The package is the product of arduous negotiations and will give Democrats a chance to accomplish important political goals before the upcoming midterm elections. Senate Democrats are using a special process to pass the package without Republican votes.
Once the legislation has passed the Senate, it will then need to be approved by the House of Representatives before President Joe Biden can sign it into law.
The Senate is expected to take the first procedural vote to proceed with the bill sometime on Saturday. A simple majority is required for the motion to proceed.
The vote has not yet been scheduled, but Senate Majority Leader Chuck Schumer said shortly after noon ET on Saturday that “within a few hours” the chamber “would formally begin the process of approving the Inflation Reduction Law”.
Democrats control the narrowest possible majority and only 50 seats in the Senate, but they are expected to be united in advancing the bill on the initial procedural vote.
However, to get a bill through the reconciliation process, the package must meet a strict set of budget rules.
The Senate MP has to decide whether the bill’s provisions meet the rules to allow Democrats to use the filibuster-proof budget process to pass legislation along direct partisan lines.
Schumer announced on Saturday that after undergoing parliamentary review, the bill “remains virtually intact.”
“When passed, the bill will accomplish all of our goals: combat climate change, lower health care costs, close tax loopholes abused by the rich, and reduce the deficit,” the New York Democrat said.
In a key ruling, Rep. Elizabeth MacDonough allowed a major component of Democrats’ prescription drug pricing plans to advance, giving Medicare the power to negotiate the prices of certain prescription drugs for the first time.
But MacDonough limited another provision aimed at lowering drug prices, imposing penalties on drug companies if they raise their prices faster than inflation. Democrats wanted the measure to apply to both Medicare and the private insurance market. But the congressman ruled that the inflation cap could only apply to Medicare, a Democratic aide said.
Democrats are waiting for new cost estimates from the nonpartisan Congressional Budget Office to see how the ruling affects their deficit projections. The restricted supply of medicines is likely to limit the reduction of the deficit of the package somewhat.
Meanwhile, MacDonough ruled to keep several climate measures from the Environment and Public Works Committee intact in the reconciliation bill, including a methane fee that would apply to oil and gas producers that leak methane, a potent greenhouse gas. greenhouse, above a certain threshold.
Earlier Saturday, Senate Finance Chairman Ron Wyden of Oregon announced that the clean energy tax portion of the bill “adheres to Senate rules, and the legislator has passed important provisions to ensure that our clean energy future is built in America.
What happens after the bill faces its first key vote
If the first procedural vote to proceed with the bill wins the support of all 50 members of the Democratic caucus, which is expected, there will be up to 20 hours of debate divided evenly between the two parties, although some of that time could be returned. for make faster the process.
It’s not yet clear how much of the allotted debate time each side will use, but some Republicans are signaling they won’t try to use all of it. And Democrats are expected to give back some of their time.
Asked if he plans to use up a lot of debate time, which could delay the bill’s final passage in the Senate, Republican Sen. Rand Paul of Kentucky said, “Probably not.”
Another Republican senator, Ron Johnson of Wisconsin, said Saturday that he would not force Senate secretaries to read the entire bill, as any senator might request under the rules. Johnson forced a reading of the American Bailout legislation during last year’s budget process, delaying a vote on the bill.
Republicans will be able to use vote-a-branch to put Democrats in the crosshairs and force politically difficult votes. The process usually extends overnight and into the early hours of the next morning. It’s not yet clear exactly when the vote-a-branch will start, but it could start as early as Saturday night. If that happens, a final vote could take place in the early hours of Sunday morning.
Sen. Patrick Leahy, a Democrat from Vermont, who has been recovering from hip surgery, returned to the Senate on Saturday. His return is imperative for Democrats, as they need the votes of all 50 members of their conference to move the bill forward.
Sen. John Cornyn, R-Texas, also returned to the Senate following his absence last week after testing positive for Covid-19.
The House is set to revisit the legislation on Friday, August 12, according to House Majority Leader Steny Hoyer’s office.
How the bill addresses the climate crisis
For a party that failed to pass major climate legislation more than 10 years ago, the reconciliation bill represents a major and long-fought victory for Democrats.
The nearly $370 billion climate and clean energy package is the largest climate investment in US history and the biggest victory for the environmental movement since the landmark Clean Air Act. It also comes at a critical time; This summer has seen deadly heat waves and flooding across the country, which scientists say are linked to global warming.
Analysis from Schumer’s office, as well as multiple independent analyses, suggests the measures would reduce US carbon emissions by as much as 40% by 2030. Strict climate regulations would be needed by the Biden administration and the state action to meet Biden’s goal of reducing emissions 50% by 2030.
The bill also contains many tax incentives aimed at lowering the cost of electricity with more renewable energy and encouraging more American consumers to switch to electricity to power their homes and vehicles.
Lawmakers said the bill represents a monumental victory and is also just the beginning of what is needed to combat the climate crisis.
“This is not about the laws of politics, this is about the laws of physics,” Democratic Sen. Brian Schatz of Hawaii told CNN. “We all knew that going into this effort we had to do what the science tells us we have to do.”
Health and fiscal policy key in the bill
The bill would empower Medicare to negotiate the prices of certain expensive drugs administered in doctors’ offices or purchased at the pharmacy. The Secretary of Health and Human Services would negotiate the prices of 10 drugs in 2026, and another 15 drugs in 2027 and again in 2028. The number would increase to 20 drugs per year by 2029 and beyond.
This controversial provision is much more limited than what House Democratic leaders have endorsed in the past. But it would open the door to fulfilling a long-standing party goal of letting Medicare use your weight to lower drug costs.
Democrats also plan to extend enhanced federal premium subsidies for Obamacare coverage through 2025, a year after lawmakers recently discussed it. That way, they wouldn’t expire right after the 2024 presidential election.
To boost revenue, the bill would impose a minimum 15% tax on income that large corporations report to shareholders, known as countable income, as opposed to the Internal Revenue Service. The measure, which would raise $258 billion over a decade, would apply to companies with revenues greater than $1 billion.
Concerned about how this provision would affect certain businesses, particularly manufacturers, Sinema has suggested she won changes to the Democrats’ plan to reduce the way businesses can deduct depreciated assets from their taxes. Details remain unclear.
However, Sinema rejected her party’s effort to reduce the accrued interest loophole, which allows investment managers to treat much of their compensation as capital gains and pay a long-term capital gains tax rate of 20%. % instead of income tax rates of up to 37%.
The provision would have lengthened the amount of time investment managers must hold the profit share from three years to five years to take advantage of the lower tax rate. Addressing this loophole, which would have raised $14 billion over a decade, had been a long-time goal of Democrats in Congress.
In its place, a 1% excise tax on company share buybacks was added, raising another $74 billion, according to a Democratic adviser.
This story has been updated with additional developments.
CNN’s Jessica Dean, Manu Raju, Ella Nilsen, Tami Luhby, Katie Lobosco and Melanie Zanona contributed to this report.