WASHINGTON — After months of grueling negotiations, Democrats are poised to advance a climate, tax and health care package that will salvage key elements of President Biden’s domestic agenda.
The legislation, while falling short of the ambitious $2.2 trillion Build Back Better Act the House passed in November, fulfills many longstanding Democratic goals, including addressing the burdens of climate change on a rapidly warming planet by taking steps to reduce of prescription drug costs and overhaul parts of the tax code in an effort to make it fairer.
Here’s what the final package contains:
It is the largest single American investment to slow global warming.
The bill includes the largest spending ever by the federal government to slow global warming and reduce demand for the fossil fuels that are primarily responsible for causing climate change.
It would invest nearly $400 billion over 10 years in tax credits aimed at steering consumers toward electric vehicles and pushing electric utilities toward renewable energy sources like wind or solar.
Energy experts said the measure would help the United States cut greenhouse gas emissions about 40 percent below 2005 levels by the end of this decade. That puts the Biden administration within touching distance of meeting its goal of cutting emissions by about half by 2030. Much more will be needed to keep the planet from warming to dangerously high global temperatures, scientists said, but Democrats they saw it as an important first step after decades of inaction.
At the same time, Democrats agreed to some fossil fuel and drilling provisions as concessions to Sen. Joe Manchin III of West Virginia, a holdover from a conservative state heavily dependent on coal and natural gas.
The measure would secure new oil drilling leases in the Gulf of Mexico and Alaska’s Cook Inlet. It would extend tax credits for carbon capture technology that could allow power plants that burn coal or natural gas to continue operating with lower emissions. And it would require the Interior Department to continue auctioning off fossil fuel leases if it plans to approve new wind or solar projects on federal lands.
The tax credits include $30 billion to accelerate the production of solar panels, wind turbines, batteries and the processing of critical minerals. $10 billion to build facilities to make things like electric vehicles and solar panels. and $500 million through the Defense Production Act for heat pumps and critical minerals processing.
There is $60 billion to help disadvantaged areas disproportionately affected by climate change, including $27 billion to create the first national “green bank” to help spur investment in clean energy projects — particularly in poor communities. The bill would also force oil and gas companies to pay fees of up to $1,500 a ton to deal with excessive leaks of methane, a potent greenhouse gas, and would reverse a 10-year moratorium on offshore wind leasing enacted by President Donald J. Trump. .
Medicare could directly negotiate the price of prescription drugs, reducing costs.
For the first time, Medicare could negotiate with pharmacists over the price of prescription drugs, a proposal projected to save the federal government billions of dollars. This will apply to 10 drugs initially, starting in 2026, and then expand to include more drugs in subsequent years.
Opponents argue that the plan will stifle innovation and the development of new treatments by reducing the profits pharmaceutical companies can make in their business, while some liberals expressed frustration that the policy would be too slow to be implemented. If the package becomes law, as expected, it would be the largest expansion of federal health policy since the passage of the Affordable Care Act.
The package would cap the out-of-pocket cost seniors pay annually for prescription drugs at $2,000 and ensure seniors have access to free vaccines. Lawmakers also included a discount in case price increases exceed the rate of inflation. (Top Senate rules officials, however, said the penalty could only apply to Medicare, not private insurers.)
Republicans successfully challenged the inclusion of a $35 price cap on insulin for patients with private insurance during a series of amendment votes early Sunday morning, forcing its removal. However, a separate proposal capping the price of insulin at $35 per month for Medicare patients remained intact.
Expanded health care subsidies will be extended.
As part of the $1.9 trillion pandemic relief bill passed by Democrats last year, lawmakers agreed to expand subsidies available under the Affordable Care Act. That proposal lowered premiums for nearly every American who relies on the plan’s purchase, either by making some plans free for lower-income people or by extending some support to higher-income people who previously didn’t get any help.
The package, which could pass the Senate as early as Sunday, would extend those subsidies, which now expire at the end of the year, for another three years. Democrats fear a backlash in November’s midterm elections if they allow the subsidies to expire.
Wealthy corporations will see a tax increase, while the IRS will receive a funding boost.
The tax proposals were crafted by Sen. Kyrsten Sinema, D-Arizona, who has resisted her party’s push to raise tax rates on the nation’s wealthiest corporations and individuals.
To avoid rising interest rates. Ms. Sinema objected, Democrats agreed to a much more complicated change to the tax code: a new minimum corporate tax of 15 percent on the profits that companies report to shareholders. It would apply to companies that report more than $1 billion in annual revenue in their financial statements, but can also use credits, deductions and other tax treatments to lower their effective tax rates.
Ms. Sinema defended a rebate that would have benefited manufacturers, a change she successfully pushed for before pledging Thursday to move forward with the legislation.
It also forced the repeal of a proposal backed by Democrats and Republicans that would have limited a tax break that both the hedge fund and private equity industries used to get lower tax rates from their employees. And he pledged to pursue separate legislation outside of the budget package, but that would require at least 10 Republicans to support it.
The legislation would also bolster the IRS with an investment of about $80 billion, hoping to recoup additional tax revenue by cracking down on wealthy corporations and wealthy tax evaders.
Republicans, who have historically opposed raising funds for the agency, argued that it would increase checks and balances on lower-income households. The IRS, in turn, dismissed the concern, telling Congress that “these resources are absolutely not about auditing small businesses or middle-income Americans.”