouGov poll released earlier this month found the bill widely popular, particularly the part that lowers the cost of Medicare prescription drugs. Democrats will now return to the campaign trail in an attempt to retain control of Congress, hoping that the IRA provisions, combined with backlash from the Supreme Court’s abortion ruling and gas price cuts, can help temper the typical midterm backlash against the party controlling the White House.
In a memo released on Capitol Hill earlier this month, Biden pollsters wrote of the IRA that “Democrats should confidently support these measures and campaign aggressively against them, putting Republicans on the defensive.”
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