After announcing last week that he could not support any spending bill in the midst of record high inflation, Senator Joe Manchin (D-WV) surprised many Americans when it was announced on Wednesday that he and other Senate Democrats had come to an agreement regarding a major spending bill. The reconciliation bill was touted as a pared-down version of Build Back Better, a bill that Manchin shot down months ago. At the time, Manchin said that the bill wasn’t good for his constituents in West Virginia. He also cited the steep cost of the bill.
When Manchin announced that he would not be supporting the bill, many Americans – particularly conservative voters – breathed a sigh of relief. Many economists have already pointed to the high price tag of the bill as well as the possibility that it will target many small businesses with its new tax rules as reason enough not to support the bill. Supporters of the bill, however, pointed to the mandate in the bill to reduce prescription drug costs as well as close potential tax loopholes for “those who don’t pay taxes” as reason to pass the legislation.
The bill is now revamped and renamed the Inflation Reduction Act, and it presents a cost of $739 billion. Democrats have touted the bill as “the single biggest investment in climate change in U.S. history.”
Manchin previously said that the bill presented more spending that he feared would “worsen inflation.” Early July inflation rates were reported at 9.1 percent, a number not seen since the early 1980s.
President Biden spoke from the White House dining room on Thursday: “It’s a big deal. It’s a bill that will cut your cost of living, reduce inflation and lower the deficit. It strengthens our economy for the long run.”
So, what’s in the bill? The bill will offer $369 billion in tax incentives aimed at renewable energy production. This includes the following:
- $60 billion in tax credits for clean energy manufacturing
- $30 billion in tax credits for wind and solar production
- a $7,500 tax write-off for those who invest in a new electric vehicle – as long as the person makes $75,000 or less per year
Other notable pieces of legislation include a three-year extension of the health insurance subsidies for those who utilize the ACA marketplace to purchase insurance. A fifteen percent minimum tax on corporations earning more than $1 billion in annual profits is also a part of the bill. There is money in the bill to “beef up” tax enforcement as well as lower prescription drug costs for seniors by allowing Medicare to negotiate prices on said medications.
Democrats also jockeyed for preschool and elder care funding, affordable childcare funding, and an extension of the monthly child tax credit that was established with the American Rescue Plan.
Although Manchin’s support is critical to the bill’s chances of passing the Senate, the bill may still face another Democrat’s opposition – that of Arizona moderate Kyrsten Sinema. In the past, Sinema has voted against hiking taxes (she didn’t support Build Back Better), and she also adamantly argued against any vote that would change the filibuster.
Senate Majority Leader Chuck Schumer, who announced that Manchin had decided to support the reconciliation bill on Wednesday afternoon, said that he hopes a vote can take place next week on the Inflation Reduction Act. A reconciliation bill can pass through the Senate on a simple majority vote. Although the Senate is evenly divided, the Vice President Kamala Harris would be invited to cast a tie-breaking vote should the need arise. Of course, some Senate Republicans could vote yea on the bill, but it is unlikely that even more moderate Republicans would support the massive spending bill, particularly in an election year.
On Thursday, the CHIPS bill, which would provide $50 billion in subsidies to tech companies to produce semiconductor chips here in the United States. In 2019, zero percent of these chips were made in America, but instead in China.