WASHINGTON (AP) — It’s nowhere near the $4 trillion proposal President Joe Biden first announced to rebuild America’s public infrastructure and family support systems But a compromise package of inflation-fighting health care, climate change and deficit-reduction strategies comes to a Senate vote this weekend..
An estimated $740 billion bid, surprised the two best negotiators, Senate Majority Leader Chuck Schumer and Senator Joe Manchin., a conservative West Virginia Democrat, embraces some of the party’s hard-fought priorities. But the latest tweaks this week came from Sen. Kyrsten Sinema, D-Ariz., who put her handiwork into the latest amendments.
What’s in the current Democrats’ 2022 in the Inflation Reduction Act” and from it:
LOWER PRESCRIPTION DRUG COSTS
Kicking off a long-sought goal, the bill would allow for the Medicare program negotiate prescription drug prices with pharmaceutical companies, saving the federal government about $288 billion USD over a 10-year budget period.
This new revenue would go back to lower drug costs for seniors, including a $2,000 cap on seniors who buy prescriptions at pharmacies.
The money would also go toward free vaccinations for seniors, which are now among the few without guaranteed free access, according to the summary document.
HELP PAY FOR HEALTH INSURANCE
The bill would extend subsidies provided during the COVID-19 pandemic to help some Americans who buy their own health insurance.
Under previous pandemic aid, additional aid will expire this year. But the law would allow the assistance to continue for another three years by lowering premiums for people who buy their own health care policies.
“ONE OF THE LARGEST INVESTMENTS IN CLIMATE CHANGE IN US HISTORY”
The bill would invest nearly $374 billion over a decade in strategies to combat climate change, including investments in renewable energy generation and tax credits for consumers who buy new or used electric vehicles..
It consists of 60 billion $30 billion for the Clean Energy Production Tax Credit and USD for a production tax credit for wind and solar energy, which are seen as ways to encourage and support industries that can help reduce the nation’s dependence on fossil fuels. The bill also provides tax credits for nuclear power and carbon capture technologies, in which oil companies such as Exxon Mobil have invested millions of dollars.
The bill would impose a new tax on excess methane emissions from oil and gas wells and give fossil fuel companies access to more leases on federal lands and waters.
The late addition, pushed by Sinema and other Democrats from Arizona, Nevada and Colorado, would have earmarked $4 billion to fight the West’s massive drought, including conservation efforts in the Colorado River Basin, which provides drinking water to nearly 40 million Americans.
Consumers benefit from tax incentives that promote greenness. One is a 10-year consumption tax credit for renewable energy investments in wind and solar power. There are tax incentives for purchasing electric vehicles, including a $4,000 tax credit for used electric vehicles and $7,500 for new ones.
Overall, Democrats believe this strategy can help the country through 2030. reduce greenhouse gas emissions by 40 percent. and “would be the largest investment in climate change in US history.”
HOW TO PAY FOR EVERYTHING?
The bill’s biggest revenue-raiser is a new 15% minimum tax on corporations that make more than $1 billion. USD of annual profit.
It’s a way to limit the roughly 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 minimum corporate tax would take effect after the 2022 tax year and raise about $258 billion over a decade.
Revenue would have been 313 billion. USD, but Sinema required a one-time change to the 15% company minimum for deducting depreciation used by the manufacturing industry. That subtracts about $55 billion from total revenue.
Money is also raised to encourage the IRS to crack down on tax fraud. The bill proposes $80 billion in investments in taxpayer services, enforcement and modernization, which is projected to generate $203 billion in new revenue, for a net gain of $124 billion over a decade.
The bill follows Biden’s original pledge not to raise taxes on families or businesses making less than $400,000 a year.
Lower drug prices for seniors come from the savings Medicare negotiates with drug companies.
WHAT HAS CHANGED IN THE LAST DAYS?
In their bid to win Sinema, Democrats scrapped plans to close a tax loophole long enjoyed by wealthier Americans — so-called “carried interest,” which under current law taxes wealthy hedge fund managers and the other 20 percent.
The left has pushed for years to raise the carryforward tax rate, which was raised to 37 percent in the original bill, more in line with higher income earners. Cinema will not allow.
Keeping the tax break for the wealthy deprives the party of $14 billion in revenue they hoped would help pay for the package.
Instead, Democrats, with Sinema’s nod, will impose a 1% excise tax on stock buybacks, raising about $74 billion over a decade.
ADDITIONAL MONEY TO PAY OFF THE DEFICIT
With about $740 billion in new revenue and about $433 billion in new investment, the difference promises to go toward deficit reduction.
During the COVID-19 pandemic, the federal deficit has ballooned as federal spending soared and tax revenues plummeted as the nation’s economy was rocked by shutdowns, office closings and other sweeping changes.
In recent years, the country’s deficit has gone up and down. But the overall federal budget is unsustainable, according to the Congressional Budget Officewhich released a new report this week on long-term forecasts.
WHAT’S LEFT BEHIND
This latest package leaves Biden with far more ambitious goals after 18 months of on-and-off negotiations.
Although Congress passed a $1 trillion bipartisan infrastructure bill The highway, broadband and other investments Biden signed last year have slipped the president and other top party priorities.
Among them is the continuation of the $300 monthly child tax credit, which sent money to families during the pandemic and is believed to have significantly reduced child poverty.
Also gone for now are plans for free preschool and community college, as well as the nation’s first paid family leave program, which would have provided up to $4,000 a month to cover births, deaths and other essential needs.
Associated Press writer Matthew Daly contributed to this report.