TL/DR –
The U.S. House of Representatives has passed a $430 billion bill, the largest climate package in U.S. history, which aims to lower greenhouse gas emissions and prescription drug prices. The bill, titled the “Inflation Reduction Act”, allows Medicare to negotiate lower drug prices for the elderly, ensures corporations pay their taxes, and provides tax credits for clean energy projects while still offering some protections for the fossil fuel industry. The legislation, which is expected to be signed into law by President Joe Biden, is largely supported by Democrats but faces opposition from Republicans who believe it will harm job growth and fuel inflation.
Historic $430 Billion Climate Package Approved by U.S. House
In a significant legislative win for President Joe Biden, the U.S. House of Representatives approved a $430 billion bill, touted as the largest climate package in U.S. history, on Friday. This landmark legislation aims to combat climate change and lower drug prices. It further intends to reduce domestic greenhouse gas emissions and regulate corporate tax evasion.
Details of the Climate Bill
The measure, known as the “Inflation Reduction Act”, passed with a 220-207 vote along party lines. It is set to enable Medicare to negotiate lower drug prices, thus benefiting the elderly. The Democrats believe this move will offset inflation by reducing the federal deficit. Following a marathon 27-hour session, the Senate approved the bill on Sunday, with Biden expected to ratify it within the week.
Political Implications and Public Support for the Climate Bill
This historic legislation is anticipated to favor Democrats in the forthcoming November polls, which will determine the congressional balance of power ahead of the 2024 presidential election. A Reuters/Ipsos poll found that approximately half of Americans, including 69% of Democrats and 34% of Republicans, support this climate and drug pricing legislation.
Mixed Reaction from Business Groups and Republican Opposition
Business groups showed mixed reactions to the new legislation, which presents higher tax liabilities for some companies while offering protections to the fossil fuel industry. Republicans opposed the bill, citing concerns about job losses due to increased corporate tax, inflation surge due to government spending, and hindrance to new drug development.
Stimulating Investment in Clean Energy
The new bill is poised to stimulate investments into clean energy products, promising a decade of federal subsidies via long-term tax credits for wind, solar, energy storage, biogas, and hydrogen. Despite criticisms from progressives, provisions for the fossil fuel industry have not hindered Democratic support.
Implications for Electric Vehicle Market
The legislation includes a $7,500 tax credit to encourage U.S. consumers to buy electric vehicles. However, major automakers have warned that this move could disrupt adoption targets for 2030, as the credit applies only to vehicles assembled in North America.
Funding the Climate Bill
The bill’s primary funding source is a proposed 15% corporate minimum tax, aimed at preventing profitable companies from exploiting the IRS code to reduce their tax bills to zero.
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