General Discussion

Inflation Reduction Act.


Inflation Reduction Act

https://en.wikipedia.org/wiki/Inflation_Reduction_Act

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Legislative history

The Build Back Better Act, which passed the House on September 27, 2021, was used by the Senate as the legislative vehicle for this legislation. On August 6, 2022 Senate Majority Leader Chuck Schumer proposed an amendment which would replace the text of the previously passed bill with the text of the Inflation Reduction Act of 2022. This substitute amendment was later adopted.[34]

Schumer's lead staffer, Gerry Petrella, recalled the surprise phone call came from Senator Joe Manchin's office just prior to the August recess and the breakthrough negotiations occurred on the final summer weekend.[35] Some of the many experts, lobbyists and organizers who worked to refine the bill's provisions included Leah C. Stokes, Adrian Deveny, Katherine Hamilton, Ari Appel, Mike Carr, Danielle Deiseroth, Ari Mathusiak, Camila Thorndike, Jamal Raad, Topher Spiro, and Yogin Kothari;[36][21][37] the overall approach was shaped by Manchin and Senators Ron Wyden, Mark Warner and Chris Coons, while Representative Scott Peters worked to add pro-pharmaceutical industry limits to the Medicare drug pricing provisions, Bernie Sanders contributed the basis for the Solar for All program, and Senators Elizabeth Warren and Kyrsten Sinema negotiated on shaping an alternative minimum tax for corporate book income.[21][38][22]

On August 7, 2022, following the vote-a-rama, an unlimited marathon voting session on amendments, that lasted nearly 16 hours, the Senate passed the bill (as amended) on a 51–50 vote, with all Democrats voting in favor, all Republicans voting against, and Vice President Kamala Harris breaking the tie.[3] On August 12, 2022, the bill was passed by the House on a 220–207 vote, with all Democrats voting in favor and all Republicans voting against it.[4] On August 16, 2022, the bill was signed into law by President Joe Biden.[39]

Provisions

Over a period of 10 years, the law was estimated to raise revenue from:[40][41][42]

Prescription drug price reform to lower prices, including Medicare negotiation of drug prices for certain drugs (starting at 10 new ones per year by 2026, increasing to more than 20 additional ones per year[43] by 2029)[44][45] and rebates from drug makers who price gouge – $281 billion[7][44][45]
Imposing a selective 15% corporate minimum tax rate for companies with higher than $1 billion of annual financial statement income – $222 billion
Increased tax enforcement – $181 billion[7][46]
Imposing a 1% excise tax on stock buybacks – $74 billion
2-year extension of the limitation on excess business losses – $53 billion[7]

In the same time period, it would spend this revenue on:[40][47]

Addressing domestic energy security and climate change, including funding for drought resiliency in western states – $783 billion[7]
Continuing for three more years the expansion of Affordable Care Act subsidies originally expanded under the American Rescue Plan Act of 2021 – $64 billion
Changes to Medicare Part D, low-income subsidies, vaccine coverage, and insulin – $44 billion[7]
Increased funding for the IRS for modernization and increased tax enforcement, including the hiring of up to 87,000 new IRS employees – $80 billion[46][48]

$663 billion of the law's climate action investments are embedded in the federal tax code.[49] Of these, McKinsey & Company estimates that roughly half the tax savings will go to corporations.[50] As part of the overall investment into clean energy, the law created a green bank,[51][52][53] extended the solar investment tax credit for 10 years[54] and invested $30 billion in nuclear power (including $700 million for high-assay low enrichment uranium (HALEU) fuel source research and development and $150 million for new Office of Nuclear Energy research)[55] and $760 million in facilitating electric power transmission siting reform.[56] It also invests $12 billion in electric vehicle incentives, $14 billion in home energy efficiency upgrades, $22 billion in home energy supply improvements, and $37 billion in advanced manufacturing.[57][40] (The latter amount includes $5.46 billion for a DOE program for zero-emissions industrial tech demonstrations,[58][59] $10 billion for the renewed 48C tax credit,[60] and more than $5 billion to the USDOT and GSA to lower embedded emissions in procurement.[61]) $19.5 billion goes to investments in climate-smart agriculture, more than $5 billion goes to revising remediation programs for those affected by discriminatory USDA lending practices, $5 billion goes to forest protection and urban heat island reductions, and nearly $3 billion goes to coastal habitat protection.[62][63][64] Lastly, the Act gives $1.005 billion to various agencies to increase staffing levels and kickstart permitting reform, particularly of environmental reviews.[56]

Alternatively, the Act's climate investments can be summarized as follows: $196–372 billion in energy, $67–183 billion in manufacturing, $28–48 billion in building retrofits and energy efficiency, $23–436 billion in transportation, $22–26 billion in environmental justice, land use, air pollution reduction and/or resilience, and $3–21 billion in agriculture.[65][66][67][68][69][70]

However, the law also requires that for federal lands, oil and gas auctions take place before wind and solar leasing, even as it provides for the Interior Department to raise royalty rates on oil and gas projects from 12.5% to 16.7%.[71][72]

The law contained provisions that cap insulin costs at $35/month and will cap out-of-pocket drug costs at $2,000 for people on Medicare, among other provisions.[40][44][45] The law also extended Affordable Care Act health insurance exchange subsidies, preventing people making above four times the poverty line from ineligibility for the exchanges.

Several provisions in the initial deal between Schumer and Manchin were changed after negotiations with Senator Sinema: a provision narrowing the carried interest loophole was dropped, a 1% excise tax on stock buybacks was added, manufacturing exceptions were added to the corporate minimum tax (itself having been crafted by Elizabeth Warren and refined by Lawrence Summers and Natasha Sarin),[73][74] and funding for drought relief for western states was added.[75][76][77]

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