Climate and tax bill passes test vote in Senate

WASHINGTON – A divided Senate took a crucial step on Saturday in approving Democrats’ plan to tackle climate change, lower health care costs and raise taxes on big corporations, with a test vote that opened the way to enact a major part of President Biden’s domestic policy. agenda for the next few days.

The measure advanced on a party-line vote of 51 to 50, with all Republicans opposed and Vice President Kamala Harris breaking the tie.

The action suggested that Democrats, after more than a year of infighting and painstaking negotiations, had finally united behind legislation that would provide hundreds of billions of dollars for climate and energy programs, expand the Affordable Care Act subsidies and would create a new federal initiative to lower the cost of prescription drugs, especially for older Americans.

Much of the 755-page legislation it would be paid for with tax increases, which Democrats have said aim to make the tax code fairer.

The vote put the bill on track to pass the Senate as early as Sunday, and the House is expected to give its approval by the end of the week. That would give Mr. Biden a big boost at a time when his popularity is waning, and would give Democrats a win in November’s midterm elections when their congressional majorities are at stake.

“I think this legislation is long overdue and vitally important,” Ms Harris said after casting her vote. “It will lower costs for American families.”

The difficult deal, which includes the most substantial investment in history to counter global warming, came after a flurry of intense negotiations with two key Democrats, Sens. Joe Manchin III of West Virginia and Kyrsten Arizona Cinema.

Just a few weeks ago, Mr. Manchin, a conservative-leaning Democrat from a red state, had said he could not agree to include climate, energy and tax measures in this summer’s domestic policy plan, given his concerns about what to do – it would be aggravated by inflation. But he and Sen. Chuck Schumer of New York, the majority leader, surprised lawmakers in both parties late last month with news that they had quietly returned to the negotiating table and struck a deal that included these proposals.

And on Thursday, Ms. Sinema announced that she too would move forward after extracting concessions, including withdrawing a provision that would have scaled back a tax break that allowed private equity executives and hedge fund managers to pay substantially lower taxes on some income than other taxpayers. do.

What’s in the Democrats’ climate and tax bill

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A new proposal. The $369 billion climate and tax package that Senate Democrats proposed in July could have far-reaching effects on the environment and the economy. Here are some of the key provisions:

Automobile industry. Currently, taxpayers can get up to $7,500 in tax credits to buy an electric vehicle, but there is a limit to how many cars from each manufacturer are eligible. The new bill would eliminate that cap and extend the tax deduction through 2032; used cars would also qualify for a credit of up to $4,000.

Energy industry The bill would provide billions of dollars in rebates for Americans who buy electric and energy-efficient appliances and tax credits for companies that build new, emission-free electricity sources, such as wind turbines and solar panels. It would also allocate $60 billion to encourage clean energy manufacturing in the United States. It would also require companies to pay a financial penalty per metric ton for methane emissions that exceed federal limits starting in 2024.

Low-income communities. The bill would invest more than $60 billion to support low-income communities and communities of color that are disproportionately affected by the effects of climate change. This includes grants for technology and zero-emission vehicles, as well as money to mitigate the negative effects of roads, bus depots and other transport facilities.

Fossil fuel industry. The bill would require the federal government to auction off more public land and water for oil drilling and expand tax credits for coal and gas-burning plants that rely on carbon capture technology. Those provisions are among those added to win the support of Sen. Joe Manchin III, D-West Virginia.

West Virginia. The bill would also bring major benefits to the state of Mr. Manchin, the nation’s second largest coal producer, making permanent a federal trust fund to support miners with black lung disease and offering new incentives for companies to build wind and solar farms in areas where coal mines or coal plants have recently closed

“The bill, when passed, will accomplish all of our goals: fighting climate change, reducing health care costs, closing tax loopholes abused by the wealthy, and reducing the deficit,” said Mr. Schumer in the Senate on Saturday. “This is an important victory for the American people and a sad commentary on the Republican Party as they actively fight against provisions that lower costs for the American family.”

Democrats were fast-tracking the bill through Congress under the arcane budget process known as reconciliation, which shields certain tax and spending measures from filibuster but also strictly limits what can be included.

Republicans remain unanimously opposed to the measure and have worked feverishly to derail it, enraged by the resurgence of a plan they thought dead. Blind to the agreement between Mr. Schumer and Mr. Manchin, have scrambled to attack the bill as an abomination of big spending and tax increases that will exacerbate inflation and damage the economy at a precarious time.

“Democrats are misreading the outrage of the American people as a mandate for yet another, yet another, reckless taxation and spending,” said Sen. Mitch McConnell of Kentucky, the minority leader.

He condemned a “wave of interference from Washington” that he said would result from the prescription drug plan, which he said would lead to “a flurry of research and development behind new medical treatments and life-saving cures.”

But Democrats have rebranded the cradle-to-grave social safety net and climate plan they once called “Build Back Better” as the Lower Inflation Act. Operating with a razor-thin Senate majority that gave its most conservative members strong leverage over the measure, Democrats have rejected hundreds of billions of dollars in proposed spending on domestic programs, as well as many of the increases in taxes they had proposed to pay for it. .

Outside estimates have indicated the measure would not force a large increase in federal spending or impose substantial tax hikes outside of large corporations, and is expected to reduce the federal budget deficit by the end of the decade.

That didn’t stop Republicans from arguing that it would be disastrous for the economy and for Americans. Sen. John Cornyn, R-Texas, called it the “Manchin-Schumer Tax Hike of 2022.”

Republicans spent much of last week trying to devise ways to slow or block the legislation, arguing it violated reconciliation rules. (However, they refrained from forcing Senate clerks to read the bill aloud, after a similar maneuver last year caused an outcry.)

Senate Rep. Elizabeth MacDonough and her staff worked into the early hours of Saturday morning to determine whether components of the bill violated those rules, which require each provision to have a direct effect on spending or federal income. Early Saturday, he instructed Democrats to cut the scope of a proposal aimed at preventing drug price increases from outpacing inflation, saying a proposed cut could only apply to drugs purchased by Medicare, not by private insurers.

But top Democrats announced that most of the legislation remained intact after Ms. MacDonough, including a plan to allow Medicare to directly negotiate the price of prescription drugs for the first time, restrictions on new tax breaks for electric vehicles and a fee aimed at reducing excess emissions of methane, a greenhouse gas that commonly emitted by oil and gas leaks.

After Saturday’s test vote, senators buckled down for an overnight session as Democrats moved closer to final passage of the bill. Around midnight, Republicans began forcing a series of quick votes on amendments to the legislation, an hour-long ritual known as a branch vote that reconciliation measures must survive to pass. In the Senate, divided equally, the 50 members of the Democratic caucus will have to remain united to avoid the changes proposed by the Republicans and achieve final approval.

“What will the vote-a-rama be like? It’s going to be hell,” promised Sen. Lindsey Graham, R-South Carolina. Of Democrats, she said, “They deserve this.”

Democrats could also change the bill. It is expected to essentially dare Republicans to pull a proposal to cap the cost of insulin for all patients, a popular measure that violates budget rules because it would not directly affect federal spending.

And at least one member of the Democratic caucus, Sen. Bernie Sanders, a Vermont independent and chairman of the Senate Appropriations Committee, hoped to win changes to the legislation. “This is a totally inadequate bill, but it does, to some degree, begin to address the existential threat facing the planet,” he said in an interview Friday. “I’m disappointed.”

Most Democrats, however, were trying to rally their colleagues to stand together against any amendments, including those their caucus colleagues might offer, to preserve the delicate consensus around the bill and ensure that become law.

“What matters to me is that we get to 50 votes, okay, in the end, and that means we have to keep this deal,” Sen. Elizabeth Warren, D-Massachusetts, told reporters. “What matters is that we made a deal and we have to keep that deal intact.”

Lisa Friedman, Stephanie Lai and Sheryl Gay Stolberg contributed to this report.

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