Senate Democrats Narrowly Pass Biden's Climate, Tax Bill

WASHINGTON, DC — Senate Democrats narrowly approved the Inflation Reduction Act on Sunday, turning the bill over to the House and moving the party one step closer to a legislative win three months before midterm elections.

The sweeping climate, health and tax package is a compromise from President Joe Biden's original vision but still includes measures to slow climate change, reform prescription drug prices and impose a minimum tax on large corporations.

The estimated $740 billion package will be sent to the Democrat-controlled House, which will soon return from its summer recess to presumably pass the legislation and send it to Biden.The bill's passage is a turnaround after Biden's more robust Build Back Better initiative struggled to get passage for more than a year.

"The House should pass this as soon as possible, and I look forward to signing it into law," Biden said in a statement.

Democrats and Republicans were split 50-50 with Vice President Kamala Harris casting the tie-breaking vote.

The bill passed after 16 hours of marathon voting that began Saturday night in which Democrats voted down dozens of Republican amendments. Sen. Bernie Sanders offered amendments to further expand the legislation's health benefits, which also were voted down.

"It's been a long, tough and winding road, but at last, at last we have arrived," Senate Majority Leader Chuck Schumer said on the Senate floor.

"The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century."

Despite its name, the bill would do little short term to ease consumer price inflation, according to the nonpartisan Congressional Budget Office. The plan would reduce the federal budget deficit by $102 billion over 10 years, according to the office.

The package includes nearly $400 billion in spending on climate change and clean energy initiatives, which includes methane emissions reduction incentives for farmers, an extension of the electric vehicle tax credit, and the launch of a National Climate Bank that would make investments in clean energy technologies and programs reducing emissions.

The bill also will allow Medicare to negotiate what it pays for drugs for its 64 million elderly recipients, penalize manufacturers for exceeding inflation for pharmaceuticals sold to Medicare and limit out-of-pocket drug costs to $2,000 annually. It also caps Medicare patient costs for insulin at $35 per month.

A measure that would penalize pharmaceutical companies whose price increases for private insurers exceed inflation was ruled against by Elizabeth MacDonough, the Senate's nonpartisan parliamentarian, under reconciliation rules that allowed the bill to pass 51-50.

The money for the bill would come from a 15 percent minimum tax on a handful of corporations with yearly profits above $1 billion, a 1 percent tax on companies that repurchase their own stock, bolstered IRS tax collections and government savings from lower drug costs.

The bill keeps Biden's long-held pledge to not raise taxes on those earning less than $400,000 per year.

Sinema forced Democrats to drop a plan to prevent wealthy hedge fund managers from paying less than individual income tax rates for their earnings. She also joined with other Western senators to win $4 billion to combat the region's drought.

Several Democratic senators joined the GOP-led effort to exclude some firms from the new corporate minimum tax.

The Associated Press contributed to this story.