joe biden USA

The US passes ‘historic’ $700bn climate, tax and healthcare package

Image credit: reuters

Joe Biden's flagship bill is expected to lower the cost of certain prescription medicines, increase corporate taxes and make the largest investment in carbon emissions reduction in the country's history.

The bill approved by US Senate is a stripped-down version of the $2.2tn (£1.8tn) Build Back Better proposal that the House of Representatives passed last November. This was in itself a cut-down plan, based on the $3.5tn (£2.9tn) package that was first proposed by Biden upon his arrival to the White House.  

The bill, formally known as the Inflation Reduction Act, was passed by a margin of 51 to 50 on Sunday with Vice-President Kamala Harris casting the deciding vote after 18 months of intense negotiations.

When signed into law, the Act will become the largest investment the US has ever made to tackle climate change and reduce the country's carbon emissions. 

The bill would allocate $369bn (£302bn) to reducing greenhouse gas emissions and investing in renewable energy sources in a plan that the government expects will reduce America’s planet-heating emissions by about 40 per cent by 2030, compared with 2005 levels.

As part of the energy provision, US households could receive up to $7,500 (£6,140) in tax credits to buy an electric car or $4,000 (£3,275) for a used one. In addition, the bill would also allocate part of its large funding in several projects aimed at speeding up the production of clean energy such as solar panels and wind turbines.

There will also be a $60bn (£49bn) fund for communities that have suffered the most from fossil fuel pollution.

"Now I can look my kid in the eye and say we're really doing something about the climate," said Senator Brian Schatz, a Democrat from Hawaii, after being seen crying tears of joy while leaving the chamber, according to the New York Times.

In addition to its climate-related provisions, the Inflation Reduction Act also includes landmark legislation regarding the fields of healthcare and taxation.

The bill is expected to increase access to healthcare by allowing the government to negotiate lower prices for prescription medicines provided under its Medicare health insurance programme for those aged over 65, saving hundreds of billions of dollars over the next decade, according to estimates from the non-partisan Congressional Budget Office.

The package also includes a minimum 15 per cent tax on most billionaire corporations, a measure that became a significant issue of contention during negotiations in Congress, as business groups argued it will limit investment.

"After more than a year of hard work, the Senate is making history," said Democratic Senate majority leader Chuck Schumer. "To Americans who've lost faith that Congress can do big things, this bill is for you."

However, some Republicans have said they will try to stall or block the progress of the bill. Florida's Republican Senator Marco Rubio argued it was out of touch as it did not help to lower prices for working people or keep criminals in jail. 

President Biden - who has called the bill "historic" - has pledged to slash greenhouse gas emissions by at least 50 per cent by 2030, as well as support efforts to build infrastructure that can withstand extreme weather and natural disasters.

“I ran for president promising to make government work for working families again, and that is what this bill does – period,” Biden said in a statement celebrating the passing of the bill. 

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