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Joe Manchin

Democrats Spent $2 Trillion to Save the Economy. They Don’t Want to Talk About It.

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“We in Georgia found ourselves trying to claw back from a historic pandemic, the likes of which we haven’t seen in our lifetime, which created an economic shutdown,” he said. “And now, seeing the economy open up, we’ve experienced major supply chain issues, which have contributed to rising costs.”

Direct pandemic payments were begun under Mr. Trump and continued under Mr. Biden, with no serious talk of another round after the ones delivered in the rescue plan. Most Democrats had hoped the one-year, $100 billion child credit in the rescue plan would be made permanent in a new piece of legislation.

But the credit expired, largely because Senator Joe Manchin III, Democrat of West Virginia and a key swing vote, opposed its inclusion in what would become the Inflation Reduction Act, citing concerns the additional money would exacerbate inflation.

Senator Michael Bennet, Democrat of Colorado, was one of the Senate’s most vocal cheerleaders for that credit and an architect of the version included in the rescue plan. His campaign has aired Spanish-language radio ads on the credit in his re-election campaign, targeting a group his team says is particularly favorable toward it, but no television ads. In an interview last week outside a Denver coffee shop, Mr. Bennet conceded the expiration of the credit has sapped some of its political punch.

“It certainly came up when it was here, and it certainly came up when it went away,” he said. “But it’s been some months since that was true. I think, obviously, we’d love to have that right now. Families were getting an average of 450 bucks a month. That would have defrayed a lot of inflation that they’re having to deal with.”

Mr. Biden’s advisers say the rescue plan and its components aren’t being deployed on the trail because other issues have overwhelmed them — from Mr. Biden’s long list of economic bills signed into law as well as the Supreme Court decision overturning Roe v. Wade that has galvanized the Democratic base. They acknowledge the political and economic challenge posed by rapid inflation, but say Democratic candidates are doing well to focus on direct responses to it, like the efforts to reduce costs of insulin and other prescription drugs.

Ms. Lake, the Democratic pollster, said talking more about the child credit could help re-energize Democratic voters for the midterms. Mr. Warnock’s speech in Dunwoody — an admittedly small sample — suggested otherwise.

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How a Quebec Lithium Mine May Help Make Electric Cars Affordable

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About 350 miles northwest of Montreal, amid a vast pine forest, is a deep mining pit with walls of mottled rock. The pit has changed hands repeatedly and been mired in bankruptcy, but now it could help determine the future of electric vehicles.

The mine contains lithium, an indispensable ingredient in electric car batteries that is in short supply. If it opens on schedule early next year, it will be the second North American source of that metal, offering hope that badly needed raw materials can be extracted and refined close to Canadian, U.S. and Mexican auto factories, in line with Biden administration policies that aim to break China’s dominance of the battery supply chain.

Having more mines will also help contain the price of lithium, which has soared fivefold since mid-2021, pushing the cost of electric vehicles so high that they are out of reach for many drivers. The average new electric car in the United States costs about $66,000, just a few thousand dollars short of the median household income last year.

lithium mines are in various stages of development in Canada and the United States. Canada has made it a mission to become a major source of raw materials and components for electric vehicles. But most of these projects are years away from production. Even if they are able to raise the billions of dollars needed to get going, there is no guarantee they will yield enough lithium to meet the continent’s needs.

eliminate this cap and extend the tax credit until 2032; used cars will also qualify for a credit of up to $4,000.

For many people in government and the auto industry, the main concern is whether there will be enough lithium to meet soaring demand for electric vehicles.

The Inflation Reduction Act, which President Biden signed in August, has raised the stakes for the auto industry. To qualify for several incentives and subsidies in the law, which go to car buyers and automakers and are worth a total of $10,000 or more per electric vehicle, battery makers must use raw materials from North America or a country with which the United States has a trade agreement.

rising fast.

California and other states move to ban internal combustion engines. “It’s going to take everything we can do and our competitors can do over the next five years to keep up,” Mr. Norris said.

One of the first things that Sayona had to do when it took over the La Corne mine was pump out water that had filled the pit, exposing terraced walls of dark and pale stone from previous excavations. Lighter rock contains lithium.

After being blasted loose and crushed, the rock is processed in several stages to remove waste material. A short drive from the mine, inside a large building with walls of corrugated blue metal, a laser scanner uses jets of compressed air to separate light-colored lithium ore. The ore is then refined in vats filled with detergent and water, where the lithium floats to the surface and is skimmed away.

The end product looks like fine white sand but it is still only about 6 percent lithium. The rest includes aluminum, silicon and other substances. The material is sent to refineries, most of them in China, to be further purified.

Yves Desrosiers, an engineer and a senior adviser at Sayona, began working at the La Corne mine in 2012. During a tour, he expressed satisfaction at what he said were improvements made by Sayona and Piedmont. Those include better control of dust, and a plan to restore the site once the lithium runs out in a few decades.

“The productivity will be a lot better because we are correcting everything,” Mr. Desrosiers said. In a few years, the company plans to upgrade the facility to produce lithium carbonate, which contains a much higher concentration of lithium than the raw metal extracted from the ground.

The operation will get its electricity from Quebec’s abundant hydropower plants, and will use only recycled water in the separation process, Mr. Desrosiers said. Still, environmental activists are watching the project warily.

Mining is a pillar of the Quebec economy, and the area around La Corne is populated with people whose livelihoods depend on extraction of iron, nickel, copper, zinc and other metals. There is an active gold mine near the largest city in the area, Val-d’Or, or Valley of Gold.

Mining “is our life,” said Sébastien D’Astous, a metallurgist turned politician who is the mayor of Amos, a small city north of La Corne. “Everybody knows, or has in the near family, people who work in mining or for contractors.”

Most people support the lithium mine, but a significant minority oppose it, Mr. D’Astous said. Opponents fear that another lithium mine being developed by Sayona in nearby La Motte, Quebec, could contaminate an underground river.

Rodrigue Turgeon, a local lawyer and program co-leader for MiningWatch Canada, a watchdog group, has pushed to make sure the Sayona mines undergo rigorous environmental reviews. Long Point First Nation, an Indigenous group that says the mines are on its ancestral territory, wants to conduct its own environmental impact study.

Sébastien Lemire, who represents the region around La Corne in the Canadian Parliament, said he wanted to make sure that the wealth created by lithium mining flowed to the people of Quebec rather than to outside investors.

Mr. Lemire praised activists for being “vigilant” about environmental standards, but he favors the mine and drives an electric car, a Chevrolet Bolt.

“If we don’t do it,” he said at a cafe in La Corne, “we’re missing the opportunity of the electrification of transport.”

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Pace of Climate Change Sends Economists Back to Drawing Board

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Economists have been examining the impact of climate change for almost as long as it’s been known to science.

In the 1970s, the Yale economist William Nordhaus began constructing a model meant to gauge the effect of warming on economic growth. The work, first published in 1992, gave rise to a field of scholarship assessing the cost to society of each ton of emitted carbon offset by the benefits of cheap power — and thus how much it was worth paying to avert it.

Dr. Nordhaus became a leading voice for a nationwide carbon tax that would discourage the use of fossil fuels and propel a transition toward more sustainable forms of energy. It remained the preferred choice of economists and business interests for decades. And in 2018, Dr. Nordhaus was honored with the Nobel Memorial Prize in Economic Sciences.

Inflation Reduction Act with its $392 billion in climate-related subsidies, one thing became very clear: The nation’s biggest initiative to address climate change is built on a different foundation from the one Dr. Nordhaus proposed.

offers tax credits, loans and grants — technology-specific carrots that have historically been seen as less efficient than the stick of penalizing carbon emissions more broadly.

The outcome reflects a larger trend in public policy, one that is prompting economists to ponder why the profession was so focused on a solution that ultimately went nowhere in Congress — and how economists could be more useful as the damage from extreme weather mounts.

A central shift in thinking, many say, is that climate change has moved faster than foreseen, and in less predictable ways, raising the urgency of government intervention. In addition, technologies like solar panels and batteries are cheap and abundant enough to enable a fuller shift away from fossil fuels, rather than slightly decreasing their use.

Robert Kopp, a climate scientist at Rutgers University, worked on developing carbon pricing methods at the Department of Energy. He thinks the relentless focus on prices, with little attention paid to direct investments, lasted too long.

California. But a federal measure in the United States, setting a cap on carbon emissions and letting companies trade their allotments, failed in 2010.

At the same time, Dr. Nordhaus’s model was drawing criticism for underestimating the havoc that climate change would wreak. Like other models, it has been revised several times, but it still relies on broad assumptions and places less value on harm to future generations than it places on harm to those today. It also doesn’t fully incorporate the risk of less likely but substantially worse trajectories of warming.

Dr. Nordhaus dismissed the criticisms. “They are all subjective and based on selective interpretation of science and economics,” he wrote in an email. “Some people hold these views, as would be expected in any controversial subject, but many others do not.”

Heather Boushey, a member of the White House’s Council of Economic Advisers who handles climate issues, says the field is learning that simply tinkering with prices won’t be enough as the climate nears catastrophic tipping points, like the evaporation of rivers, choking off whole regions and setting off a cascade of economic effects.

“So much of economics is about marginal changes,” Dr. Boushey said. “With climate, that no longer makes sense, because you have these systemic risks.” She sees her current assignment as similar to her previous work, running a think tank focused on inequality: “It profoundly alters the way people think about economics.”

To many economists, the approach pioneered by Dr. Nordhaus was increasingly out of step with the urgency that climate scientists were trying to communicate to policymakers. But a carbon tax remained at the center of a bipartisan effort on climate change, supported by a panoply of large corporations and more than 3,600 economists, that also called for removing “cumbersome regulations.”

speech in 2018, Dr. Nordhaus pegged the “optimal” carbon price — that is, the shared economic burden caused by each ton of emissions — at $43 in 2020. Gernot Wagner, a climate economist at Columbia Business School, called it a “woeful underestimate of the true cost” — noting that the prize committee’s home country already taxed carbon at $120 per ton.

another tack. Carbon prices, they reasoned, tend to hit lower-income people hardest. Even if the proceeds funded rebates to taxpayers, as many proponents recommended, similar promises by supporters of trade liberalization — that people whose jobs went offshore would get help finding new ones in a faster-growing economy — proved illusory. Besides, without government investment in low-carbon infrastructure, many people would have no alternative to continued carbon use.

“You’re saying, ‘Things are going to cost more, but we aren’t going to give you help to live with that transition,’” said Rhiana Gunn-Wright, director of climate policy at the left-leaning Roosevelt Institute and an architect of the Green New Deal. “Gas prices can go up, but the fact is, most people are locked into how much they have to travel each day.”

At the same time, the cost of technologies like solar panels and batteries for electric vehicles — in part because of huge investments by the Chinese government — was dropping within the range that would allow them to be deployed at scale.

For Ryan Kellogg, an energy economist who worked as an analyst for the oil giant BP before getting his Ph.D., that was a key realization. Leaving an economics department for the public policy school at the University of Chicago, and working with an interdisciplinary consortium including climate scientists, impressed on him two things: that fossil fuels needed to be phased out much faster than previously thought, and that it could be done at lower cost.

Just in the utility sector, for example, Dr. Kellogg recently found that carbon taxes aren’t meaningfully more efficient than subsidies or clean electricity standards in driving a full transition to wind and solar power. And as more essential devices can be powered by batteries, affordable electricity becomes paramount.

more useful for policymakers than broad, top-down economic models.

begun to look at the relationship between extreme weather and federal revenue. But because it’s still not clear how best to do that, other institutions are trying as well.

Carter Price, a mathematician at the nonprofit RAND Corporation, is working on a budget model that will incorporate the latest social science research, as well as climate science, to inform long-term policy decisions.

“This is a space where having more models early on would be better,” Dr. Price said. “Rather than someone has an assumption, that assumption goes into a model, nobody questions it and, 10 years later, we realize that assumption is pretty powerful and maybe not right.”

The larger lesson is that modern climate policy is a complex endeavor that calls for large, interdisciplinary teams — which is not historically how the economics field has operated.

“You can only do so much by writing things down on a single sheet of paper from your office at Yale,” said Dr. Kopp, of Rutgers. “That’s not how science gets done. That’s how a lot of economics gets done. But you run into limits.”

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Inflation Reduction Act Pushes Financial Incentives, Reduced Costs

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The Inflation Reduction Act offers tax credits and other incentives for switching to cleaner energy alternatives.

It has been called groundbreaking and historic by some, expensive and futile by others. But the parts of the Inflation Reduction Act that deal with climate change could dramatically impact the lives of many Americans — and soon. 

“The Inflation Reduction Act will add another $370 billion in clean energy tax credits in reconciliation, including incentives to accelerate domestic production of solar panels, wind turbines, batteries and critical materials process,” President Joe Biden said.

Related StoryPresident Biden Signs Massive Climate And Health Care LegislationPresident Biden Signs Massive Climate And Health Care Legislation

Tackling climate change has been debated for so long that many Americans might be inclined to chalk these words and actions up to more political chatter with little results.  

“It’s because American people want their government to do something so they can go into August recess and they can get ready for elections and really brag about so many things,” Haddad Media CEO Tammy Haddad said. “If you read every single poll — and you don’t have to read a poll, you can talk to your neighbor — things are bad. The weather is bad. You can’t get what you want. Should I wear a mask? Shouldn’t I wear a mask? All of these things. And then finally, from the government comes certainty.”

Here is how you may feel the impact of the legislation. 

If you already own an electric vehicle, you are probably already seeing huge savings. Currently, EV drivers receive a $7,500 tax credit for a new vehicle and a $4,000 tax credit for used vehicles. This legislation extends that tax credit until the end of 2032, with the hope of providing a greater incentive for drivers to switch from gas to electric.  

Despite the lucrative switch to plug-ins, there are some hurdles that might keep you years away from purchasing an electric vehicle, like supply chain. According to the Wall Street Journal, China alone currently regulates 75% of all lithium-ion battery cell manufacturing. That’s why Sen. Joe Manchin insists the tax credit will force automakers to move their EV supply chain away from China and to the U.S.

For consumers looking to purchase larger electric vehicles like trucks, vans and SUVs, there is a cost threshold. The cost of the vehicle must be under $80,000 to see those savings. And there are also income limits. People have to make under $150,000 to take advantage of the tax credit.  

As the temperatures rise and fall around the world, the demand to cool and heat us in extreme condition will likely grow.  

According to a study by The Climate Institute, 20% of the total electricity use in buildings around the world goes toward air conditioning units and electric fans.  

The legislation will provide a tax credit that covers 30% the cost of installing energy efficient air conditioners, water heaters, furnaces and other cooling and heating equipment. Savings could be as high as $1,200 per household.   

For low- and moderate-income households, this legislation could provide up to $14,000 to cover the upgrade cost of your appliances.  

For homes with outdated windows and doors, you can receive up to $1,200 in rebates a year to upgrade your home over the next 10 years. 

The legislation will also cover up to 30% of the pricey installation cost of a solar panel system to your home, saving you nearly $6,000. 

: newsy.com

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Electric Cars Are Too Costly for Many, Even With Aid in Climate Bill

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Policymakers in Washington are promoting electric vehicles as a solution to climate change. But an uncomfortable truth remains: Battery-powered cars are much too expensive for a vast majority of Americans.

Congress has begun trying to address that problem. The climate and energy package passed on Sunday by the Senate, the Inflation Reduction Act, would give buyers of used electric cars a tax credit.

But automakers have complained that the credit would apply to only a narrow slice of vehicles, at least initially, largely because of domestic sourcing requirements. And experts say broader steps are needed to make electric cars more affordable and to get enough of them on the road to put a serious dent in greenhouse gas emissions.

would eliminate this cap and extend the tax credit until 2032; used cars would also qualify for a credit of up to $4,000.

With so much demand, carmakers have little reason to target budget-minded buyers. Economy car stalwarts like Toyota and Honda are not yet selling significant numbers of all-electric models in the United States. Scarcity has been good for Ford, Mercedes-Benz and other carmakers that are selling fewer cars than before the pandemic but recording fat profits.

Automakers are “not giving any more discounts because demand is higher than the supply,” said Axel Schmidt, a senior managing director at Accenture who oversees the consulting firm’s automotive division. “The general trend currently is no one is interested in low prices.”

Advertised prices for electric vehicles tend to start around $40,000, not including a federal tax credit of $7,500. Good luck finding an electric car at that semi-affordable price.

Ford has stopped taking orders for Lightning electric pickups, with an advertised starting price of about $40,000, because it can’t make them fast enough. Hyundai advertises that its electric Ioniq 5 starts at about $40,000. But the cheapest models available from dealers in the New York area, based on a search of the company’s website, were around $49,000 before taxes.

Tesla’s Model 3, which the company began producing in 2017, was supposed to be an electric car for average folks, with a base price of $35,000. But Tesla has since raised the price for the cheapest version to $47,000.

pass the House, would give buyers of used cars a tax credit of up to $4,000. The used-car market is twice the size of the new-car market and is where most people get their rides.

But the tax credit for used cars would apply only to those sold for $25,000 or less. Less than 20 percent of used electric vehicles fit that category, said Scott Case, chief executive of Recurrent, a research firm focused on the used-vehicle market.

The supply of secondhand vehicles will grow over time, Mr. Case said. He noted that the Model 3, which has sold more than any other electric car, became widely available only in 2018. New-car buyers typically keep their vehicles three or four years before trading them in.

SAIC’s MG unit sells an electric S.U.V. in Europe for about $31,000 before incentives.

New battery designs offer hope for cheaper electric cars but will take years to appear in lower-priced models. Predictably, next-generation batteries that charge faster and go farther are likely to appear first in luxury cars, like those from Porsche and Mercedes.

Companies working on these advanced technologies argue that they will ultimately reduce costs for everyone by packing more energy into smaller packages. A smaller battery saves weight and cuts the cost of cooling systems, brakes and other components because they can be designed for a lighter car.

“You can actually decrease everything else,” said Justin Mirro, chief executive of Kensington Capital Acquisition, which helped the battery maker QuantumScape go public and is preparing a stock market listing for the fledgling battery maker Amprius Technologies. “It just has this multiplier effect.”

$45 million in grants to firms or researchers working on batteries that, among other things, would last longer, to create a bigger supply of used vehicles.

“We also need cheaper batteries, and batteries that charge faster and work better in the winter,” said Halle Cheeseman, a program director who focuses on batteries at the Advanced Research Projects Agency-Energy, part of the Department of Energy.

Gene Berdichevsky, chief executive of Sila Nanotechnologies, a California company working on next-generation battery technology, argues that prices are following a curve like the one solar cells did. Prices for solar panels ticked up when demand began to take off, but soon resumed a steady decline.

The first car to use Sila’s technology will be a Mercedes luxury S.U.V. But Mr. Berdichevsky said: “I’m not in this to make toys for the rich. I’m here to make all cars go electric.” 

A few manufacturers offer cars aimed at the less wealthy. A Chevrolet Bolt, a utilitarian hatchback, lists for $25,600 before incentives. Volkswagen said this month that the entry-level version of its 2023 ID.4 electric sport utility vehicle, which the German carmaker has begun manufacturing at its factory in Chattanooga, Tenn., will start at $37,500, or around $30,000 if it qualifies for the federal tax credit.

Then there is the Wuling Hongguang Mini EV, produced in China by a joint venture of General Motors and the Chinese automakers SAIC and Wuling. The car reportedly outsells the Tesla Model 3 in China. While the $4,500 price tag is unbeatable, it is unlikely that many Americans would buy a car with a top speed of barely 60 miles per hour and a range slightly over 100 miles. There is no sign that the car will be exported to the United States.

Eventually, Ms. Bailo of the Center for Automotive Research said, carmakers will run out of well-heeled buyers and aim at the other 95 percent.

“They listen to their customers,” she said. “Eventually that demand from high-income earners is going to abate.”

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Dems Push Biden Climate, Health Priorities Toward Senate OK

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Democrats intend to combat inflation, prescription drug costs and fight climate change with their their election-year economic package.

Democrats drove their election-year economic package toward Senate approval early Sunday, debating a measure with less ambition than President Joe Biden’s original domestic vision but that touches deep-rooted party dreams of slowing global warming, moderating pharmaceutical costs and taxing immense corporations.

Debate began Saturday and by early Sunday morning, Democrats had swatted down over a dozen Republican amendments designed to torpedo the legislation or create campaign ads attacking Democratic senators. Despite unanimous GOP opposition, Democratic unity in the 50-50 chamber — buttressed by Vice President Kamala Harris’ tiebreaking vote — suggested the party was on track for a morale-boosting victory three months from elections when congressional control is at stake.

“I think it’s gonna pass,” President Biden told reporters as he left the White House early Sunday to go to Rehoboth Beach, Delaware, ending his COVID-19 isolation. The House seemed on track to provide final congressional approval when it returns briefly from summer recess on Friday.

“It will reduce inflation. It will lower prescription drug costs. It will fight climate change. It will close tax loopholes and it will reduce the deficit,” Senate Majority Leader Chuck Schumer, said of the package. “It will help every citizen in this country and make America a much better place.”

Republicans said the measure would undermine an economy that policymakers are struggling to keep from plummeting into recession. They said the bill’s business taxes would hurt job creation and force prices skyward, making it harder for people to cope with the nation’s worst inflation since the 1980s.

“Democrats have already robbed American families once through inflation, and now their solution is to rob American families a second time,” Senate Minority Leader Mitch McConnell, R-Ky., argued. He said spending and tax increases in the legislation would eliminate jobs while having insignificant impact on inflation and climate change.

Nonpartisan analysts have said Democrats’ “Inflation Reduction Act” would have a minor effect on surging consumer prices. The bill is barely more than one-tenth the size of President Biden’s initial 10-year, $3.5 trillion rainbow of progressive aspirations and abandons its proposals for universal preschool, paid family leave and expanded child care aid.

Even so, the new measure gives Democrats a campaign-season showcase for action on coveted goals. It includes the largest ever federal effort on climate change — close to $400 billion — hands Medicare the power to negotiate pharmaceutical prices and extends expiring subsidies that help 13 million people afford health insurance.

President Biden’s original measure collapsed after conservative Sen. Joe Manchin, D-W.Va., opposed it, saying it was too costly and would fuel inflation.

In an ordeal imposed on all budget bills like this one, the Senate had to endure an overnight “vote-a-rama” of rapid-fire amendments. Each tested Democrats’ ability to hold together a compromise negotiated by Schumer, progressives, Manchin and the inscrutable centrist Sen. Kyrsten Sinema, D-Ariz.

Progressive Sen. Bernie Sanders, I-Vt., offered amendments to further expand the legislation’s health benefits, and those efforts were defeated. Most votes were forced by Republicans and many were designed to make Democrats look soft on U.S.-Mexico border security and gasoline and energy costs, and like bullies for wanting to strengthen IRS tax law enforcement.

Before debate began Saturday, the bill’s prescription drug price curbs were diluted by the Senate’s nonpartisan parliamentarian. Elizabeth MacDonough, who referees questions about the chamber’s procedures, said a provision should fall that would impose costly penalties on drug makers whose price increases for private insurers exceed inflation.

It was the bill’s chief protection for the 180 million people with private health coverage they get through work or purchase themselves. Under special procedures that will let Democrats pass their bill by simple majority without the usual 60-vote margin, its provisions must be focused more on dollar-and-cents budget numbers than policy changes.

But the thrust of their pharmaceutical price language remained. That included letting Medicare negotiate what it pays for drugs for its 64 million elderly recipients, penalizing manufacturers for exceeding inflation for pharmaceuticals sold to Medicare and limiting beneficiaries out-of-pocket drug costs to $2,000 annually.

The bill also caps patients’ costs for insulin, the expensive diabetes medication, at $35 monthly.

The measure’s final costs were being recalculated to reflect late changes, but overall it would raise more than $700 billion over a decade. The money would come from a 15% minimum tax on a handful of corporations with yearly profits above $1 billion, a 1% tax on companies that repurchase their own stock, bolstered IRS tax collections and government savings from lower drug costs.

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.

It was on the energy and environment side that compromise was most evident between progressives and Manchin, a champion of fossil fuels and his state’s coal industry.

Clean energy would be fostered with tax credits for buying electric vehicles and manufacturing solar panels and wind turbines. There would be home energy rebates, funds for constructing factories building clean energy technology and money to promote climate-friendly farm practices and reduce pollution in minority communities.

Manchin won billions to help power plants lower carbon emissions plus language requiring more government auctions for oil drilling on federal land and waters. Party leaders also promised to push separate legislation this fall to accelerate permits for energy projects, which Manchin wants to include a nearly completed natural gas pipeline in his state.

Additional reporting by the Associated Press.

: newsy.com

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Dems’ Climate, Energy, Tax Bill Clears Initial Senate Hurdle

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United Democrats pushed the 755-page measure through the Senate on a party-line vote.

A divided Senate voted Saturday to start debating Democrats’ election-year economic bill, boosting the sprawling collection of President Joe Biden’s priorities on climate, energy, health and taxes past its initial test as it starts moving through Congress.

In a preview of votes expected on a mountain of amendments, united Democrats pushed the legislation through the evenly divided chamber by 51-50, with Vice President Kamala Harris breaking the tie and overcoming unanimous Republican opposition. The package, a dwindled version of earlier multitrillion-dollar measures that Democrats failed to advance, has become a partisan battleground over inflation, gasoline prices and other issues that polls show are driving voters.

The House, where Democrats have a slender majority, could give it final approval next Friday when lawmakers plan to return to Washington.

The vote came after the Senate parliamentarian gave a thumbs-up to most of Democrats’ revised 755-page bill. But Elizabeth MacDonough, the chamber’s nonpartisan rules arbiter, said Democrats had to drop a significant part of their plan for curbing drug prices.

MacDonough said Democrats violated Senate budget rules with language imposing hefty penalties on drug makers who boost their prices beyond inflation in the private insurance market. Those were the bill’s chief pricing protections for the roughly 180 million people whose health coverage comes from private insurance, either through work or bought on their own.

Other pharmaceutical provisions were left intact, including giving Medicare the power to negotiate what it pays for drugs for its 64 million elderly recipients, a longtime Democratic aspiration. Penalties on manufacturers for exceeding inflation would apply to drugs sold to Medicare, and there is a $2,000 annual out-of-pocket cap on drug costs and free vaccines for Medicare beneficiaries.

“The time is now to move forward with a big, bold package for the American people,” said Senate Majority Leader Chuck Schumer. “This historic bill will reduce inflation, lower costs, fight climate change. It’s time to move this nation forward.”

Senate Minority Leader Mitch McConnell said Democrats “are misreading the American people’s outrage as a mandate for yet another reckless taxing and spending spree.” He said Democrats “have already robbed American families once through inflation and now their solution is to rob American families yet a second time.”

Saturday’s vote capped a startling 10-day period that saw Democrats resurrect top components of President Biden’s agenda that had seemed dead. In rapid-fire deals with Democrats’ two most unpredictable senators — first conservative Joe Manchin of West Virginia, then Arizona centrist Kyrsten Sinema — Schumer pieced together a package that would give the party an achievement against the backdrop of this fall’s congressional elections.

A White House statement said the legislation “would help tackle today’s most pressing economic challenges, make our economy stronger for decades to come, and position the United States to be the world’s leader in clean energy.”

Assuming Democrats fight off a nonstop “vote-a-rama” of amendments — many designed by Republicans to derail the measure — they should be able to muscle the measure through the Senate.

“What will vote-a-rama be like? It will be like hell,” Sen. Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee, said of the approaching GOP amendments. He said that in supporting the Democratic bill, Manchin and Sinema “are empowering legislation that will make the average person’s life more difficult” by forcing up energy costs with tax increases and making it harder for companies to hire workers.

The bill offers spending and tax incentives favored by progressives for buying electric vehicles and making buildings more energy efficient. But in a bow to Manchin, whose state is a leading fossil fuel producer, there is also money to reduce coal plant carbon emissions and language requiring the government to open more federal land and waters to oil drilling.

Expiring subsidies that help millions of people afford private insurance premiums would be extended for three years, and there is $4 billion to help Western states combat drought. A new provision would create a $35 monthly cap for insulin, the expensive diabetes medication, for Medicare and private insurance patients starting next year. It seemed possible that language could be weakened or removed during debate.

Reflecting Democrats’ calls for tax equity, there would be a new 15% minimum tax on some corporations that earn over $1 billion annually but pay far less than the current 21% corporate tax. Companies buying back their own stock would be taxed 1% for those transactions, swapped in after Sinema refused to support higher taxes on private equity firm executives and hedge fund managers. The IRS budget would be pumped up to strengthen its tax collections.

While the bill’s final costs are still being determined, it overall would spend close to $400 billion over 10 years to slow climate change, which analysts say would be the country’s largest investment in that effort, and billions more on health care. It would raise more than $700 billion in taxes and from government drug cost savings, leaving about $300 billion for deficit reduction over the coming decade — a blip compared to that period’s projected $16 trillion in budget shortfalls.

Democrats are using special procedures that would let them pass the measure without having to reach the 60-vote majority that legislation often needs in the Senate.

The parliamentarian decides whether parts of legislation must be dropped for violating those rules, which include a requirement that provisions be chiefly aimed at affecting the federal budget, not imposing new policy.

Additional reporting by The Associated Press.

: newsy.com

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Senate Rules Referee Weakens Dem Drug Plan In Economic Bill

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Lawmakers must remove language imposing hefty penalties on drugmakers that boost their prices beyond inflation in the private insurance market.

The Senate parliamentarian on Saturday dealt a blow to Democrats’ plan for curbing drug prices but left the rest of their sprawling economic bill largely intact as party leaders prepared for first votes on a package containing many of President Joe Biden’s top domestic goals.

Elizabeth MacDonough, the chamber’s nonpartisan rules arbiter, said lawmakers must remove language imposing hefty penalties on drugmakers that boost their prices beyond inflation in the private insurance market. Those were the bill’s chief pricing protections for the roughly 180 million people whose health coverage comes from private insurance, either through work or bought on their own.

Other major provisions were left intact, including giving Medicare the power to negotiate what it pays for pharmaceuticals for its 64 million elderly recipients, a longtime goal for Democrats. Penalties on manufacturers for exceeding inflation would apply to drugs sold to Medicare, and there is a $2,000 annual out-of-pocket cap on drug costs and free vaccines for Medicare beneficiaries.

Her rulings came as Democrats planned to begin Senate votes Saturday on their wide-ranging package addressing climate change, energy, health care costs, taxes and even deficit reduction. Party leaders have said they believe they have the unity they will need to move the legislation through the 50-50 Senate, with Vice President Kamala Harris’ tiebreaking vote and over solid Republican opposition.

“This is a major win for the American people,” Senate Majority Leader Chuck Schumer, D-N.Y., said of the bill, which both parties are using in their election-year campaigns to assign blame for the worst period of inflation in four decades. “And a sad commentary on the Republican Party, as they actively fight provisions that lower costs for the American family.”

In response, Senate Minority Leader Mitch McConnell, R-Ky., said Democrats “are misreading the American people’s outrage as a mandate for yet another reckless taxing and spending spree.” He said Democrats “have already robbed American families once through inflation and now their solution is to rob American families yet a second time.”

Dropping penalties on drugmakers reduces incentives on pharmaceutical companies to restrain what they charge, increasing costs for patients.

Erasing that language will cut the $288 billion in 10-year savings that the Democrats’ overall drug curbs were estimated to generate — a reduction of perhaps tens of billions of dollars, analysts have said.

Schumer said MacDonough’s decision about the price cap for private insurance was “one unfortunate ruling.” But he said the surviving drug pricing language represented “a major victory for the American people” and that the overall bill “remains largely intact.”

The ruling followed a 10-day period that saw Democrats resurrect top components of President Biden’s agenda that had seemed dead. In rapid-fire deals with Democrats’ two most unpredictable senators — first conservative Joe Manchin of West Virginia, then Arizona centrist Kyrsten Sinema — Schumer pieced together a broad package that, while a fraction of earlier, larger versions that Manchin derailed, would give the party an achievement against the backdrop of this fall’s congressional elections.

The parliamentarian also signed off on a fee on excess emissions of methane, a powerful greenhouse gas contributor, from oil and gas drilling. She also let stand environmental grants to minority communities and other initiatives for reducing carbon emissions, said Senate Environment and Public Works Committee Chairman Thomas Carper, D-Del.

She approved a provision requiring union-scale wages to be paid if energy efficiency projects are to qualify for tax credits, and another that would limit electric vehicle tax credits to those cars and trucks assembled in the United States.

The overall measure faces unanimous Republican opposition. But assuming Democrats fight off a nonstop “vote-a-rama” of amendments — many designed by Republicans to derail the measure — they should be able to muscle the measure through the Senate.

House passage could come when that chamber returns briefly from recess on Friday.

“What will vote-a-rama be like. It will be like hell,” Sen. Lindsey Graham of South Carolina, the top Republican on the Senate Budget Committee, said Friday of the approaching GOP amendments. He said that in supporting the Democratic bill, Manchin and Sinema “are empowering legislation that will make the average person’s life more difficult” by forcing up energy costs with tax increases and making it harder for companies to hire workers.

The bill offers spending and tax incentives for moving toward cleaner fuels and supporting coal with assistance for reducing carbon emissions. Expiring subsidies that help millions of people afford private insurance premiums would be extended for three years, and there is $4 billion to help Western states combat drought.

There would be a new 15% minimum tax on some corporations that earn over $1 billion annually but pay far less than the current 21% corporate tax. There would also be a 1% tax on companies that buy back their own stock, swapped in after Sinema refused to support higher taxes on private equity firm executives and hedge fund managers. The IRS budget would be pumped up to strengthen its tax collections.

While the bill’s final costs are still being determined, it overall would spend more than $300 billion over 10 years to slow climate change, which analysts say would be the country’s largest investment in that effort, and billions more on health care. It would raise more than $700 billion in taxes and from government drug cost savings, leaving about $300 billion for deficit reduction — a modest bite out of projected 10-year shortfalls of many trillions of dollars.

Democrats are using special procedures that would let them pass the measure without having to reach the 60-vote majority that legislation often needs in the Senate.

It is the parliamentarian’s job to decide whether parts of legislation must be dropped for violating those rules, which include a requirement that provisions be chiefly aimed at affecting the federal budget, not imposing new policy.

Additional reporting by The Associated Press.

: newsy.com

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How a New Corporate Minimum Tax Could Reshape Business Investments

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WASHINGTON — At the center of the new climate and tax package that Democrats appear to be on the verge of passing is one of the most significant changes to America’s tax code in decades: a new corporate minimum tax that could reshape how the federal government collects revenue and alter how the nation’s most profitable companies invest in their businesses.

The proposal is one of the last remaining tax increases in the package that Democrats are aiming to pass along party lines in coming days. After months of intraparty disagreement over whether to raise taxes on the wealthy or roll back some of the 2017 Republican tax cuts to fund their agenda, they have settled on a longstanding political ambition to ensure that large and profitable companies pay more than $0 in federal taxes.

To accomplish this, Democrats have recreated a policy that was last employed in the 1980s: trying to capture tax revenue from companies that report a profit to shareholders on their financial statements while bulking up on deductions to whittle down their tax bills.

reduce their effective tax rates well below the statutory 21 percent. It was originally projected to raise $313 billion in tax revenue over a decade, though the final tally is likely to be $258 billion once the revised bill is finalized.

would eliminate this cap and extend the tax credit until 2032; used cars would also qualify for a credit of up to $4,000.

Because of that complexity, the corporate minimum tax has faced substantial skepticism. It is less efficient than simply eliminating deductions or raising the corporate tax rate and could open the door for companies to find new ways to make their income appear lower to reduce their tax bills.

Similar versions of the idea have been floated by Mr. Biden during his presidential campaign and by Senator Elizabeth Warren, Democrat of Massachusetts. They have been promoted as a way to restore fairness to a tax system that has allowed major corporations to dramatically lower their tax bills through deductions and other accounting measures.

According to an early estimate from the nonpartisan Joint Committee on Taxation, the tax would most likely apply to about 150 companies annually, and the bulk of them would be manufacturers. That spurred an outcry from manufacturing companies and Republicans, who have been opposed to any policies that scale back the tax cuts that they enacted five years ago.

Although many Democrats acknowledge that the corporate minimum tax was not their first choice of tax hikes, they have embraced it as a political winner. Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, shared Joint Committee on Taxation data on Thursday indicating that in 2019, about 100 to 125 corporations reported financial statement income greater than $1 billion, yet their effective tax rates were lower than 5 percent. The average income reported on financial statements to shareholders was nearly $9 billion, but they paid an average effective tax rate of just 1.1 percent.

“Companies are paying rock-bottom rates while reporting record profits to their shareholders,” Mr. Wyden said.

told the Senate Finance Committee last year. “This behavioral response poses serious risks for financial accounting and the capital markets.”

Other opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.

“The potential politicization of the F.A.S.B. will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” Ms. Hanlon and Jeffrey L. Hoopes, a University of North Carolina professor, wrote in a letter to members of Congress last year that was signed by more than 260 accounting academics.

the chief economist of the manufacturing association. “Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”

Ms. Sinema has expressed opposition to increasing tax rates and had reservations about a proposal to scale back the special tax treatment that hedge fund managers and private equity executives receive for “carried interest.” Democrats scrapped the proposal at her urging.

When an earlier version of a corporate minimum tax was proposed last October, Ms. Sinema issued an approving statement.

“This proposal represents a common sense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” she said. In announcing that she would back an amended version of the climate and tax bill on Thursday, Ms. Sinema noted that it would “protect advanced manufacturing.”

That won plaudits from business groups on Friday.

“Taxing capital expenditures — investments in new buildings, factories, equipment, etc. — is one of the most economically destructive ways you can raise taxes,” Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, said in a statement. He added, “While we look forward to reviewing the new proposed bill, Senator Sinema deserves credit for recognizing this and fighting for changes.”

Emily Cochrane contributed reporting.

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Democrats Say They’ve Reached Agreement On Economic Package

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Its approval would let Dems appeal to voters by boasting they’re moving to reduce inflation, address climate change and increase U.S. energy security.

Senate Democrats have agreed to eleventh-hour changes to their marquee economic legislation, they announced late Thursday, clearing the major impediment to pushing one of President Joe Biden’s paramount election-year priorities through the chamber in coming days.

Sen. Kyrsten Sinema, a centrist seen as the pivotal vote in the 50-50 chamber, said in a statement that she had agreed to revamping some of the measure’s tax and energy provisions and was ready to “move forward” on the bill.

Senate Majority Leader Chuck Schumer said he believed his party’s energy, environment, health and tax compromise “will receive the support of the entire” Democratic membership of the chamber. His party needs unanimity and Vice President Kamala Harris’ tie-breaking vote to move the measure through the Senate over certain solid opposition from Republicans, who say the plan’s tax boosts and spending would worsen inflation and damage the economy.

The announcement came as a surprise, with some expecting talks between Schumer and the mercurial Sinema to drag on for days longer without guarantee of success. Schumer has said he wants the Senate to begin voting on the legislation Saturday, after which it would begin its summer recess. Passage by the House, which Democrats control narrowly, could come when that chamber returns briefly to Washington next week.

Related StoryWhat's In, And Out, Of Democrats' Inflation-Fighting PackageWhat’s In, And Out, Of Democrats’ Inflation-Fighting Package

Democrats revealed few details of their compromise, and other hurdles remained. Still, final congressional approval would complete an astounding resurrection of President Biden’s wide-ranging domestic goals, though in more modest form.

Democratic infighting had embarrassed President Biden and forced him to pare down a far larger and more ambitious $3.5 trillion, 10-year version, and then a $2 trillion alternative, leaving the effort all but dead. Instead, Schumer and Sen. Joe Manchin, the conservative maverick Democrat from West Virginia who derailed President Biden’s earlier efforts, unexpectedly negotiated the slimmer package two weeks ago.

Its approval would let Democrats appeal to voters by boasting they are moving to reduce inflation — though analysts say that impact would be minor — address climate change and increase U.S. energy security.

“Tonight, we’ve taken another critical step toward reducing inflation and the cost of living for America’s families,” President Biden said in a statement.

Sinema said Democrats had agreed to remove a provision raising taxes on “carried interest,” or profits that go to executives of private equity firms. That’s been a proposal she has long opposed, though it is a favorite of Manchin and many progressives.

The carried interest provision was estimated to produce $13 billion for the government over the coming decade, a small portion of the measure’s $739 billion in total revenue.

It will be replaced by a new excise tax on stock buybacks which will bring in more revenue than that, said one Democrat familiar with the agreement. The official, who was not authorized to discuss the deal publicly and spoke on condition of anonymity, provided no other detail.

Sinema said she had also agreed to unspecified provisions to “protect advanced manufacturing and boost our clean energy economy.”

She noted that Senate parliamentarian Elizabeth MacDonough is still reviewing the measure to make sure no provisions must be removed for violating the chamber’s procedures. “Subject to the parliamentarian’s review, I’ll move forward,” Sinema said.

The measure must adhere to those rules for Democrats to use procedures that will prevent Republicans from mounting filibusters, delays that require 60 votes to halt.

Schumer said the measure retained the bill’s language on prescription drug pricing, climate change, “closing tax loopholes exploited by big corporations and the wealthy” and reducing federal deficits.

He said the bill “addressed a number of important issues” that Democratic senators raised during talks. He said the final measure “will reflect this work and put us one step closer to enacting this historic legislation into law.”

Left unclear was whether changes had been made to the bill’s 15% minimum corporate tax, a provision Sinema has been interested in revising. It would raise an estimated $313 billion, making it the legislation’s largest revenue raiser.

That levy, which would apply to around 150 corporations with income exceeding $1 billion, has been strongly opposed by business, including by groups from Sinema’s Arizona.

The final measure was expected to include assistance that Sinema and other Western senators have been trying to add to help their states cope with epic drought and wildfires that have become commonplace. Those lawmakers have been seeking around $5 billion but it was unclear what the final language would do, said a Democrat following the bargaining who would describe the effort only on condition of anonymity.

The measure will also have to withstand a “vote-a-rama,” a torrent of nonstop amendments expected to last well into the weekend, if not beyond. Republicans want to kill as much of the bill as possible, either with the parliamentarian’s rulings or amendments.

Even if their amendments lose — as is certain for most — Republicans will consider it mission accomplished if they force Democrats to take risky campaign-season votes on touchy issues like taxes, inflation and immigration.

Democratic amendments are expected as well. Progressive Sen. Bernie Sanders has said he wants to make its health care provisions stronger.

The overall bill would raise $739 billion in revenue. That would come from tax boosts on high earners and some huge corporations, beefed-up IRS tax collections and curbs on drug prices, which would save money for the government and patients.

It would spend much of that on initiatives helping clean energy, fossil fuels and health care, including helping some people buy private health insurance. That would still leave over $300 billion in the measure for deficit reduction.

Additional reporting by The Associated Press.

: newsy.com

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