Divided U.S. Senate passes 'anti-inflation' bill

2022-08-08 Editor : Li Yan ECNS App Download

The U.S. Senate's passage on Sunday of the "Inflation Reduction Act of 2022" highlighted the division in the country's politics but also gave President Joe Biden a late-summer political victory.

After 16 hours of weekend debate, the $740 billion bill passed when Vice-President Kamala Harris cast the vote to break a 50-50 Senate tie. All 50 Republicans opposed the bill.

"The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century," said Senate Majority Leader Chuck Schumer, a New York Democrat.

"Democrats have already robbed American families once through inflation, and now their solution is to rob American families a second time," said Senate Minority Leader Mitch McConnell, a Kentucky Republican.

He said spending and tax increases in the legislation would eliminate jobs while having insignificant impact on inflation and climate change.

The House is expected to pass the bill Friday and send it to Biden for a signature.

"Today, Senate Democrats sided with American families over special interests, voting to lower the cost of prescription drugs, health insurance, and everyday energy costs and reduce the deficit, while making the wealthiest corporations finally pay their fair share," Biden said in a statement.

The vote gave the White House much-needed good news among the president's sinking poll numbers, three months before the November midterm elections.

Democrats approved the bill using a parliamentary procedure called "reconciliation", which allows budget-related legislation to avoid the 100-seat chamber's 60-vote threshold for most bills and pass by a simple majority.

The bill would invest $369 billion over 10 years in tax credits and incentives to support wind and solar power and electric vehicles, as well as emerging technologies such as carbon capture and storage, and low-emissions hydrogen, The New York Times reported.

The tax credits include $30 billion to increase the production of solar panels, wind turbines, batteries and critical minerals processing; $10 billion to build facilities for the manufacture of electric vehicles and solar panels; and $500 million under the Defense Production Act for heat pumps and critical minerals processing, the paper reported.

The Times reported that the measure would help the United States cut greenhouse gas emissions about 40 percent below 2005 levels by the end of this decade.

About $300 billion of the funds raised by the bill would go toward deficit reduction.

The bill would be funded with a 15 percent minimum tax on a handful of corporations with yearly profits above $1 billion, and a 1 percent tax on companies that repurchase their own stock. It also would bolster Internal Revenue Service (IRS) tax collections and increase government savings from lower drug costs.

The increased support for the IRS has rankled conservatives, who said the agency will hire 87,000 more agents.

But Senator Ben Cardin, a Maryland Democrat, told Fox News Sunday: "The auditing is going to be focused on those with high incomes, the large corporations, et cetera. So there's no reason to be fearful. And if you paid your taxes, and you complied with our laws, you should want to make sure everyone else does that."

Senator Joe Manchin, a Democrat from West Virginia who had previously opposed White House legislation more than once, voted with his party on Sunday.

He is a supporter of fossil fuels and his home state's coal industry.

Manchin won billions of dollars to help power plants lower carbon emissions plus language requiring more government auctions for oil drilling on federal land and waters. Party leaders also promised to push separate legislation this fall to accelerate permits for energy projects, which Manchin wants to include a nearly completed natural gas pipeline in his state.

The bill also includes letting the government's Medicare program for seniors negotiate what it pays for drugs for its 64 million elderly recipients; penalizing manufacturers for exceeding inflation for pharmaceuticals sold to Medicare; and limiting beneficiaries' out-of-pocket drug costs to $2,000 annually.

The bill also caps Medicare patients' costs for insulin, the diabetes medication, at $35 monthly. Democrats wanted to extend the $35 cap to private insurers, but it ran afoul of Senate rules.

"Right now, this bill actually ought to be called the war on seniors act," Republican Senator Rick Scott of Florida said during an interview on CBS News' Face the Nation and claimed it would raise Medicare costs. "I mean, this is a war on Medicare. … This is a $280 billion cut in Medicare."

Host Margaret Brennan interrupted Scott when he claimed, "Medicare is going to get caught and there are going to be seniors that don't get lifesaving drugs."

"Reducing Medicare cost is not the same as benefits though, you, you know that," Brennan said.

Scott replied: "Margaret, it's $280 billion that would have been spent. It was anticipated to be spent. It's not going to be spent now. And the drug companies that would be doing more research are not going to be able to spend the money on research."

Senator Kyrsten Sinema, an Arizona Democrat, who, with Manchin, has derailed some Democratic proposals, forced her party to drop a plan to prevent wealthy hedge fund managers from paying less than individual income tax rates for their earnings.

Democratic Senator Chris Coons of Connecticut said on ABC News' This Week that the bill could take "a year or more" to cut inflation.

"But, look ... we've seen gas prices come down week after week after week for the last five weeks in a row," Coons said. "Yes, inflation is higher than it should be, but we just got a robust jobs number, more than 500,000 jobs created in this past month. Unemployment's the lowest it's been in my lifetime. And I think we've got a strong economy, a strong recovery underway."

A strong jobs market, however, usually leads to more consumer spending, which does have an impact on inflation.


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