Senate Democrats on Sunday passed a $750 billion climate, health care and tax bill after more than a year of negotiations, CNN reports.
The Senate voted 51-50 in favor of the Inflation Reduction Act, with Vice President Kamala Harris casting the tie-breaking vote.
The Democrats used budget reconciliation to pass the bill down party lines, avoiding the specter of a Republican filibuster. Every Republican voted against the legislation.
President Joe Biden initially sought a $3+ trillion bill that also included a rollback of the Trump tax cuts and more funding for social programs. Sen. Joe Manchin, who tried to get the bill closer to $1-1.5 trillion, repeatedly blew up negotiations over a compromise.
Manchin and Senate Majority Leader Chuck Schumer ultimately quietly crafted a much smaller compromise bill and dropped their proposed tax measures targeting private equity firms to appease Arizona Sen. Kyrsten Sinema.
What’s in the bill?
The centerpiece of the bill is more than $300 billion for climate change funding.
The bill includes $60 billion for growing renewable energy infrastructure in manufacturing and provides tax credits for individuals who buy electric vehicles or make their homes more energy efficient.
The bill also allows Medicare to negotiate the price of certain drugs, though Sinema helped water down the measure. The agency will only be able to negotiate 10 drugs by 2026 and 20 drugs by 2029.
The legislation also provides a three-year extension of Obamacare subsidies that were boosted in the pandemic relief bill last year.
The legislation also includes $300 billion in deficit reduction demanded by Manchin.
The bulk of the legislation will be paid for by Medicare’s cost savings and a 15% corporate minimum tax on businesses that make $1 billion or more.
Sinema pushed to cut a measure limiting the carried interest loophole, which allows private equity managers to pay a 21% capital gains tax rate on income instead of a 37% income tax.
To cover the shortfall by Sinema’s demand, the Senate added a 1% excise tax on stock buybacks that will take effect next year.