Landmark climate and health care legislation passes the House

The U.S. House of Representatives passed the Inflation Reduction Act of 2022 on Friday, clearing the way for President Biden to sign the biggest investment in combating climate change in the nation’s history.

The legislation was an unexpected resurrection of some pieces of Biden’s Build Back Better agenda, pulled together in a surprising deal by Senate Majority Leader Chuck Schumer and Sen. Joe Manchin, D-W.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 Aug. 7 and cleared the House only days later.

With four Republican House members not voting, the bill was passed with unanimous support from House Democrats but no Republican votes. The Senate vote was also divided 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 assign $369 billion to the mitigation of climate change over 10 years by making electric vehicles more affordable, developing clean energy and improving energy efficiency in everything from home appliances to industrial processes. It also fulfills a longtime Democratic campaign promise of lowering prescription drug prices by allowing Medicare to directly negotiate with pharmaceutical companies, which would cap out-of-pocket drug costs for older Americans.

It will also provide subsidies for Obamacare premiums set to expire, keeping health care costs down for many Americans.

Funding for the bill will come from raising taxes on some corporations that make over $1 billion annually in profits, taxing corporate stock buybacks and funding the Internal Revenue Service to better go after tax cheats. The total legislative package is projected to lower the federal deficit by as much as $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 lessen inflation.

Due to Republican opposition, Democrats were not able 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 took millions of children out of poverty in 2021 — and provide Medicare recipients with dental, vision and hearing coverage but was voted down.

Other plans dropped from the original Biden proposal included paid family leave and free pre-kindergarten. In order to earn the vote of Sen. Kyrsten Sinema, D-Ariz., her fellow Democrats nixed a change that would have resulted in hedge fund and private equity fund managers paying the same tax rate on their incomes as other employees, closing a loophole that currently lets them pay a lower capital gains tax rate.

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 gasses causing global warming. It will attempt to reduce emissions through a variety of means, the largest of which will be a heavy investment in tax credits for consumers who buy electric vehicles, solar panels and more efficient appliances that can replace gas or oil burners.

Most of these programs are targeted at low- and moderate-income households. A family that takes advantage of every possible rebate and credit could enjoy a total of $28,500 in incentives for reducing their carbon footprint, and save an average of $1,800 per year in reduced gasoline, 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-burning power plants to clean energy such as wind or solar power. In order to win Sinema’s support, there will also be $4 billion for projects to help residents of the Southwest conserve water to deal with the ongoing climate change-related megadrought in that region.

The IRA will spend $20 billion to promote climate-smart agriculture practices and $5 billion for forest conservation and urban tree planting.

All of those victories came at a cost, however. To win the support of Manchin, who hails from a state rich in coal and gas, Democrats agreed to require the Department of the Interior to lease 2 million acres in federal lands and 60 million acres offshore annually for oil and gas extraction. That will violate Biden’s own campaign pledge to end new federal fossil fuel leasing. Manchin also secured a commitment from Schumer to attempt to pass legislation that would speed up the federal permitting process for energy development projects.

Most environmental experts and activists endorsed the bill, saying the tradeoff is acceptable on balance. Former Vice President Al Gore, who has been outspoken on the issue for four decades, called the IRA “transformative” and said it was “a long time coming.”

However, some campaigners 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 surged and concern that money spent on oil benefits petro-state dictators such as Russian President Vladimir Putin, the bill is expected to reduce dependence on oil and U.S. vulnerability to oil and gas supply shocks like the one caused by Russia’s invasion of Ukraine.

Overall, the IRA is expected to help annual U.S. greenhouse gas emissions drop by between 37% and 41% from 2005 levels by 2030, and to prevent between 3,700 and 3,900 premature deaths per year thanks to reduced air pollution, according to modeling developed by the think tank Energy Innovation. The group also found that every ton of emissions generated by the new oil and gas leasing will be offset by at least 24 tons of emissions reduced by the other bill’s provisions.

Despite that, the bill on its own will fall short of Biden’s pledge to reduce emissions by 50% by 2030. Climate activists continue to call on Biden to help close the gap between the emissions goal and what the IRA will achieve by issuing new regulations on pollution generated by burning fossil fuels.

Some Republicans are saying that the bill will result in nearly 100,000 new IRS agents targeting middle-class Americans, but there’s nothing in the language of the bill stating that, according to fact checkers, and some of the funding will go to revamping the agency’s outdated technology. Republicans have also claimed that the bill contains a tax hike on working-class Americans, but no individual earning under $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 the bill to be broadly popular, particularly the part that lowers the cost of Medicare prescription drugs. Democrats will now return to the campaign trail in an attempt to hold control of Congress, hoping that the provisions in the IRA, combined with the backlash to the Supreme Court’s decision on abortion and decreasing gas prices can help mitigate the typical midterm backlash against the party controlling the White House.

In a memo circulated on Capitol Hill earlier this month, Biden’s pollsters wrote of the IRA that “Democrats should confidently support these measures, and campaign on them aggressively, putting Republicans on defense.”