August 5, 2022
Senate Democrats have the votes…for now…to pass a major climate and healthcare bill known as the Inflation Reduction Act. This is a major deal but the path forward is littered with pitfalls and this thing could go sideways very easily. This is going to be a deep dive – so if you don’t have time to watch right now, favorite this and come back and watch when you have a few minutes.
I actually broke the news of the Democrat deal last night in my News Girl News Roundup email. You should probably sign up for it to stay up to date on everything that’s happening. It’s free. So why not? The link is in my bio.
Now back to what’s in this bill, what does it do for you and does it really reduce inflation…plus I’ll talk about the democrat deal that got us here and the dicey path forward.
Generally this bill will do several things that will bring money into the government and then it will take that money and spend it on specific things.
*This all depends on the Senate Parliamentarian’s ruling on whether all these provisions can be included under the Budget Reconciliation process.
In the revenue generating column there are things like establishing at 15% minimum tax for all corporations, the ability for Medicare to negotiate drug prices which will bring the cost down for patients and for the government, and it give money to the IRS to go after higher income tax cheats and it imposes fees on oil and gas facilities that are pumping metric tons of methane into the environment. The most recent estimate by the congressional budget office found those actions -and many others– will generate about $790 billion dollars over 10 years. That’s the money that’s expected to come *in* to the government.
In those 10 years the bill says that newly generated revenue will be spent on climate policy programs and healthcare issues. On the climate side we’re talking about things like extending electric vehicle tax credits and credits for making your home more energy efficient and clean energy manufacturing grants. But the bill also facilitates more oil and gas drilling through required sales of land leases. This bill also extends the subsidies for those who get their healthcare through the affordable care act for the next three years. And it caps out of pocket prescription costs for those on Medicare at $2000 a year starting in 2025.
But here’s the big one, $300 billion dollars of that revenue will go towards paying down the federal deficit.
Now — will all this actually bring down inflation?
It really depends on which economist you talk to. Some say – in totality, overall, yes it will. But skeptics say yeah that might be true but it’s not going to help get inflation down tomorrow. For all you who really want to look at the numbers I posted the most recent congressional budget office analysis on my website.
So now to the democrat deal.
The lone democrat holdout, Arizona Senator Kyrsten Sinema said last night she’s willing to “move forward” and support this legislation. But she did get some concessions in return. She was able to get leadership to remove the provision that would have closed the “carried interest tax” loophole and instead replaced it with language to impose a one-percent excise tax on company stock buybacks. She also was able to get some changes to the provision that outlines how companies can deduct depreciated assets from their taxes.
Lastly – the process to get this massive bill past is going to start tomorrow. Yes, Senators are going to be working through the weekend. Looks like I will be too.
Democrats are trying to pass this bill with zero Republican votes. They can do that through a process called budget reconciliation. It bypasses the filibuster 60-vote requirement and instead only requires a simple majority –50 votes– plus the Vice President’s tie breaking vote. That means all 50 Democrats and Independents have to vote yes. And how that Sinema is on board, Democrats have the numbers.
But if you thought it would be that simple you’ve got another thing coming. Starting tomorrow, the senate will vote to open debate on this bill through reconciliation. Then – the vote-a-rama begins. I know that’s a funny-sounding name, but it’s real and it’s like a lightning round of debates and votes. During the vote-a-rama any Senator to bring an amendment to the floor they get about 10 minutes to debate and then senators immediately vote. These vote-a-ramas get really really ugly. Both sides put amendments on the floor that have almost nothing to do with the inflation reduction act. The amendments are really meant to just put the other side into a politically uncomfortable situation. In this case, republicans say they will make the vote-a-rama “hell” for democrats.
After the vote-a-rama is done there’s one more vote and it’s over. That whole process could be completed as early as tomorrow night. It may also stretch into Sunday. Then the House has to vote. But the house is on recess. So leadership said House members will be called back to Washington dc and we are expecting a vote on the Inflation Reduction Act in the House –if—it passes the Senate, next Friday.
Committee for a Responsible Federal Budget analysis here.
CBO score here.
