After hours of debate and votes on a nearly endless stream of amendments, Senate Democrats passed the Inflation Reduction Act, a sweeping climate change, health care and tax bill that delivers on many of the key priorities of the Biden administration.
The roughly $740 billion measure – which includes the largest investment to fight climate change in U.S. history – now heads to the House of Representatives, which is expected to take it up this week and send it to President Joe Biden's desk.
The bill includes around $370 billion to fight climate change, allows Medicare to negotiate the prices on some prescription drugs, establishes a 15% corporate minimum tax on companies worth $1 billion or more, enhances IRS enforcement and introduces an excise tax on stock buybacks.
The measure delivers President Biden and Democrats in the House and Senate majorities a major election-year victory.
"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," President Biden said in a statement. "I ran for President promising to make government work for working families again, and that is what this bill does — period."
"It’s a very important day and I celebrate that,” Vice President Kamala Harris said as she left the Capitol on Sunday afternoon after casting the tiebreaking vote to pass the bill.
After more than 16 hours of considering amendments, all 50 Senate Democrats voted to support the measure, hugging, fist-bumping and exchanging congratulatory messages with one another. All 50 Republicans opposed, and quickly left the Senate floor after voting. Democrats cheered and applauded as Vice President Harris cast the tiebreaking vote to pass the measure.
"It's been a long, tough and winding road," Senate Majority Leader Chuck Schumer, D-N.Y., said ahead of the final vote, referencing the nearly two-year odyssey of attempting to pass parts of President Biden's multi-trillion Build Back Better social spending and climate change agenda. "After more than a year of hard work, the Senate is making history."
"I am confident the Inflation Reduction Act will endure is one of the defining legislative feats of the 21st century," he said. "Our bill reduces inflation, lowers costs, creates millions of good-paying jobs, and it's the boldest climate package in U.S. history. This bill will kickstart the era of affordable clean energy in America. It's a game changer. It's a turning point. And it's been a long time in coming."
"To Americans who've lost faith that Congress can do big things, this bill is for you," he continued. "To seniors who face the indignity of rationing medications, or skipping them all together, this bill is for you. And to the tens of millions of young Americans who spent years marching, rallying, demanding that Congress act on climate change.
"It's over, gang," said Sen. Joe Manchin, who negotiated the measure with Schumer, calling it a "a good, balanced bill.”
After more than a year of negotiating, Schumer and West Virginia Sen. Joe Manchin surprised the political world last week by announcing an agreement on the bill, which would lower prices on some prescription drugs, extend Affordable Care Act subsidies, invest roughly $370 billion in fighting climate change and energy production and pay down the federal deficit by $300 billion.
"“It's going to lower prescription drug costs," Sen. Ed Markey, D-Mass., told Spectrum News. "It's going to ensure that everyone gets the subsidies they need for their coverage under the Affordable Care Act."
Among the climate benefits, the bill includes rebates on the purchase of energy efficient appliances for the next decade, a tax credit for homeowners of up to 30% of the value of big clean energy projects, like rooftop solar, and a $7,500 tax credit on the purchase of a new electric vehicle for Americans making less than $150,000 per year.
"We want every consumer to get everything they can out of this bill," White House national climate adviser Gina McCarthy told Spectrum News.
The bill would be paid for by a 15% corporate minimum tax on companies worth $1 billion or more and enhanced IRS enforcement — with the pledge of no new taxes on families making less than $400,000 and no new taxes on small businesses.
"We're talking about 150-200 companies in the country, huge companies that, through various use of the tax code, pay zero or practically no taxes," Maine Sen. Angus King told Spectrum News. "I don't think I can explain to a policeman in Portland why he's paying more in taxes.”
The Inflation Reduction Act contains much of what President Joe Biden had called for in his Build Back Better bill, a multi-trillion social spending and climate change bill scuttled by Manchin last December.
The lawmakers got Arizona Sen. Kyrsten Sinema on board with the bill by removing a certain tax provision known as the carried interest loophole from the bill, as well as adding billions in drought resiliency funding.
At a press conference on Friday, Schumer confirmed that the carried interest component would be replaced by including an excise tax on stock buybacks, which will bring in an estimated $74 billion in revenue – much higher than the $14 billion the carried interest provision would raise. Schumer said that "a good number of progressive legislators" were excited by the new tax on stock buybacks.
"I hate stock buybacks," Schumer said. "I think they're one of the most self-serving things that corporate America does. Instead of investing in workers and in training and in research and in equipment, they don't do a thing to make their company better and they artificially raise the stock price by just reducing the number of shares. They're despicable. I'd like to abolish them. In fact, [Vemont Sen. Bernie] Sanders and I had legislation to do that."
Lawmakers spent the better part of Saturday waiting for rulings from the Senate's parliamentarian, Elizabeth MacDonough, who made decisions on whether or not key provisions of the bill fit the requirements of the reconciliation process.
MacDonough on Saturday gave the green light to most of Democrats' prescription drug pricing plan – including letting Medicare negotiate on the price for prescription drugs and capping out-of-pocket expenses – giving the president's party a win as they start to consider the bill later in the afternoon.
"For the first time, Medicare will finally be allowed to negotiate prescription drug prices, seniors will have free vaccines and their costs capped," Leader Schumer said Saturday, adding: "We have a bill before us that can win the support of all 50 Democrats," Schumer added.
The parliamentarian did, however, deal Democrats a minor blow, making remove a provision that would force drugmakers to pay rebates if their prices rise above inflation for products they sell to private insurers. Pharmaceutical companies would have to pay those penalties if their prices for drugs bought by Medicare rise too high.
Schumer acknowledged that MacDonough issued "one unfortunate ruling" by cutting the provision; Oregon Sen. Ron Wyden, chair of the Senate Finance Committee, said that while he was “disappointed” the penalties for higher drug prices for privately insured consumers were dropped, the bill "nevertheless puts a substantial check on Big Pharma’s ability to price gouge.”
The parliamentarian earlier Saturday cleared the clean energy provisions of the bill, including one limiting electric vehicle tax credits to those assembled in the United States. She signed off on a fee on excess emissions of methane, a powerful greenhouse gas contributor, from oil and gas drilling. She also let stand environmental grants to minority communities and other initiatives for reducing carbon emissions, said Senate Environment and Public Works Committee Chairman Thomas Carper, D-Del.
She approved a provision requiring union-scale wages to be paid if energy efficiency projects are to qualify for tax credits, and another that would limit electric vehicle tax credits to those cars and trucks assembled in the United States.
"The Finance Committee's clean energy tax package adheres to Senate rules, and important provisions to ensure our clean energy future is built in America have been approved by the parliamentarian," wrote Sen. Wyden in a statement.
"I'm especially pleased that our prevailing wage provisions were approved," Wyden continued. "These provisions guarantee wage rates for clean energy projects. Clean energy jobs will be good-paying jobs."
Democrats received a boost last week when the Congressional Budget Office scored the bill, saying that it would indeed cut federal deficits by $102 billion. Adding the roughly $204 billion from IRS enforcement, which the CBO does not officially score, that puts it in line with the $300 billion touted by Schumer and Manchin in their agreement.
The Senate's reconciliation process – which allows for budget-related bills to pass with a simple majority vote instead of the 60-vote filibuster threshold – lets lawmakers introduce an unlimited number of amendments to the measure, a process known as the "vote-a-rama."
Lawmakers voted late into the night on Saturday and through the early moring hours and all day Sunday on a series of amendments, largely introduced by Republicans to derail the measure and force Democrats into tough votes on issues like police funding and immigration. Progressive Sen. Bernie Sanders, I-Vt., also added his own amendments to try and expand the bill's benefits.
The Democratic caucus largely held together to keep the bill intact, though two key votes of note slightly modified the bill.
First, Republicans successfuly dealt Democrats a blow by stripping a provision from the bill that caps the price of insulin at $35 for private insurance. The measure failed despite 7 Republicans – Sens. Susan Collins, R-Maine, Josh Hawley, R-Mo., Cindy Hyde-Smith, R-Miss., John Kennedy, R-La., Bill Cassidy, R-La., Lisa Murkowski, R-Alaska, and Dan Sullivan, R-Alaska – joining all 50 Democrats in supporting keeping it in the bill.
And at almost the last minute, the bill was nearly derailed at the last minute by an amendment from Republican Whip John Thune, R-S.D., which would exempt some businesses from the 15% minimum tax on corporations, one of the bill's key fundraising provisions; the measure would be offset by the state and local tax (SALT) deduction, a controversial policy among lawmakers from northeastern states like New York, New Jersey and Massachusetts.
Moderate Sen. Kyrsten Sinema of Arizona supported the amendment – as did a number of Senate Democrats up for re-election in November, including Sens. Raphael Warnock, R-Ga., Maggie Hassan, D-N.H., Catherine Cortez Masto, D-Nev., and Mark Kelly, D-Ariz. – sending the rest of her party scrambling to come to an agreement to salvage the bill.
Ultimately, Sen. Mark Warner, D-Va., proposed an amendment right after that accepted the slight narrowing of the corporate minimum tax, but offered a different tax offset to fund it, one which extends for two years limits on how certain businesses can write off losses. Warner said the offset would raise $52 billion in revenue.
"The end is near," Warner said as he introduced his amendment, joking: "I hope."
After passing, the agreement set the bill on a course for final passage.
The Senate announced this week that they would take up the sweeping bill after Arizona Sen. Kyrsten Sinema, the last holdout on the measure, said that she would "move forward" with the measure. She reached a deal to remove a certain tax provision, the so-called carried interest loophole, from the bill, likely giving Senate Democrats the votes they need to pass the bill.
"We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate's budget reconciliation legislation," Sinema said in a statement. "Subject to the Parliamentarian's review, I'll move forward."
Sinema had also reportedly pushed for drought resilience funding to be added to the sweeping bill. Fellow Arizona Sen. Mark Kelly, along with Nevada Sen. Catherine Cortez Masto and Colorado Sen. Michael Bennet – all of whom are up for re-election in November – announced $4 billion in drought funding late Friday afternoon.
"I am pleased that we have reached an agreement on the Inflation Reduction Act that I believe will receive the support of the entire Senate Democratic conference," Schumer said at a press conference on Friday. "I've had many productive discussions with every member of our caucus over the last few days, and we've addressed a number of important issues that they have raised."
Schumer said that "Sinema said she would not vote for the bill" if the carried interest tax provision was removed, so they "had no choice" but to strike it from the bill.
"Make no mistake: The agreement preserves the core components of the inflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes, exploited by big corporations and the wealthy and reducing the deficit," Schumer continued. "We're now one step closer to enacting this historic legislation into law."
"We're delivering lower prices on prescription drugs, we're delivering lower energy costs, including your electric bill going down, and we're delivering on deficit reduction, as well as tax fairness," he said. "This is a very, very, very big deal."
Schumer praised what the measure aims to accomplish and pointed to recent polling which suggests wide support for the bill's provisions.
"With this bill, we're going to put our country on track to meet the climate goals we need to preserve for a planet for the sake of our children and our grandchildren," Schumer said. "With this bill, we're going to use the purchasing power of Medicare to ensure America's seniors have affordable access to life saving medicines they need. The anguish of people having to pay, not being able to pay for medicines that may save their lives will be greatly reduced. And with this bill, we are going to deliver our promise to close loopholes exploited by big corporations in the wealthy."
"But simply, this legislation will save lives," he said. "Create jobs, reduce costs, and reduce inflation, just what the American people want."
In an interview with Spectrum News on Friday, Labor Secretary Marty Walsh warned that the effects of the bill might not be felt by the average American for several months.
"I think it will be several months, probably like six months before they actually feel the impact," Walsh told Spectrum News' Taylor Popielarz. "One provision of that is that by allowing Medicare ... to be able to debate and negotiate down lower prices for prescription drugs, that won't happen overnight, but that will return a lot of money – particularly to our seniors in this country – back in their pocket."
"Then you have also some climate resiliency work that's going on there," he continued. "You have a tax change that's going to see money coming back into the American economy quick that's going to reduce the deficit. So there'll be some parts that I think it'll be six months for the whole bill is working the way it needs to be."
Prior to the vote, the White House put on a full-court press to tout the bill’s benefits for the American people and popular support for its provisions.
The Biden administration on Saturday issued a formal statement of support on the measure: "The Administration strongly supports passage of the Inflation Reduction Act of 2022. This legislation would lower health care, prescription drug, and energy costs, invest in energy security, and make our tax code fairer—all while fighting inflation and reducing the deficit."
"This historic legislation would help tackle today’s most pressing economic challenges, make our economy stronger for decades to come, and position the United States to be the world’s leader in clean energy," the Biden administration continued. "In all, the bill would reduce the deficit by more than $300 billion, including near-term deficit reduction that, according to a range of economic experts, would also reduce near-term inflation. In addition, lower costs for prescription drugs, health care, and energy would help reduce inflation, while giving American families more breathing room."
At a briefing on Friday, White House press secretary Karine Jean-Pierre touted a letter from more than 40 major companies, including Lyft, Unilever, Logitech, Ford and Levi Strauss & Co., calling for Congress to quickly pass the bill "because it will combat inflation, lower prices for Americans, invest in manufacturing and transition our country to a clean energy economy," the backing of a bipartisan group of former EPA administrators and the support of the U.S. Conference of Mayors.
Also Friday, the White House touted the support of former Republican California Gov. Arnold Schwarzenegger, who wrote in his newsletter that while he doesn't love every aspect of the bill, the measure makes him "hopeful" and urged Congress to pass it.
"The biggest investment any country has ever made in clean energy is a big f****** deal," Schwarzenegger wrote.
On Thursday, President Biden convened a roundtable of labor and business leaders to highlight the importance of passing the bill, saying it “meets the needs of working families and [is] what our economy needs now for stronger, sustained economic growth in the years ahead.”
“The Inflation Reduction Act will mean we're making the largest investment ever in clean energy and American energy security,” Biden said, emphasizing: “Largest in our history."
"And it will be the largest in American manufacturing as well," Biden added, when coupled with the Chips and Science Bill Congress recently passed that he will sign next week.
“I think it's important to underscore that this legislation is fiscally responsible,” Treasury Secretary Janet Yellen said. “It will actually reduce the deficit by hundreds of billions of dollars over time. And by reducing deficits, we’ll be complementing the work the Federal Reserve and the Administration is doing to combat inflation, even as we address these cost pressures like health care, prescription drugs and energy.”
General Motors CEO Mary Barra said that the bill “will help drive further investments in American manufacturing and sustainable, scalable, and secure supply chains. And all that comes with that is a stronger economy and job growth.”
“This is going to deliver fundamental economic change across America,” said AFL-CIO president Liz Shuler. “This bill as a major step forward. It’s going to improve the lives of working people. It’s going to improve lives for seniors who are trying to pay for their prescriptions, kids who are going to have a healthier planet to live on.”
The White House on Wednesday shared a series of polls showing the bill has popular support from the American people, as well as a statement from five former Treasury Secretaries — from both Democratic and Republican administrations — strongly backing the bill.
The Associated Press contributed to this report.