WASCONSIN (Associated Press) — The United States’ largest ever expenditure on combating global warming. A hard-won limit on how much Medicare recipients will have to pay each year for their prescription drugs. A new minimum tax on corporations would ensure that large businesses chip in.
Plus, the federal government will have billions with which to reduce its deficits.
It’s possible that the Democratic Party’s “Inflation Reduction Act” won’t immediately stem the tide of rising prices. Long-sought party proposals will affect millions of Americans if they make it into the final package currently making its way through Congress and on to the White House for President Joe Biden to sign.
The compromise on health care, climate change, and deficit-reduction strategies is a smaller but not unsubstantial product brought back to political life after having collapsed last year. It is also a stunning election year turnaround, a smaller but not unsubstantial product brought back to life after having collapsed last year.
The package has the support of only Democrats, with all Republicans expected to vote no. In particular, Republicans have criticized the bill’s $80 billion investment in the Internal Revenue Service to hire new employees and go after tax scofflaws, calling it an example of “big government overreach” in a bill that is 730 pages long.
Control of Congress will be decided by voters in November.
On the table for final approval this coming Friday in the House is a $740 billion package, which includes $440 billion in new spending and $300 billion toward easing deficits.
PRICE REDUCTIONS FOR PRESCRIPTION MEDICATION
Medicare drug prices could be negotiated with pharmaceutical companies under this bill, a long-sought goal that could save the federal government $288 billion over the next decade.
The end result, including a $2,000 out-of-pocket cap for older adults purchasing prescriptions from pharmacies, is expected to reduce costs for seniors on medications.
According to a summary document, the funds raised would also be used to offer free vaccinations to seniors, who are currently one of the minority groups that are not guaranteed free access.
Insulin costs for the elderly would be capped at $35 per month.
BUDGETARY SUPPORT FOR MEDICAL COVERAGE
The bill would help some uninsured Americans by extending subsidies offered during the COVID-19 pandemic.
The supplementary aid provided under the earlier pandemic relief program was set to end this year. The bill would extend the subsidies for an additional three years, bringing down the cost of health insurance for an estimated 13 million people who are responsible for their own coverage thanks to the Affordable Care Act.
U.S.’s “BY FAR” LARGEST INVESTMENT IN ATTACKING CLIMATE CHANGE
The bill “would represent the single biggest climate investment in U.S. history, by far,” and would pour nearly $375 billion into climate change fighting strategies over the next decade, which Democrats believe could put the country on a path to cut greenhouse gas emissions 40% by 2030.
As a result, households earning $300,000 or less as a couple, or $150,000 or less as an individual, are eligible for tax rebates of $4,000 or up to $7,500, respectively, when purchasing an electric vehicle.
Requirements that component parts be manufactured and assembled in the U.S. mean that not all electric vehicles will be eligible for the full tax credits. Also not included are vehicles with sticker prices of $55,000 or more, as well as SUVs and pickup trucks that cost more than $80,000.
In addition, there are financial incentives for people to make environmentally friendly purchases. The first of these is a consumer tax credit of up to $10,000 over ten years for investments in renewable energy sources like wind and solar.
Businesses will benefit from the bill’s $90 billion in total tax incentives, $30 billion of which will go toward wind and solar energy production tax credits and $60 billion toward a clean energy manufacturing tax credit. These incentives are meant to foster the growth of the industries that will eventually reduce the country’s reliance on fossil fuels.
Oil companies like Exxon Mobil have spent millions developing nuclear power and carbon capture technology, and the bill rewards them with tax credits for their efforts.
More leases on federal lands and waters would be made available to fossil fuel companies in exchange for a new fee on excess methane emissions produced during oil and gas drilling.
Nearly 40 million Americans rely on the Colorado River Basin for drinking water, so it was important that Senator Kyrsten Sinema (D-Ariz.) and other Democrats from Arizona, Nevada, and Colorado secure a $4 billion earmark to combat a mega-drought in the West.
HOW WILL WE COLLECT THE COST OF THIS?
The bill’s minimum tax rate for corporations with annual profits over $1 billion is increased to 15%.
It’s a way to crack down on the roughly 200 American businesses that legally find ways to avoid paying the standard 21% corporate tax rate.
After the tax year 2022, the new corporate minimum tax would be in effect, generating over $258 billion.
In addition, a new one percent excise tax on stock buybacks will be implemented, generating around $74 billion in revenue over the next decade.
The Medicare drug discount program would save $288 billion over a decade, according to the non-partisan Congressional Budget Office.
The bill remains true to Biden’s promise to not increase taxes for individuals or corporations with annual incomes of less than $400,000.
Still other funds can be gathered by increasing IRS efforts to capture tax evaders. An estimated $203 billion in additional revenue will be generated as a result of the bill’s proposed $80 billion investment in taxpayer services, enforcement, and modernization, yielding a net gain of $124 billion over the next decade.
EXTRA CASH TO CLEAR OUT DEFICITS
The bill is expected to put the remaining $300 billion toward deficit reduction after collecting about $740 billion more in tax revenue and making about $440 billion more in investments.
During the COVID-19 pandemic, federal deficits skyrocketed as spending jumped and tax revenues dropped due to the tumultuous effects of government shutdowns, empty buildings, and other drastic measures on the economy.
Deficits have fluctuated up and down over the past few years. However, a new report on long-term projections from the Congressional Budget Office suggests that the federal budget as a whole is headed down an unsustainable path.
Where does that leave us?
While not nearly as ambitious as Biden’s original vision for the Build Back Better program, the package is still a sizable undertaking that, along with COVID-19 relief and the GOP 2017 tax cuts, is one of the more significant pieces of legislation to come out of Congress in recent memory.
However, while a $1 trillion bipartisan infrastructure bill for highways, broadband, and other investments that was part of the White House’s initial vision was passed and signed into law by Vice President Joe Biden, the Democrats’ other major priorities have fallen by the wayside.
Free preschool and community college, as well as the first paid family leave program in the country that would have provided up to $4,000 per month for births, deaths, and other life-changing events, are no longer on the table. The $300 monthly increase in the child care credit that was in place during the pandemic has also been allowed to lapse.
___Matthew Daly, a reporter for the Associated Press, contributed to this article.
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