by Gabe Fleisher
Good morning! It’s Monday, August 8, 2022. Election Day 2022 is 92 days away. Election Day 2024 is 820 days away.
Senate approves major Democratic climate, health, tax package
After 18 months of intricate negotiations — and more than a few points along the way when their efforts seemed doomed — Senate Democrats succeeded on Sunday in passing the party’s sweeping climate, health care, and tax package.
The package, which Democrats have dubbed the Inflation Reduction Act, passed in a party-line 50-50 vote, with Vice President Kamala Harris providing the pivotal tie-breaker.
Its passage marks a critical victory for Democrats, and comes after a string of other successes for President Biden and his party. We’ll come back to the political significance in a moment; first, here’s a refresher on what’s actually in the legislation:
→ The most significant climate investments ever passed by the Senate. The package would plow more than $370 billion into combatting climate change, including $260 billion over 10 years in new tax credits to incentivize the production of renewable energy sources like solar, wind, and hydropower.
Other climate elements include $80 billion in consumer tax credits to encourage people to buy electric vehicles and other clean energy products, $60 billion to aid impoverished communities facing the effects of climate change, a program to force oil and gas companies to slash their methane emissions, and a $27 billion “green bank” to spur further investments in clean energy.
At the same time, as a concession to win the support of Sen. Joe Manchin (D-WV), the package would also pave the way for fossil fuel companies to receive new oil and gas leases on public lands and waters. Still, Democrats say the package would lower greenhouse gas emissions by 40%, compared to 2005 levels, by 2030 — achieving almost all of Biden’s 50% goal.
→ The biggest changes to health care since Obamacare. The package includes a long-sought Democratic goal: provisions that will allow Medicare to directly negotiate prescription drug prices with drug companies, which is projected to save the federal government more than $280 billion over 10 years.
The program would not take effect until 2026, when the government would be able to negotiate to push down the prices of 10 high-cost drugs; more drugs would follow in later years.
The bill would also make all vaccines free for Medicare beneficiaries, cap their out-of-pocket drug costs at $2,000 a year, and require drug companies to offer rebates to seniors on Medicare if drug prices are raised faster than inflation. Finally, the package includes a three-year extension for Obamacare subsidies passed last year, ensuring aid for millions of Americans in paying their health care premiums.
→ New taxes on wealthy Americans and corporations. Also as part of a bid to win Manchin over, the package is completely paid for — and then some. The bill spends about $430 billion over 10 years, but raises about $730 billion through tax reforms or prescription drug savings, leaving around $300 billion that will go towards reducing the deficit.
The biggest tax change in the package is a new 15% minimum tax on corporations that earn $1 billion or more annually but use loopholes to avoid paying the standard 21% corporate tax rate.
Democrats had also hoped to narrow the carried interest tax loophole, which allows private equity income to be taxed at a lower rate, but that provision was axed by Sen. Kyrsten Sinema (D-AZ) and replaced with a 1% excise tax on stock buybacks. The package would also spend about $80 billion to beef up IRS tax enforcement, which has been estimated will lead to $124 million in net revenue.
Sunday’s vote came after a 16-hour ritual known as a “vote-a-rama.” Democrats were able to advance the Inflation Reduction Act with only 50 votes — as opposed to the 60 usually needed to avoid a filibuster — because they went through a process known as reconciliation.
Reconciliation allows the majority party to skirt around the filibuster, but only if a bill is deemed to comply with the Senate’s strict budget rules — and only after the Senate holds votes on a series of amendments offered by both parties. In total, 37 amendments were considered in the wee hours of Sunday morning; almost all of them were rejected, as Democrats voted down Republican amendments to weaken the package and efforts by Sen. Bernie Sanders (I-VT) to expand it.
Notably, Democrats also tried during the “vote-a-rama” to overrule the Senate parliamentarian — the referee who decides which parts of the package are in compliance with the reconciliation rules — to include a provision that would have capped insulin costs at $35 per month in the private market. The effort gained seven Republican backers, but failed 57-43, short of the 60 votes required.
Democrats were exuberant after the bill’s passage in the Senate. “This bill will kick-start the era of affordable clean energy in America,” Senate Majority Leader Chuck Schumer (D-NY) declared after the vote. “It is a game-changer. It is a turning point. And it has been a long time coming.”
“To Americans who’ve lost faith that Congress can do big things, this bill is for you.”
The House is slated to approve the measure on Friday and then send it to President Biden’s desk. When Biden signs the package, it will mark his latest major achievement, following a two-week period that also included congressional approval of sweeping packages boosting competitiveness with China and aiding veterans, a mission killing al Qaeda’s leader, and new data showing unemployment at a 50-year low.
Biden, ironically, has been in quarantine for most of those successes, diagnosed with Covid and then with a rebound case; he tested negative and emerged from isolation on Sunday.
Will the new legislation be enough to rescue Democrats in November’s midterm elections? It’s hard to say. Even coming off of that string of victories, Biden still faces some pretty daunting headwinds: an approval rating below 40% and historic trends that point to sweeping midterm losses for the incumbent president’s party.
Republicans expressed confidence this weekend that the new Democratic package would only hurt the party further. Arguing that the tax burden from the package would be passed onto workers — and citing estimates that the bill would barely impact inflation, despite its name — Senate Minority Leader Mitch McConnell (R-KY) said Sunday that the package proved Democrats “simply do not care about middle-class families’ priorities.”
“But the working Americans they have failed will be writing Democrats’ report cards in three months’ time,” McConnell added.
Both parties now have less than three months to make their cases to the American electorate.
What else to watch this week
→ Gas prices. The national average is expected to fall under $4 today for the first time since March, another positive development for Biden. But the real test will come Wednesday, when inflation figures for July are released.
→ Biden’s victory lap. The president will spend much of this week celebrating the wins he notched while in quarantine. He’ll hold back-to-back bill signings on Tuesday and Wednesday for the China competitive package and the veteran health care measure.
→ Trump investigations. Also coming up this week: former President Donald Trump’s personal lawyer, Rudy Giuliani, is set to testify before a Georgia grand jury examining Trump’s efforts to overturn the 2020 election.
Meanwhile, new books continue to come out with revelations from the Trump era: including a new excerpt from one out this morning on Trump’s relationship with his top generals, and new photos from another depicting the ex-president’s habit of flushing documents down the toilet.
What’s going on in Washington today
All times Eastern. Click on an event’s time to watch it.
President Joe Biden will start his day at his vacation home in Rehoboth Beach, Delaware, where he flew on Sunday after testing negative for Covid.
This morning, he will travel to Lost Creek, Kentucky (8:30 am) to receive a briefing on the ongoing response efforts to the recent floods (12:30 pm). While there, he will visit with families impacted by the flooding and survey the damage, and then deliver remarks (2 pm). After his speech, Biden will leave to return the White House (3:25 pm).
Vice President Kamala Harris will meet with a group of college presidents to discuss abortion access (3:15 pm).
First Lady Jill Biden will join the president on his trip to Kentucky.
Second Gentleman Doug Emhoff will visit Capital Area Food Bank in Washington, D.C., and host a roundtable discussion on addressing food insecurity (12:30 pm).
White House press secretary Karine Jean-Pierre will hold a press gaggle aboard Air Force One during the flight to Kentucky.
The Senate is on recess until September 6.
The House is on recess until Friday.
The Supreme Court is on recess until October.
I want to quickly clear up three errors that were made in the newsletter last week:
- I listed the wrong home state for Sen. Dan Sullivan. He’s from Alaska.
- I incorrectly reported details from a Michigan House primary. Rep. Haley Stevens was backed by the group AIPAC while Rep. Andy Levin was supported by the organization J Street.
- I gave the wrong age for Reese Hamsmith, the Texas girl whose death after swallowing a battery inspired a law that passed Congress last week. She was 18 months old.
My sincere apologies for the errors and my thanks to all of the readers who wrote in to point them out.
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