Biden signs $740bn health, climate, tax ‘Inflation Reduction Act’
The legislation, though less than Biden originally wanted, brings the largest investment to fight climate change in United States history.
US President Joe Biden has signed a $740bn climate change, healthcare and tax bill into law, handing the Democratic Party a much-needed win ahead of the November midterm elections.
In a signing ceremony at the White House on Tuesday, Biden heralded the Inflation Reduction Act for its record investment towards cutting carbon emissions. The bill includes nearly $370bn meant to encourage a shift away from fossil fuels, although some allege that it does not go nearly far enough.
“The American people won and the special interests lost,” Biden said during a ceremony at the White House on Tuesday. “This bill is the biggest step forward on climate, ever.”
The estimated $740bn package is made up of $440bn in new spending and $300bn towards easing deficits.
The bill’s passage represents one of the most substantial victories for Biden’s legislative agenda to date. His Democratic Party hopes it may help convince voters that it has been able to deliver on fundamental promises, even with a thin majority in Congress that has given leverage to more conservative Democrats allied with the fossil fuel industry.
Earlier versions of Biden’s legislative agenda would have included more than $3 trillion to move away from fossil fuels, establish universal childcare, paid family and medical leave, and expand healthcare, among other provisions.
The promise of this nation is real. The Inflation Reduction Act is not just about today, it's about tomorrow.
It’s about showing that America – and American democracy – works.
Not just for the privileged few. But for all of us.
— President Biden (@POTUS) August 16, 2022
However, those ambitions were shaved down little by little in order to make the legislation more acceptable to Democrats such as Senator Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, who have received large donations from corporate interests and demanded a smaller bill with less spending.
Advocates of more robust climate action see the final result as an incomplete but mostly positive step forward.
The legislation requires the Interior Department “to offer at least 2 million acres of public lands and 60 million acres of offshore waters for oil and gas leasing each year for a decade as a prerequisite to installing any new solar or wind energy,” according to the conservation group the Center for Biological Diversity. It called those provisions “Manchin Poison Pills”.
The law also includes more than $4bn in funds to help western US states such as California and Arizona cope with record droughts that have strained water supplies and contributed to enormous wildfires.
Healthcare is another component of the bill, which includes $64bn to help people cover health insurance premiums. It also includes a $2,000 yearly cap on prescription drug costs for Americans who receive health insurance through Medicare.
The Republican Party has strongly opposed the legislation at every step, and no Republican legislator has voted for the bill in either the House of Representatives or the Senate, the two legislative houses that make up the US Congress.
The GOP has hammered Biden for inflation that has caused the cost of living to increase, and while the law is named the Inflation Reduction Act (IRA), analysts doubt that it will have a strong effect on current inflation.
Republicans have focused much of their criticism on new funds for the Internal Revenue Service (IRS), the US federal tax collection agency.
The Biden administration has countered claims from Republican lawmakers that everyday families will pay a steeper tax bill, and US Treasury Secretary Janet Yellen has instructed the IRS to focus enforcement activities on households and companies that make upwards of $400,000 a year.
A January poll by Data for Progress, a progressive polling institute, found that Americans support more rigorous enforcement of tax laws against wealthy Americans by substantial margins. Just seven percent of respondents said that the IRS should conduct fewer audits of millionaires and large corporations, and 73 percent said the agency should be conducting more.
The law is estimated to bring in $740bn in revenue over the next 10 years, from a combination of higher taxes on wealthy corporations, levies on stock buybacks, and stronger enforcement of tax laws on high-income households.
It is unclear what impact the legislation will have on voters as the US nears the November 8 midterm elections, where the party in power typically loses ground to the opposition. However, Democrats hope that a number of recent accomplishments, such as expanding veteran healthcare, investments in US tech manufacturing, and mild gun reform will help their chances.
They also hope that voters will be turned off by an increasingly extreme Republican Party, which has promoted the lie that the 2020 election was stolen from former President Donald Trump through widespread voter fraud and passed strict abortion bans in numerous states.