WASHINGTON (AP) – Nowhere near the $ 4 trillion dollar proposal first launched by President Joe Biden to rebuild America’s public infrastructure and family support systems but compromise package to tackle health inflation, climate change and deficit reduction strategies looks on track for Senate votes this weekend.
The estimated $ 740 billion proposal, impressed by two prominent negotiators, Senate Majority Leader Chuck Schumer and Senator Joe Manchin, the West Virginia Conservative Democrat, includes some hotly contested party priorities. But the finishing touches came this week from Senator Kyrsten Sinema, D-Ariz., Who put his work into the latest revisions.
What’s in and out of the Democrats’ 2022 Inflation Reduction Act as it stands now:
LOWER COSTS OF PRESCRIPTION DRUGS
By launching 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 over the 10-year budget window.
This new revenue would be reintroduced into lower costs for seniors on medications, including a $ 2,000 limit for seniors buying prescriptions from pharmacies.
The money would also be used to provide free vaccinations to the elderly, who are now among the few who are not guaranteed free access, according to a summary document.
HELP ME PAY FOR HEALTH INSURANCE
The bill would extend the subsidies provided during the COVID-19 pandemic to help some Americans who buy health insurance on their own.
Based on previous pandemic relief, the extra aid was due to expire this year. But the bill would allow care to go on for another three years, lowering insurance premiums for people who are buying their own health policies.
‘ONE BIG INVESTMENT IN CLIMATE CHANGE IN US HISTORY’
The bill would invest nearly $ 374 billion over the decade in climate change strategies, including investments in renewable energy production and tax breaks for consumers buying new or used electric vehicles..
It is split into $ 60 billion for a clean energy production tax credit and $ 30 billion for a production tax credit for wind and solar, seen as ways to scale up and support industries that can help curb the country’s dependence on fossil fuels. The bill also grants tax credits for nuclear power and carbon capture technology that oil companies like Exxon Mobil have invested millions of dollars to advance.
The bill would impose a new tax on excess methane emissions from oil and gas drilling, while giving fossil fuel companies access to more leases on federal land and water.
A belated addition by Sinema and other Democrats in Arizona, Nevada and Colorado would designate $ 4 billion to fight a mega-drought in the West, including conservation efforts in the Colorado River Basin, which nearly 40 million Americans rely on. for drinking water.
For consumers, there are tax breaks as incentives to go green. One is a 10-year consumer tax credit for renewable energy investments in wind and solar. There are tax breaks for the purchase of electric vehicles, including a $ 4,000 tax credit for the purchase of used electric vehicles and $ 7,500 for new ones.
In all, Democrats believe the strategy could put the country on the path to reducing greenhouse gas emissions by 40% by 2030 and “would represent by far the largest climate investment in US history.”
HOW TO PAY ALL THIS?
The biggest revenue boost in the bill is a new 15% minimum tax on companies earning more than $ 1 billion in annual profits.
It’s a way to crack down on some 200 US companies that avoid paying the standard corporate tax rate of 21%, including some that end up paying no tax at all.
The new minimum corporate tax will take effect after fiscal year 2022 and will raise approximately $ 258 billion over the decade.
Revenue would have been $ 313 billion, but Sinema insisted on a change to the company minimum of 15%, allowing for a deduction from the depreciation used by manufacturing industries. This saves approximately $ 55 billion in total revenue.
The money is also raised by encouraging the IRS to pursue tax tricks. The bill proposes an $ 80 billion investment in taxpayer services, enforcement and modernization, which is expected to raise $ 203 billion in new revenue, a net gain of $ 124 billion over the decade.
The bill abides by Biden’s original promise not to raise taxes on households or businesses earning less than $ 400,000 annually.
Lower drug prices for seniors are paid for with savings from Medicare negotiations with drug companies.
WHAT HAS CHANGED IN THE LAST DAYS?
To win over Sinema, the Democrats have abandoned plans to close a tax loophole that wealthy Americans have long enjoyed: the so-called “interest rate,” which under current law taxes wealthy hedge fund managers and others at a tax rate. 20%.
The left has been trying for years to raise the tax rate on reported interest, which was raised to 37% in the original bill, more in line with higher incomes. Sinema would not allow it.
Maintaining the tax break for the rich robs the party of the $ 14 billion in revenue they were counting on to help pay for the package.
In its place, the Democrats, with Sinema’s approval, will impose a 1% excise tax on share buybacks, raising about $ 74 billion over the decade.
EXTRA MONEY TO PAY DEFICITS
With about $ 740 billion in new revenue and about $ 433 billion in new investment, the account promises to make a difference in reducing the deficit.
Federal deficits rose during the COVID-19 pandemic, as federal spending soared and tax revenues fell as the nation’s economy changed due to closures, closed offices, and other massive changes.
The nation has seen deficits rise and fall in recent years. But the general federal budget is on an unsustainable path, according to the Congressional Budget Officewhich this week released a new report on long-term projections.
WHAT IS LEFT BEHIND
This latest package, after 18 months of start-stop negotiations, leaves many of Biden’s most ambitious goals behind.
While Congress passed a $ 1 trillion bipartisan infrastructure bill for highways, broadband and other investments that Biden enacted last year, the other key priorities of the president and party have vanished.
Among these is the continuation of a $ 300 monthly tax credit for children that sent money directly to families during the pandemic and is believed to have largely reduced child poverty.
Plans for free preschool and community college are also gone for now, as well as the nation’s first paid family leave program that would have provided up to $ 4,000 a month for births, deaths, and other basic needs.
Associated Press writer Matthew Daly contributed to this report.