What's in, and out of, Democrats' inflation-fighting package
What started as a $4-trillion effort during President Biden’s first months in office to rebuild America’s public infrastructure and family support systems has ended up
a much slimmer, but not
unsubstantial, compromise package of inflation-fighting healthcare, climate change and deficit reduction strategies that appears headed toward quick votes in Congress.
Lawmakers are poring over the $739-billion proposal by Senate Majority Leader Charles E. Schumer and Sen. Joe Manchin III, the conservative West Virginia Democrat who rejected Biden’s earlier plans but surprised colleagues with a new one late Wednesday.
What’s in, and out, of the Democrats’ 725-page measure, called the Inflation Reduction Act of 2022, as it stands now:
Lower prescription costs for seniors
The bill would achieve a long-sought goal by allowing the Medicare program to negotiate prescription drug prices with pharmaceutical companies, saving the government some $288 billion over the 10-year budget window.
The savings would go toward lowering costs for seniors’ medication, in part through a $2,000 cap on their out-of-pocket spending on prescriptions from pharmacies, according to a summary document.
The money would also provide free vaccinations for seniors, who now are among the few groups not guaranteed free access.
Help paying for health insurance
The bill would extend the COVID-19 pandemic subsidies to help some Americans who purchase health insurance on their own.
The extra help under pandemic relief was set to expire this year. But the bill would allow the assistance to continue for three more years, lowering premiums for people who buy their own healthcare policies.
Investments to fight climate change
The bill would invest $369 billion over the decade in strategies to address climate change, including investments in renewable energy production and tax rebates for consumers who buy new or used electric vehicles.
The spending is broken down to include $60billion for a clean energy manufacturing tax credit and $30 billion for a production tax credit for wind and solar power, to boost industries that can help curb the country’s dependence on fossil fuels.
Other tax breaks would give consumers added incentives to go green, including a 10-year consumer tax credit for investments in renewable wind and solar energy. The incentives for buying electric vehicles include a $4,000 tax credit for purchasing a used electric vehicle and up to a $7,500 credit for buying a new one.
In all, Democrats believe the strategy could put the country on a path to cut greenhouse gas emissions 40% by 2030, and “would represent the single biggest climate investment in U.S. history, by far.”
How to pay for all of this?
The biggest revenue-raiser in the bill is a new 15% minimum tax on corporations that make more than $1 billion in annual profits.
It’s a way to clamp down on some 200 U.S. companies that avoid paying the standard 21% corporate tax rate, including some that end up paying no taxes at all.
The new corporate minimum tax would kick in after the 2022 tax year and would be expected to raise about $313billion over the decade.
The measure would also raise money by helping the Internal Revenue Service go after tax cheats. The bill proposes an $80-billion investment in taxpayer services, enforcement and modernization, which is projected would raise $203billion in new revenue — a net gain of $124billion over the decade.
The bill holds to Biden’s original pledge not to raise taxes on families or businesses that make less than $400,000 a year.
The lower drug prices for seniors would be paid for with savings from negotiations with drug companies.
Extra money to pay down deficits
With a projected $739 billion in new revenue and some $433 billion in new investments, the bill promises to put the difference toward deficit reduction.
Federal deficits have increased during the pandemic, with spending soaring and tax revenue falling as the economy has endured shutdowns, closed offices and other massive changes.
The nation has seen deficits rise and fall in recent years. But overall, federal budgeting is on an unsustainable path, according to the Congressional Budget Office, which put out a new report this week on long-term projections.
What's left behind
This latest package after 18 months of start-stop negotiations drops many of the president’s more ambitious goals.
While Congress did pass a $1-trillion bipartisan infrastructure bill of highway, broadband and other investments that Biden signed into law last year, other Democratic Party priorities have slipped away.
Among those is the goal of continuing a $300 monthly pandemic child tax credit, which sent money to families and is believed to have widely reduced child poverty.
Also gone, for now, are plans for free prekindergarten and free community college, as well as the nation’s first paid family leave program, which aimed to provide up to $4,000 a month for time off for births, deaths and other important needs.
This story originally appeared in Los Angeles Times.
