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The Senate passes the Inflation Control Act. What you need to know

IIn a partisan vote, the Senate passed a landmark climate, health and tax package called the Inflation Reduction Act on Sunday. Did.

Legislators introduced the bill after an all-night session in which dozens of amendments were voted on in a process known as "voting lamas." In a evenly-divided Senate, all 50 of her senators who attended the caucuses with Democrats supported the package, allowing Vice President Kamala Harris to act as a tiebreaker.

The bill was enacted after months of intense negotiations. Much of that was focused on garnering the support of two Democratic centrists, Senator West Joe Manchin of Virginia and Senator Kirsten Cinema of Arizona. .

The bill is now on its way to the House of Representatives, where it is scheduled to be voted on Friday.

Here's what you need to know about anti-inflation laws.

What is the Inflation Control Law?

This bill would become the largest climate change investment in US history, provide health care subsidies to millions, and extend his minimum tax rate of 15% to companies with profits of $1 billion or more. will impose.

The bill passed by the Senate on Sunday is significantly smaller than this package (previously known as the "Build Back Better Act") that President Biden first pledged, but the Leaders insist the law still addresses voters' main concerns.

Reducing climate change proved to be a top priority, as the bill would investmore than $360 billion in energy and climate programs over the next decade. Accelerate the country's transition to renewable energy sources. Senate Democrats have said that the bill would reduce carbon emissions by nearly 40% by 2030,following the goals they pledged to reach last year at the Leaders Summit on Climate hosted by Biden. about 10% lessat the White House.

In addition, he said $60 billion will be given to cities disproportionately impacted by climate change, and millions more as "climate resilience funds" for his Native American communities. Given.

The bill could also reduce health care costs for many Americans by allowing Medicare to negotiate drug prices directly with pharmaceutical companies. Congress also tried to limit the amount an uninsured person would pay for insulin to $35. But while this provision was removed by Senate Republicans on Sunday during the amendment process, the same cap on Medicare insulin users remains in the bill. Partially covered by a new 15% minimum tax rate applicable to businesses with dollar or more. The company will also pay his 1% tax when repurchasing its own shares, significantly tightening the IRS' crackdown on tax evasion. Measures to minimize effective interest tax (which allows a hedge fund manager to tax profits at a lower rate of 20%, as opposed to his 37% personal income tax rate for the highest earners) possible) was definitely reduced. Cinema support.

How we got here

President Biden's first bill, his $1.75 trillion buildback His Better was introduced last year, and initially It passed the House of Representatives in November. With an evenly divided Senate, Democrats needed to have every member of the caucus on board. The bill died on his December 19th after Manchin told his Fox News that he would vote "no" amid concerns that it would increase inflation and the national debt.

What is lacking in the Inflation Reduction Act is a Build Back Better initiative intended to specifically benefit parents and families. The federal government expands paid family and medical leave, universal pre-K funding for about 6 million children, subsidized child care and child tax credits for another year. David Mitchell, director of government and external relations at the Washington Center for Equitable Growth, which focuses on inequality, says investments in social infrastructure like childcare will increase labor supply and reduce economic pressure. He said it helped ease the pain. “I think a big weakness has been not addressing the care infrastructure issues that we know the country is struggling with,” says Mitchell. “Universal pre-kindergarten, paid leave, child tax credits, these types of investments will help boost the economy by allowing most of the women who spend most of their time raising children in the United States to join the workforce. It increases the potential for growth.”

The program enshrined in the Inflation Reduction Act largely reflected what Manchin was happy to support. Republicans in West Virginia reached a $433 billion health, climate and tax deal with Senate Majority Leader Chuck Schumer last month after suggesting talks had broken down earlier this the surprise of many in Washington. Specification.

Republicans voted unanimously against the bill on Sunday. Texas Republican Senator Ted Cruz called it a "massive power grab", claiming it would reduce manufacturing jobs and raise gas prices.

Some liberals have expressed dissatisfaction with the final version of the bill.Senator Bernie Sanders, an independent from Vermont and participating in the caucuses with the Democrats, was made to get Manchin's signature. He is a vocal critic of many of the concessions. On Sunday, Sanders tried to pass a number of amendments, including one that provides dental, vision, and hearing benefits for Medicare recipients, along with his two other senators, both from Georgia. His two Democrats) only supported him.

"As it is currently written, this is a very modest bill that does virtually nothing to address the enormous crisis facing our working families. "We are far from what the American people want, what they need, what they ask of us," Sanders said in a public statement.

The House is scheduled to return on Aug. 12 to send the bill to Biden's desk.

Will this bill actually reduce inflation?

There was much debate about the content of the bill and its impact, if any, on inflation.

In Sunday's vote, Sanders cited a economic analysis from the Congressional Budget Office,which predicted that the Inflation Reduction Act would have "negligible impact on inflation." . That same analysis estimates that the bill will reduce the deficit by $102 billion over the next nine years,.

According to Mitchell, the direct impact of the bill on inflation is controversial, but the long-term impact is less debated. "For the most part, economists agree that it will help ease some of the price pressures facing Americans," says Mitchell.

Former Federal Reserve Board member Economist Claudia Sahm agrees. She expects the short-term impact on inflation to be modest, but the bill's climate clause will be particularly beneficial for the future. “Improved energy efficiency and the use of renewable energy will better protect us from the kind of global oil price spike that is currently causing difficulties,” Sahm told TIME in an emailed statement. "This bill is a big step forward in acknowledging that Congress also has a responsibility to fight inflation.

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