WASHINGTON (AP) — A far cry from the $4 trillion proposal first launched by President Joe Biden to rebuild America’s public infrastructure Family support system But a compromise package of health care, climate change and deficit reduction strategies to fight inflation appears to be on track for a Senate vote this weekend..
an estimated $740 billion proposal, Hit by two top negotiators, Senate Majority Leader Chuck Schumer and holdout Senator Joe Manchinconservative West Virginia Democrats have included some hard-fought party priorities. .
What and what the current Democratic “2022 Inflation Reduction Act” says:
Reduce prescription drug costs
Launching Long-Sought Goal, Bill Allows Medicare Program Negotiating prescription drug prices with pharmaceutical companies has saved the federal government about $288 billion over a 10-year budget window.
These new revenues will feed back into lower drug costs, including a $2,000 co-payment cap for seniors to purchase prescriptions at pharmacies.
According to the summary document, the funds will also be used to provide free vaccinations to the elderly.
Help pay for health insurance
Bill extends subsidies provided during COVID-19 pandemic To help some Americans buy their own health insurance.
Under previous pandemic relief, additional aid was set to expire this year. But the bill would allow the assistance to continue for another three years and lower premiums for those who purchase their own health insurance.
“The Largest Investment in Climate Change in U.S. History”
The bill will invest about $374 billion over 10 years in strategies to combat climate change, including investments in renewable energy production and tax rebates for consumers to buy new or used electric vehicles. ..
The breakdown includes $60 billion in clean energy manufacturing tax credits and $30 billion in wind and solar production tax credits to boost and support industries that help reduce the country’s dependence on fossil fuels. regarded as a method. The bill also provides tax credits for nuclear power and carbon capture technologies that oil companies such as ExxonMobil have invested millions of dollars in moving forward.
The bill would impose new charges on excess methane emissions from oil and gas drilling, while giving fossil fuel companies access to more leases of federal land and waters.
Additional proposals, later pushed by Democrats such as Cinema of Arizona, Nevada, and Colorado, included conservation efforts in the Colorado River Basin, where nearly 40 million Americans depend for drinking water. will appoint $4 billion to deal with the western megadrought.
For consumers, tax cuts are an incentive to go green. One is his 10-year consumer tax credit for renewable energy investments in wind and solar. There are tax breaks for buying an electric car, including a $4,000 tax credit for buying a used electric car and a $7,500 tax credit for a new electric car.
Overall, Democrats believe the strategy can put the country on a path to reduce greenhouse gas emissions by 40% by 2030, and “will be the largest climate investment in US history.”
How to pay for all this?
The bill’s biggest revenue driver is a minimum tax rate of 15% for companies with more than $1 billion in annual profits.
It’s a way to crack down on about 200 US companies that avoid paying the standard 21% corporate tax rate, some of which end up paying no tax at all.
The new minimum corporate tax will begin after tax year 2022 and will raise approximately $258 billion over 10 years.
Revenue would have been $313 billion, but Sinema insisted on changing one of the 15% corporate minimums to allow depreciation allowances used in manufacturing. This will cut about $55 billion from total revenue.
It also raises money by backing the IRS to pursue tax fraud. The bill proposes his $80 billion investment in taxpayer services, enforcement, and modernization, which is expected to generate $203 billion in new revenue.
The bill is in line with Mr. Biden’s original promise not to raise taxes on families and businesses earning less than $400,000 a year.
Lower drug prices for the elderly are financed by savings negotiated with Medicare and drug companies.
What are the recent changes?
To win over cinema, Democrats dropped plans to close tax loopholes rich Americans have long enjoyed. The so-called “carried interest” tax is currently levied on wealthy hedge fund managers and others at a rate of 20%.
For years, the left has tried to raise the effective interest tax rate, which was raised to 37% in the original bill, to suit high-income earners. Cinema did not allow it.
Maintaining tax cuts for the wealthy robs the party of the $14 billion in revenue they expected to help pay for the package.
Instead, the Democrats, with Cinema’s consent, will impose a 1% excise tax on share buybacks and raise about $74 billion over 10 years.
extra money to pay the deficit
With about $740 billion in new revenue and about $433 billion in new investment, the bill promises to channel the difference towards reducing the deficit.
Federal deficits soared during the COVID-19 pandemic. That’s because federal spending surged and tax revenue fell as the country’s economy was rocked by shutdowns, office closures, and other major changes.
The country has seen deficits rise and fall in recent years.But overall federal budgeting is on an unsustainable path, according to the Congressional Budget Officereleased a new report on long-term forecasts this week.
what is left
After 18 months of end-to-end negotiations, this latest package leaves out many of Biden’s more ambitious goals.
Congress passed a $1 trillion bipartisan infrastructure bill, The highway, broadband, and other investments Biden signed last year lost other key priorities for the president and his party.
Among them was the continuation of the $300 monthly child tax credit, which was being sent directly to families during the pandemic and is believed to have significantly reduced child poverty.
Also eliminated, for now, are free pre-kindergarten and community college programs, and America’s first paid family leave program, which provides up to $4,000 a month for births, deaths and other essential needs. I got
Associated Press writer Matthew Daly contributed to this report.