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Aug. 7, 2022, 4:08 p.m. EDT

Senate passes Democrats’ big healthcare, climate and tax package after marathon session

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Robert Schroeder

The Senate on Sunday approved Democrats’ big healthcare, climate and tax package after a marathon session, notching a victory for President Joe Biden’s party ahead of key midterm elections in November.

By a vote of 51-50 — with Vice President Kamala Harris breaking the tie — senators OK’d the package and sent it on to the Democratic-controlled House of Representatives. Biden on Friday called the bill “a game changer for working families and our economy,” as he also hailed a stronger-than-expected jobs report. No Republicans voted “yes,” as GOP senators argued the measure wouldn’t address soaring inflation but would sock Americans with higher taxes.

The package, agreed to by Senate Majority Leader Chuck Schumer of New York and key moderate Joe Manchin of West Virginia, would pump billions of dollars into climate and healthcare programs over the next decade, paid for by a 15% minimum tax on some large corporations and a 1% tax on stock /zigman2/quotes/210599714/realtime SPX -1.51% buybacks. It contains about $430 billion in new spending.

A late deal to attract pivotal Democrat Kyrsten Sinema of Arizona resulted in the dropping of an effort to close the so-called carried-interest loophole. Sinema’s vote was crucial in the 50-50 Senate.

Democrats are facing a tough midterm-election environment amid soaring inflation, and the package will allow them to appeal to voters weary of paying higher prices for gasoline, food and other items. The bill is named the Inflation Reduction Act — though economists are divided on how much it would actually attack inflation.

Now see: 0.25% or 0.33%? Democrats’ Inflation Reduction Act wouldn’t lower prices by all that much, analysts say

The bill would beef up renewable energy /zigman2/quotes/205740995/composite ICLN -0.05% production and offer tax rebates for buying new or used electric vehicles. It would extend Obamacare subsidies as well as give Medicare the power to negotiate what it pays for pharmaceuticals /zigman2/quotes/200345932/composite PJP -0.99% .

Read: Want an EV? A first-ever $4,000 tax credit for used electric vehicles, and $7,500 for new, is nearing approval

In an eleventh-hour change to the bill, Elizabeth MacDonough, the Senate parliamentarian, said lawmakers had to remove language that would have slapped penalties on drug makers that boost their prices beyond inflation in the private insurance market.

Now see: Senate rules referee weakens Democrat’s drug plan in economic bill but leaves most intact  

Also see: Pharmaceutical CEOs use earnings calls to criticize drug-pricing proposal

Still, after the rules arbiter weighed in, the bill was left mostly unchanged, and the White House trumpeted it as the Senate began voting Saturday afternoon.

“This legislation would lower health care, prescription drug, and energy costs, invest in energy security, and make our tax code fairer— all while fighting inflation and reducing the deficit,” said a White House statement.

Treasury Secretary Janet Yellen has told congressional leaders that the measure would either cut or have no effect on the taxes of a family with income less than $400,000 a year.

The bill would also boost funding for the Internal Revenue Service by $80 billion, with the extra money aimed at improving customer service, increasing the number of audits on wealthy people and corporations and upgrading the agency’s technology.

Read more: The Inflation Reduction Act would send $80 billion to the IRS, but some tax experts wonder if it’s enough to help the backlogged agency

Republicans have savaged the IRS measure — charging that the agency will target middle- and lower-income taxpayers — and the rest of the sprawling bill. The GOP is favored to take the House in November, but its chances for Senate control have dipped recently in prediction markets.

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