WASHINGTON — After months of painstaking negotiations, Democrats are poised to pass a climate, tax and health care package that would salvage key parts of President Biden’s national agenda.
The legislation, while falling well short of the ambitious $2.2 trillion Build Back Better Act the House passed in November, fulfills several longstanding Democratic goals, including addressing climate change on a planet that’s is heating up fast, taking steps to reduce the cost of prescription drugs and revamping parts of the tax code in a bid to make it fairer.
Here’s what’s in the final package:
It is the largest American investment to slow global warming.
The bill includes the largest spending ever by the federal government to slow global warming and reduce demand for fossil fuels that are primarily responsible for climate change.
It would invest nearly $400 billion over 10 years in tax credits to steer consumers toward electric vehicles and push electric utilities toward renewable energy sources like wind or solar.
Energy experts said the measure would help the United States cut greenhouse gas emissions about 40% below 2005 levels by the end of this decade. That puts the Biden administration within striking distance of meeting its goal of cutting emissions by about half by 2030. It will take much more to help keep the planet from warming to dangerously high global temperatures, say said the scientists, but Democrats viewed it as a critical first step. after decades of inaction.
At the same time, Democrats agreed to a number of fossil fuel and drilling provisions as concessions to Sen. Joe Manchin III of West Virginia, a holdout from a conservative state heavily reliant on coal and gas.
The move would secure new oil drilling leases in the Gulf of Mexico and Cook Inlet in Alaska. It would expand tax credits for carbon capture technology that could allow coal or gas-fired power plants to continue operating with reduced emissions. And it would require the Department of the Interior to continue holding auctions for fossil fuel leases if it considers approving new wind or solar projects on federal lands.
The tax credits include $30 billion to accelerate production of solar panels, wind turbines, batteries and processing of critical minerals; $10 billion to build facilities to make things like electric vehicles and solar panels; and $500 million through the Defense Production Act for heat pumps and critical mineral processing.
There’s $60 billion to help disadvantaged areas that are disproportionately affected by climate change, including $27 billion for the creation of what would be the country’s first “green bank” to help spur investment in clean energy projects, especially in poor communities. The bill would also require oil and gas companies to pay fees of up to $1,500 a ton to fix excessive leaks of methane, a potent greenhouse gas, and it would reverse a 10-year moratorium on leasing oil. offshore wind turbines established by President Donald J. Trump. .
Medicare could directly negotiate the price of prescription drugs, which would reduce costs.
For the first time, Medicare would be allowed to negotiate with drugmakers on the price of prescription drugs, a proposal that is expected to save the federal government billions of dollars. This would initially apply to 10 drugs, starting in 2026, and then expand to include more drugs in subsequent years.
Opponents argue the plan would stifle innovation and the development of new treatments by reducing the profits drug companies can invest in their business, while some liberals have expressed frustration that the policy is too slow to take hold. If the package becomes law, as expected, it would be the biggest expansion of federal health policy since the Affordable Care Act was passed.
The package would cap the out-of-pocket expenses seniors pay each year for prescription drugs at $2,000 and ensure seniors have access to free vaccines. Lawmakers have also provided for a rebate if price increases exceed the rate of inflation. (However, top Senate rules officials said the penalty could only apply to Medicare, not private insurers.)
Republicans successfully challenged the inclusion of a $35 price cap on insulin for privately insured patients in a quick round of amendment votes early Sunday morning, forcing its removal. But a separate proposal that caps the price of insulin at $35 per month for Medicare patients has remained intact.
Expanded health care subsidies would be extended.
As part of the $1.9 trillion Pandemic Relief Act that Democrats imposed last year, lawmakers agreed to expand grants available under the Affordable Care Act. This proposal reduced premiums for almost all Americans who depend on the program market, either by making some plans free for low-income people or by providing support for higher-income people who previously received no help.
The package, which could be passed by the Senate as early as Sunday, would extend those grants, which are now set to expire at the end of the year, for three more years. Democrats fear a backlash in November’s midterm elections if they let the grants expire.
Wealthy corporations will see a tax hike, while the IRS will benefit from increased funding.
The tax proposals were crafted by Senator Kyrsten Sinema, an Arizona Democrat, who resisted pressure from her party to raise tax rates on corporations and the nation’s wealthiest individuals.
To avoid the rate hike that Ms. Sinema has opposed, Democrats instead opted for a much more complex tax code change: a new minimum corporate tax of 15% on profits corporations return to shareholders. It would apply to companies that report more than $1 billion in annual revenue on their financial statements, but can also use credits, deductions and other tax treatments to lower their effective tax rates.
Ms Sinema protected a deduction that would benefit manufacturers, a change she successfully pushed for before pledging on Thursday to move forward with the legislation. And she joined six other Democrats and all Republicans in reducing the scope of this minimum corporate tax by supporting an amendment in the final hours of the vote-a-rama on Sunday afternoon.
Democrats, to offset the loss of revenue imposed by this amendment, extended the limit on tax deductions for business losses that was enacted as part of Trump’s 2017 tax cuts.
She also forced the withdrawal of a proposal backed by Democrats and Republicans that would have cut a tax break used by both the hedge fund and private equity industries to secure lower tax rates than their junior employees. And she has pledged to pursue separate legislation outside of the budget package, but that would require at least 10 Republicans to support her.
The legislation would also bolster the IRS with an investment of about $80 billion, hoping to recoup additional tax revenue by cracking down on wealthy corporations and wealthy tax evaders.
Republicans, who have historically opposed consolidating funds for the agency, argued that it would increase audits and surveillance of low-income households. The IRS, in turn, dismissed the concern, telling Congress that “these resources are absolutely not intended to increase audit control over small businesses or middle-income Americans.”
Jim Tankerley contributed report.