The US House of Representatives on Friday passed the Inflation Reduction Act of 2022, clearing the way for President Biden to sign the largest investment in the fight against climate change in the country’s history.
The legislation was an unexpected resurrection of some pieces of Biden’s Build Back Better agenda, brought together in a surprising 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: a deal was announced on July 27, it passed the Senate on August 7 and passed 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 Republican House members not voting, the bill passed with unanimous support from House Democrats, but no Republican votes. The Senate vote was also split along party lines at 50-50, with all Republicans in opposition and Vice President Kamala Harris casting the tie-breaking vote.
The Inflation Reduction Act will allocate $369 billion to climate change mitigation 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 will also provide subsidies for Obamacare premiums to come, keeping health care costs down for many Americans.
IRS headquarters in Washington. (Al Drago/Bloomberg via Getty Images)
Funding for the bill would come from raising taxes on some corporations that make more than $1 billion a year in profits, taxing corporate stock buybacks and funding the Internal Revenue Service to better track tax cheats. The total legislative package is expected to reduce the federal deficit by up to $300 billion over the next decade. By reducing the deficit and lowering the cost of energy and prescription drugs, Democrats hope the bill will also reduce inflation.
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Because of Republican opposition, Democrats were unable to include a cap on insulin prices for Americans with private insurance. Sen. Bernie Sanders tried to add an extension of the expanded child tax credit, which lifted millions of children out of poverty by 2021, and offered Medicare recipients dental, vision and hearing coverage, but was rebuffed.
Other plans dropped from Biden’s original proposal included paid family leave and free daycare. In order to get the vote of Sen. Kyrsten Sinema, D-Ariz., her fellow Democrats rejected a change that would have made hedge fund managers and private equity fund managers pay the same tax rate on their their income than other employees, closing a gap. which currently allows them to pay a lower capital gains tax rate.
Workers prepare to install solar panels on the roof of a home in Hayward, California (David Paul Morris/Bloomberg via Getty Images)
The Inflation Reduction Act, or IRA, is the first significant legislation to combat climate change ever passed by the United States, which is the world’s largest cumulative emitter of the greenhouse gases that cause global warming. It will try to reduce emissions through a variety of means, the biggest of which will be a heavy investment in tax breaks for consumers who buy electric vehicles, solar panels and more efficient appliances that can replace gas or diesel burners.
Most of these programs target low- and moderate-income households. A family that takes advantage of all possible rebates and credits could enjoy a total of $28,500 in incentives to reduce their carbon footprint and save an average of $1,800 a year in reduced gas, energy and heating costs.
There will also be billions of dollars in grants to state and local governments to switch their fleets to electric vehicles and to help utilities switch from gas or coal-fired power plants to clean energy like wind or solar power. In order to win Sinema’s support, there will also be $4 billion for projects to help Southwest residents conserve water to deal with the ongoing climate change-related megadrought in that region.
Senator Joe Manchin left 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 to promote climate-smart farming practices and $5 billion for forest conservation and urban tree planting.
All these victories came at a cost, however. To win over Manchin, who hails from a coal- and gas-rich state, Democrats agreed to require the Interior Department to lease 2 million acres on federal land and 60 million acres on sea per year for oil and gas extraction. This will violate Biden’s campaign 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 compensation is acceptable. Former Vice President Al Gore, who has been outspoken on the issue for four decades, called the IRA “transformative” and said it was “going to be a long time coming”.
However, some activists who are more focused on opposing fossil fuel production, including many indigenous activists from communities near oil and gas wells and pipelines, were outraged by the fossil fuel extraction provisions.
Still, at a time when gasoline prices have soared and there are concerns that money invested in oil benefits petrostate dictators like Russian President Vladimir Putin, the bill is expected to reduce dependence on oil and the vulnerability of the United States to oil and gas supply shocks like this. caused by the Russian invasion of Ukraine.
Emissions come from the stacks of a coal-fired power plant near Emmett, Kan. (Charlie Riedel/AP)
Together, the IRA is expected to help reduce annual US greenhouse gas emissions by 37% to 41% below 2005 levels by 2030, and prevent 3,700 to 3,900 premature deaths per year thanks to the reduction of air pollution, according to the model developed by the think tank Energy Innovation. The group also found that every ton of emissions generated by the new oil and gas lease will be offset by at least 24 tons of emissions reduced by provisions in the other bill.
However, the bill alone will not meet 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 the which the IRA will achieve by issuing new regulations on pollution generated by the combustion of fossil fuels.
Some Republicans say the bill will lead to nearly 100,000 new IRS agents targeting middle-class Americans, but there’s nothing in the bill’s language to indicate that, according to fact-checkers , and part of the funding will be used to renew the agency’s seniority. technology Republicans have also said the bill includes a tax hike on working-class Americans, but no individual making less than $400,000 will be directly affected. The new 15% minimum tax on many larger corporations, however, could increase costs for consumers.
A Yahoo News/YouGov poll released earlier this month found that the bill was widely popular, especially the part that lowers the cost of Medicare prescription drugs. Democrats will now return to the campaign trail to try to retain control of Congress, hoping that the IRA provisions, combined with backlash to the Supreme Court’s decision on abortion and lower gas prices, can help mitigate the typical mid-term backlash against the party. controlling the White House.
In a memo circulated on Capitol Hill earlier this month, Biden pollsters wrote of the IRA that “Democrats should confidently support these measures and campaign aggressively, putting the Republicans on defense.”