On Sunday afternoon – after an all-night vote-a-rama on Republican amendments – Senate Democrats finally succeeded in passing their budget reconciliation package. Its scope and price tag are significantly reduced from when it was originally envisioned in the summer of 2021, but it nonetheless represents a major victory for President Joe Biden and the Democratic Party ahead of the upcoming midterms.
The House will return on Friday to pass the legislation and send it to President Biden’s desk.
The bill is expected to raise an estimated $739 billion as a result of a 15% minimum tax on large corporations and a boost of funding to the Internal Revenue Service to help close the “tax gap” – the difference between taxes owed under the law and those that are actually paid. The package will also raise revenue through provisions that include a 1% tax on stock buybacks and permitting Medicare to directly negotiate for lower prices for certain prescription drugs.
The vast majority of the revenue increases would go to fund climate and health initiatives, as well as to reduce the budget deficit. The bill allows for roughly $374 billion in climate and energy spending. Specifically, it provides $260 billion in tax credits for renewable energy in order to bring down the cost of solar, wind, and other clean power sources. It also ends per-manufacturer limits for the $7,500 tax credit for electric vehicle purchases. Furthermore, the legislation grants a three-year extension of subsidies for health insurance under the Affordable Care Act that were created by the American Rescue Plan Act of 2021.
One notable change from last week resulted when Senate Parliamentarian Elizabeth MacDonough ruled that a proposal to limit inflation-related price increases for prescription drugs covered by private insurers did not meet the reconciliation requirements. MacDonough also blocked a $35 price cap for insulin costs from being included in the final package. Democrats attempted to overrule the parliamentarian by voting to preserve the provision in the bill, but the effort was stymied by a majority of Republicans.
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