WASHINGTON (AP) — This is a far cry from the $4 trillion proposal President Joe Biden first floated to rebuild America’s public infrastructure. and family support systems but the compromise package on health care against inflation, climate change and deficit reduction strategies looks on track for Senate votes this weekend.
The proposal estimated at 740 billion dollars, hit by two top negotiators, Senate Majority Leader Chuck Schumer and Resistant Senator Joe Manchin, the conservative Democrat from West Virginia, understands some hard-fought party priorities. But the finishing touch came this week from Sen. Kyrsten Sinema, D-Arizona, who put her work to the final revisions.
What is and is in the Democrats’ “Inflation Reduction Act of 2022” as it currently stands:
REDUCED PRESCRIPTION DRUG COSTS
Launching a long-sought goal, the bill would allow the Medicare program to negotiate prescription drug prices with pharmaceutical companies, saving the federal government some $288 billion over the 10-year budget window.
These new revenues would be reinvested in reducing drug costs for seniors, including a $2,000 cap for seniors buying prescriptions at pharmacies.
The money would also be used to provide free vaccinations to the elderly, who are now among the few not guaranteed free access, according to a briefing paper.
HELP PAY HEALTH INSURANCE
Bill would extend grants given during COVID-19 pandemic to help some Americans who buy health insurance themselves.
Under previous pandemic relief, additional aid was due to expire this year. But the bill would allow the aid to continue for three more years, reducing insurance premiums for people who buy their own health care policies.
“THE LARGEST CLIMATE CHANGE INVESTMENT IN US HISTORY”
The bill would invest nearly $374 billion over the decade in climate change strategies, including investments in renewable energy generation and tax refunds for consumers to buy vehicles new or used electrics..
It breaks down to include $60 billion for a clean energy manufacturing tax credit and $30 billion for a wind and solar power production tax credit, seen as ways to stimulate and to support industries that can help reduce the country’s dependence on fossil fuels. The bill also grants tax credits for nuclear power and carbon capture technology that oil companies such as Exxon Mobil have invested millions of dollars to advance.
The bill would impose a new levy on excess methane emissions from oil and gas drilling while giving fossil fuel companies access to more leases on federal lands and waters.
A late addition pushed 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, including Nearly 40 million Americans depend on them for drinking water.
For consumers, there are tax breaks like incentives to go green. One is a 10-year consumption tax credit for renewable energy investments in wind and solar. There are tax breaks for the purchase of electric vehicles, including a tax credit of $4,000 for the purchase of used electric vehicles and $7,500 for new vehicles.
In total, Democrats believe the strategy could put the country on a path to reducing greenhouse gas emissions by 40% by 2030, and “would represent by far the biggest climate investment in history. the United States “.
HOW TO PAY ALL THIS?
The biggest source of revenue in the bill is a new 15% minimum tax on corporations that make more than $1 billion in annual profits.
It’s a way to crack down on some 200 U.S. companies that avoid paying the standard 21% corporate tax rate, including some that end up paying no tax at all.
The new minimum corporate tax would take effect after the 2022 tax year and would raise some $258 billion over the decade.
Revenue would have been $313 billion, but Sinema insisted on a change to the 15% minimum for businesses, allowing a capital cost allowance used by manufacturing industries. This reduces total revenue by approximately $55 billion.
Money is also collected by strengthening the IRS to fight tax evaders. The bill proposes an $80 billion investment in taxpayer services, enforcement and modernization, which is expected to generate $203 billion in new revenue, a net gain of $124 billion over the decade.
The bill respects Biden’s original pledge not to raise taxes on families or businesses earning less than $400,000 a year.
Lower drug prices for seniors are funded by savings from Medicare’s negotiations with drug companies.
WHAT HAS CHANGED IN THE LAST DAYS?
To convince Sinema, Democrats dropped plans to close a tax loophole long enjoyed by the wealthiest Americans — the so-called “deferred interest,” which under current law taxes wealthy hedge fund managers. and others at a rate of 20%.
The left has sought for years to raise the tax rate on carried interest, raised to 37% in the original bill, more in line with higher incomes. Sinema would not allow it.
Maintaining the tax break for the wealthy robs the party of $14 billion in revenue it was counting on to help pay for the package.
In its place, Democrats, with Sinema’s nod, will impose a 1% excise tax on stock buybacks, raising some $74 billion over the decade.
EXTRA MONEY TO PAY DEFICITS
With some $740 billion in new revenue and about $433 billion in new investment, the bill promises to spend the difference on deficit reduction.
Federal deficits soared during the COVID-19 pandemic when federal spending soared and tax revenues plummeted as the country’s economy went through shutdowns, closed offices and other massive changes.
The nation has seen deficits rise and fall in recent years. But overall federal budgeting is on an unsustainable path, says the Congressional Budget Officewhich this week released a new report on long-term projections.
This latest package after 18 months of start-stop negotiations leaves behind many of Biden’s most ambitious goals.
As Congress passes a $1 trillion bipartisan infrastructure bill for highways, broadband and other investments Biden signed into law last year, the president’s and party’s other key priorities have been eclipsed.
Among them is the continuation of a $300 monthly child tax credit that sent money directly to families during the pandemic and which would have significantly reduced child poverty.
For now, free pre-kindergarten and community college plans, as well as the nation’s first paid family leave program, which would have provided up to $4,000 a month for births, deaths and other critical needs, have also disappeared.
Associated Press writer Matthew Daly contributed to this report.
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