Chocolate, beef jerky, tons of nuts: in anticipation of a marathon all-night session, the 100 members of the US Senate had stocked up on their favorite snacks to keep them going. After 19 hours, the Democrats cheered.
The Republicans, on the other hand, warned of an economic slump: the Senate passed a historic package with 50 to 50 votes along the party lines plus the vote of Vice President Kamala Harris, which was decisive in the event of a stalemate.
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The title “Inflation Reduction Act” is misleading. In fact, it is about new paths in energy and climate policy, about relieving older citizens of health costs and higher taxes for companies.
The House of Representatives is expected to approve it later this week. The Democrats have a clear majority there. Then President Joe Biden can sign the “Inflation Reduction Act” into force and achieve great success three months before the congressional elections.
The Democrats also need it in view of the poor poll numbers. They have a lot to do with anger at the sharp rise in energy and consumption prices – hence the creative name for the law.
Its contents are contradictory. The changes to the original draft over the course of a year and a half of parliamentary processing are also a lesson in how domestic political dynamics and escalating conflicts in the world can throw a governing party’s flagship projects off track.
Originally, Biden and the progressive wing of the Democrats had planned a “Build Back Better” program to lead the US out of the corona recession: a two trillion, i.e. $2 trillion, redistribution program between business, state and society.
It has been compared to historical achievements such as the introduction of health insurance and a basic pension scheme. It was aimed at many areas of life and the economy: from free state childcare, paid sick days and paid time for family care to energy and climate policy to the redistribution of health care costs and higher taxes for companies.
The Democratic majority in the House of Representatives had passed the ambitious mammoth project 2021. But it didn’t stand a chance in the Senate because of threats of a blockade by the Republicans on principle and opposition from conservative Democrats within the party.
Added to this were the president’s falling polls and the consequences of the war in Ukraine for citizens’ wallets. The project was radically slimmed down. Now the price tag is $370 billion.
What emerged is essentially a compromise between Senate Majority Leader Chuck Schumer and two fellow party brakes who are watching the mood of their constituents. First, Senator Joe Manchin of coal state West Virginia.
In the meantime, Manchin was suspected of wanting to defect to the Republicans and overturn the majority in the Senate. He campaigned for fossil fuels and pipelines, one of them in West Virginia. Second, Senator Kyrsten Sinema of Swing State Arizona; she urged to limit costs and taxes for businesses.
The result is part compromise, part both/and competing interests. Thanks to a considerable effort in the USA to promote renewable energies and investments in energy-saving technologies, emissions are expected to fall by 40 percent by 2030 compared to 2005, which is the norm there.
Fossil fuels are also being supported with new oil and gas wells being approved in the Gulf of Mexico and off the coast of Alaska. The mix is ​​intended to help lower prices. The $7,500 premium for buying an EV will be extended through 2032.
When it comes to healthcare costs, older citizens in particular will be relieved. They suffer from co-payments for prescription drugs, which are very high by European standards. These co-payments are capped at $2,000 per year.
Ways are also opened up for large healthcare providers such as the Medicare administration to negotiate price discounts with the pharmaceutical companies. A key part of the original plan, capping the price of insulin to help diabetics, fell out. Likewise, the care of small children and more paid sick days. Self-responsibility instead of state aid remains the motto in the everyday management of American families.
To fund the spending side of the legislative package, it will introduce part-minimum taxes and part-higher taxes for industries known for tax avoidance. In the future, stock corporations will have to pay one percent tax on the buyback of shares in their own company.
During the long night of debate, the Republicans tried to break the unity of the Democrats with amendments. But on their side, even those who were disappointed by the slimmed-down version stuck to the motto: better this law than no law at all. Who knows if the Democrats will even have a legislative majority after November’s congressional election.
