US Congress passes spending bill in win for Biden administration

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The US Congress has passed the Democratic Party’s climate and healthcare bill in what is likely to be considered the most substantial legislative success of his first term. Democrats hope that the $430bn bill will help them maintain control of Congress in November’s midterm elections.

The bill passed 220-207 on Friday and includes $375bn meant to encourage a shift away from fossil fuels, as well as $64bn to help people cover health insurance premiums. The bill is substantially less ambitious than the party originally hoped for, but is considered a sizable achievement given the party’s narrow majority in Congress. The bill now heads to US President Joe Biden for signature.

“Today is a day of celebration, a day we take another giant step in our momentous agenda,” said House Speaker Nancy Pelosi, a Democrat. She said the measure “meets the moment, ensuring that our families thrive and that our planet survives”.

Democrats hope a series of recent legislative wins, paired with voter frustration with the Supreme Court’s decision to invalidate abortion rights and an increasingly right-wing Republican Party, will bolster Biden’s low popularity and demonstrate that the Democratic Party can deliver wins for their agenda.

Republicans opposed the bill in the House and the Senate, where the bill passed on Sunday with Vice President Kamala Harris casting the tiebreaking vote.

“Democrats, more than any other majority in history, are addicted to spending other people’s money, regardless of what we as a country can afford,” said Republican House Minority Leader Kevin McCarthy. “I can almost see glee in their eyes.”

The bill is a sign of how much Democrats were forced to whittle down their agenda due to opposition from more conservative members of their own party: Biden’s initial proposal would have spent $3.5 trillion over 10 years, and included free preschool, paid family and medical leave, and expanded Medicare benefits.

However, with the US Senate split down the middle, Senator Joe Manchin from West Virginia used his substantial leverage to cut the bill, saying that it was too expensive. Manchin has received substantial political contributions from the fossil fuel industry and was criticised for obstructing Biden’s agenda.

Negotiations between Manchin and Senate Majority Leader Chuck Schumer had seemed to have stalled until the two unexpectedly announced a bargain last month on the new package.

The current bill is still considered substantially more ambitious than any previous legislation when it comes to cutting emissions and combatting climate change. The bill includes more than $370bn over 10 years to encourage industry and consumers to break away from carbon-emitting to cleaner forms of energy, as well as $4bn to help the western US cope with severe drought.

The bill uses spending, tax credits, and loans to give a shot in the arm to technology such as solar panels, home energy efficiency, and air pollution controls for farms, ports, and low-income communities, among others.

Healthcare was another key focus of the legislation, with $64bn to assist 13 million people cover expenses for private health insurance premiums over the next three years. Medicare, a government health insurance programme for people aged 65 and older, would gain the ability to negotiate prices for certain pharmaceutical drugs, and some prescription costs for drugs such as insulin would be capped.

The law is expected to raise about $740bn in revenue over the next 10 years by increasing taxes on some $1bn corporations, levies on stock buybacks, and more robust tax enforcement on the wealthy. Lower drug prices stemming from the ability of Medicare to negotiate would also contribute hundreds of billions of dollars in savings, the bills’s supporters say.

Republicans have latched onto the spending to bolster the Internal Revenue Service (IRS), and have pushed a false claim that 87,000 new IRS agents would target average families. There is not a plan to add that number of agents – the money in the bill is earmarked to hire agents to replace the estimated 50,000 eligible to retire in the next five years, as well as to upgrade technology and operations.

The false claims by Republicans appear to be a fear tactic ahead of Congressional midterm elections in November.

US Treasury Secretary Janet Yellen has also  instructed the IRS to focus enforcement efforts on families and businesses that make more than $400,000 a year.

Though Democrats have named the bill the Inflation Reduction Act (IRA), analysts doubt it will have a perceptible impact on prices.

Democrats are hoping this bill, alongside other recent successes, will help the them in the midterm elections, when the party in power is traditionally outperformed by the opposition.

Several other legislative successes have Democrats feeling more optimistic they may be able to beat the odds. Those wins include the passage of a bill that would boost US semiconductor manufacturing, another that expands health care and disability benefits for veterans exposed to toxic “burn pits”, and a meagre gun control bill.

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