The historic Inflation Reduction Act strongly pushed by the Democratic Party, officially made it through the hyper-partisan Congress this Friday August 12th, after a long and well-publicized series of negotiations, procedural hurdles, and political dramas expected to culminate with President Biden’s signature of the bill into law of the land this week. The landmark decision includes the largest investment in green-energy infrastructure in U.S. history, as well as the most significant additions to public healthcare policy since the Affordable Care Act of 2010.
The Inflation Reduction Act, proposed in one form or another ever since President Joseph Biden took office in January last year, had so far failed to make it through the equally-divided Senate due to the dissent of Democrat representatives Joe Manchin of West Virginia and Krysten Sinema of Arizona. But Senate Majority Leader Mr. Chuck Schumer managed to alleviate the moderates’ concerns about overspending and struck a deal with Manchin a couple of weeks ago, removing the last major obstacle in the way of the Act. Once passed, the bill was aptly hailed by Mr. Schumer as a “defining legislative feat of the 21st century”.
But the victory did not come easy; in fact, the opposition could not have been more adverse. Not a single Republican representative in either chamber of Congress voted for the historic bill designed to reduce inflation through taxation as well as provide relief to the most vulnerable segments of society. Surprisingly, the bill was proposed and successfully passed while the Congress was officially in weeklong summer recess last week. It went through the Senate after a 50-50 deadlock was broken by Vice President Kemala Harris last Monday, after which the House marked its approval in an absolute partisan 220-207 vote Friday. The bill was vehemently debated and amendments were considered by the two parties in the Senate in a nightlong vote-a-rama session last weekend. The Senate filibuster was avoided through a procedural mechanism known as budget reconciliation, a tool that has become frequently invoked in recent decades.
The bill, aptly named Inflation Reduction Act, consists of two major parts. The first major part of the bill deals with federal revenue, expected to raise up to $700 billion in new tax revenue over ten years, almost exclusively from the highest income earners through 15 % mandatory corporate tax and 1 % tax on stock buybacks. It will also empower the Internal Revenue Service through additional necessary funding to enforce the new levies. These measures are expected to result in a notable overall reduction in fiscal deficit over the coming decade.
On the expenditure side, the new legislation proposes around $370 billion in climate and energy policy spending, in a bid to reduce the U.S. carbon emissions by up to 40 % from 2005 levels. If signed into effect, the bill will be huge step to improve America’s lagging performance in keeping its international climate pledges and dealing with the rising threat of climate change, which has already cost the American people over $1 trillion in damages over the past ten years.
How will it Help Black People?
The Inflation Reduction Act will also impose a corporate minimum tax on corporations making $1 billion or more and increase the budget for the Internal Revenue Service (IRS) by $80 billion to crack down on wealthy Americans who are dodging their taxes. This tax policies could help close the racial wealth gap in low income areas helping Small Businesses to capitalize on tax breaks. On the Climate side “It is also reducing pollution in urban places where we know that there’s a lot of congestion and therefore a lot of air pollution such as large cities.
Furthermore, the Inflation Reduction Act also accomplishes remarkable feats in the healthcare arena at very little cost: It empowers Medicare to directly negotiate fixed drug prices with pharmaceutical dealers, as well as cap the annual out-of-pocket costs to recipients to a maximum amount of $2,000. It also allows for a three-year extension in public health subsidies, among other measures, to boost insurance coverage across the country. These changes will be the most significant addition to the national healthcare system since the passing of the Affordable Care Act in 2010 under the previous Democrat administration.