As Democrats celebrate the passage of the $740 billion package in the Senate Sunday morning for healthcare, climate change and deficit reduction through a budget reconciliation process where Vic President Kamala Harris casts her tie-breaking vote to pass the bill, it's good to see what's in the bill for the Americans.
The estimated $740 billion package is made up of healthcare, climate change and deficit-reduction strategies as part of the modified Build, Better, Back initiative of President Joe Biden after Senate majority leader Chuck Schumer accepted amendments proposed by Senators Joe Manchin and Krysten Sinema.
Bernie Sanders, independent from Vermont, speaking on the side of the Democrats, called it a Votea Rama in a circus of theatre of politics where Biden's original proposals were watered down.
Not as robust as the proposal President Joe Biden once envisioned to rebuild America's public infrastructure and family support systems, the Democrats' compromise of healthcare, climate change and deficit-reduction strategies is still a substantial undertaking, said CNBC in a report.
Sander's amendments were all voted out in a bipartisan approach by both republicans and democrats 99-1 for which he expressed deep disappointment for not understanding his viewpoint on the President's original proposals.
The estimated $740 billion package -- passed Sunday by the Senate and heading to the House of Representatives for a debate and vote on Friday before the August recess -- is full of party priorities.
Those include capping prescription drug costs at $2,000 out of pocket for seniors, helping Americans pay for private health insurance and what Democrats are calling the most substantial investment in history to fight climate change, some $375 billion over the decade.
Sanders had endorsed the original cap price of $35 for certain categories of drugs. He wasn't sure if pharma companies being powerful would find other alternatives to get over this. This is applicable for seniors for every dosage of insulin but not those with healthcare insurances.
Almost half the money raised, $300 billion, will go toward paying down federal deficits, which is why parliamentarian Elizabeth MacDonough accepted the budget reconciliation process to pass the bill under fiscal considerations, which avoided the republican filibuster of 60 votes on the threshold to disallow it. MacDonough did it under the Byrd act, named after a person considered a fiscal hawk.
It's all paid for largely with new corporate taxes, including a 15 per cent minimum tax on big corporations to ensure they don't get scott-free of paying any taxes at all, as well as projected federal savings from lower Medicare drug costs.
Called the 'Inflation Reduction Act of 2022', it's not at all clear the 755-page bill will substantially ease inflationary pressures, though millions of Americans are expected to see some relief in healthcare and other costs, CNBC said.
Inflation is at a 40-year high at 13 per cent and technically the US is facing recession with two quarters of negative GDP growth at -0.9 per cent. But economists want a full year to call it so.
Votes fell strictly along party lines in the 50-50 Senate, with all Democrats in favour, all Republicans opposed, and Vice President Kamala Harris providing a tie-breaking vote for 51-50 passage. The House of Representatives is expected to vote by Friday.
A look at what's in and out of the final package: Launching a long-sought goal, the bill would allow the Medicare programme to negotiate prescription drug prices with pharmaceutical companies, saving the federal government some $288 billion over the 10-year budget window. Those new revenues would be put back into lower costs for seniors on medications, including a $2,000 out-of-pocket cap for older adults buying prescriptions from pharmacies.
The money would also be used to provide free vaccination for seniors, who now are among the few not guaranteed free access, according to a summary document.
Seniors would also have insulin prices capped at $35 a dose. A provision to extend that price cap on insulin to Americans with private health insurances was out of line with Senate budget rules and Republicans stripped it from the final bill.
The bill would extend the subsidies provided during the Covid-19 pandemic to help some Americans who buy health insurance on their own. Under earlier pandemic relief, the extra help was set to expire this year. But the bill would allow the assistance to keep going for three more years, lowering insurance premiums for people purchasing their own healthcare policies.
Single biggest investment in climate change in US history: The bill would invest nearly $375 billion over the decade in climate change-fighting strategies including investments in renewable energy production and tax rebates for consumers to buy new or used electric vehicles.
It's broken down to include $60 billion for a clean energy manufacturing tax credit and $30 billion for a production tax credit for wind and solar, seen as ways to boost and support the industries that can help curb the country's dependence on fossil fuels. The bill also gives tax credits for nuclear power and carbon capture technology that oil companies such as ExxonMobil have invested millions of dollars to advance.
The bill would impose a new fee 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 Senator Kyrsten Sinema, and other Democrats in Arizona, Nevada and Colorado, would designate $4 billion to combat a mega-drought in the West, including conservation efforts in the Colorado River Basin, which nearly 40 million Americans rely on for drinking water.
For consumers, there are tax breaks as incentives to go green. One is a 10-year consumer tax credit for renewable energy investments in wind and solar. There are tax breaks for buying electric vehicles, including a $4,000 tax credit for purchase of used electric vehicles and $7,500 for new ones, CNBC said.
In all, Democrats believe the strategy could put the country on a path to cut greenhouse gas emissions 40 per cent by 2030, and "would represent the single biggest climate investment in US history, by far".
New corporate minimum tax: The biggest revenue-raiser in the bill is a new 15 per cent minimum tax on corporations that earn more than $1 billion in annual profits. It's a way to clamp down on some 200 US companies that avoid paying the standard 21 per cent corporate tax rate, including some that end up paying no taxes at all.
The new corporate minimum tax would kick in after the 2022 tax year and raise more than $258 billion over the decade. The revenue would have been higher, but Sinema insisted on one change to the 15 per cent corporate minimum, allowing a depreciation deduction used by manufacturing industries. That shaves about $55 billion off the total revenue.
To win over Sinema, the Democrats dropped plans to close a tax loophole long enjoyed by wealthier Americans -- so-called carried interest, which under current law taxes wealthy hedge fund managers and others at a 20 per cent rate. The left has for years sought to boost the carried interest tax rate, hiked to 37 per cent in the original bill, more in line with upper-income earners. Sinema wouldn't allow it.
Keeping the tax break for the wealthy deprives the party of $14 billion in revenue they were counting on to help pay for the package. In its place, Democrats, with Sinema's nod, will impose a 1 per cent excise tax on stock buybacks, raising some $74 billion over the decade.
Money is also raised by boosting the IRS to go after tax evaders. The bill proposes an $80 billion investment in taxpayer services, enforcement and modernization, which is projected to raise $203 billion in new revenue -- a net gain of $124 billion over the decade.
The bill sticks with Biden's original pledge not to raise taxes on families or businesses making less than $400,000 a year. The lower drug prices for seniors are paid for with savings from Medicare's negotiations with the drug companies.
Extra money to pay down deficits: With some $740 billion in new revenue and around $440 billion in new investments, the bill promises to put the difference of about $300 billion toward deficit reduction. Federal deficits spiked during the Covid-19 pandemic when federal spending soared and tax revenues fell as the nation's economy churned 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 put out a new report this week on long-term projections.
What's left out of the inflation reduction act? This latest package emerged suddenly at the end of July after 18 months of start-stop negotiations that left behind many of Biden's more ambitious goals. Senate Majority Leader Chuck Schumer struck a deal with Senator Joe Manchin to revive Biden's package, slimming it down to bring the West Virginia Democrat back to the negotiating table.
Next, they drew Sinema, the remaining party holdout, with additional changes. The package remains robust, by typical standards, but nowhere near the sweeping Build Back Better program Biden once envisioned, which is what Sanders wanted.
While the Congress did pass a $1 trillion bipartisan infrastructure bill for highways, broadband and other investments that Biden signed into law last year, the president's and the party's other key priorities have slipped away. Among them is a continuation of a $300 monthly child tax credit that was sending money directly to families during the pandemic and is believed to have widely reduced child poverty.
Sadly, also gone, for now, are plans for free pre-kindergarten and community college, 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 pivotal needs of lower- and middle-class families.
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