US Senate Democracts approve Biden’s ‘Inflation Reduction Plan’

Democrats pushed their election-year economic package to Senate passage, a hard-fought compromise less ambitious than President Joe Biden’s original vision — but one that still meets deep-rooted party goals of slowing climate change, moderating pharmaceutical costs, and taxing big corporations.

The package on Sunday heads next to the House where legislators are poised to deliver on Biden’s priorities, a stunning turnaround of what had seemed a lost and doomed effort that suddenly roared back to political life. Democrats held united, 51-50, with Vice President Kamala Harris casting the tie-breaking vote.

“It’s been a long, tough and winding road, but at last, at last we have arrived,” said Senate Majority Leader Chuck Schumer ahead of final votes.

“The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century.”

Senators engaged in a round-the-clock marathon of voting that began Saturday and stretched late into Sunday. Democrats swatted down some three dozen Republican amendments designed to torpedo the legislation.

Confronting unanimous opposition, Democratic unity in the 50-50 chamber held, keeping the party on track for a morale-boosting victory three months from elections when congressional control is at stake.

“I think it’s gonna pass,” Biden told reporters as he left the White House early Sunday to go to Rehoboth Beach, Delaware, ending his COVID-19 isolation.

The House seemed likely to provide final congressional approval when it returns briefly from the US summer recess on Friday.

The bill ran into trouble midday over objections to the new 15 percent corporate minimum tax that private equity firms and other industries disliked, forcing last-minute changes.

Despite the momentary setback, the Inflation Reduction Act gives Democrats a campaign-season showcase for action on coveted goals.

It includes the largest-ever federal effort on climate change — close to $400bn — caps out-of-pocket drug costs for seniors on Medicare to $2,000 a year and extends expiring subsidies that help 13 million people afford health insurance. By raising corporate taxes, the whole package is paid for with some $300bn in extra revenue for deficit reduction.

Barely more than one-tenth the size of Biden’s initial 10-year, $3.5 trillion rainbow of progressive aspirations in his Build Back Better initiative, the new package abandons earlier proposals for universal preschool, paid family leave, and expanded child care aid. That plan collapsed after conservative Senator Joe Manchin, a Democrat, opposed it saying it was too costly and would drive inflation.

Nonpartisan analysts have said the Inflation Reduction Act would have a minor effect on surging consumer prices.

Republicans said the measure would undermine an economy that policymakers are struggling to keep from plummeting into recession. They said the bill’s business taxes would hurt job creation and force prices skyward, making it harder for people to cope with the nation’s worst inflation since the 1980s.

“Democrats have already robbed American families once through inflation, and now their solution is to rob American families a second time,” Republican Senate Minority Leader Mitch McConnell argued.

He said spending and tax increases in the legislation would eliminate jobs while having an insignificant effect on inflation and climate change.

 

In an ordeal imposed on all budget bills such as this one, the Senate had to endure an overnight “vote-a-rama” of rapid-fire amendments. Each tested Democrats’ ability to hold together a compromise negotiated by Schumer, progressives, Manchin and the inscrutable centrist Senator Kyrsten Sinema, a Democrat.

Sinema forced Democrats to drop a plan to prevent wealthy hedge fund managers from paying less than individual income tax rates for their earnings.

Progressive Senator Bernie Sanders offered amendments to further expand the legislation’s health benefits, but those efforts were defeated. Most votes were forced by Republicans, and many were designed to make Democrats look soft on US-Mexico border security and gasoline and energy costs, and like bullies for wanting to strengthen IRS tax law enforcement.

The thrust of the pharmaceutical price language remained. That included letting Medicare negotiate what it pays for drugs for its 64 million elderly recipients, penalizing manufacturers for exceeding inflation for pharmaceuticals sold to Medicare, and limiting beneficiaries’ out-of-pocket drug costs to $2,000 annually.

The measure’s final costs were being recalculated to reflect late changes, but overall it would raise more than $700bn over a decade. The money would come from a 15 percent minimum tax on a handful of corporations with yearly profits above $1bn, a 1 percent tax on companies that repurchase their own stock, bolstered IRS tax collections, and government savings from lower drug costs.