Inflation Reduction Act, with EV tax credits, passes Senate


The Senate passed a landmark tax, climate and health-care bill, speeding a slimmed-down version of President Joe Biden’s domestic agenda on a path to becoming law after a year of Democratic infighting that the White House was unable to control.

The bill allows roughly $374 billion in climate and energy spending such as expanded tax credits for renewable energy projects. It ends per-manufacturer limits for the $7,500 tax credit for electric vehicle purchases, a boost for electric vehicle makers. But the vehicles will have to be built in North America and carmakers will have to quickly end a reliance on China for the battery supply chain. Some automakers such as Ford Motor Co. and General Motors lobbied to make changes to the credit.

The vote on the bill was 51 Democrats in favor to 50 Republicans against, with Vice President Kamala Harris casting the tie-breaking vote after an overnight marathon of votes on amendments. It now goes to the House, where the Democratic majority is expected to pass it on Friday. 

“I am confident the Inflation Reduction Act will be one of the defining feats of the 21st century,” Majority Leader Chuck Schumer said before the vote. 

Democrats called the bill the largest investment in fighting climate change ever made in the US, and it’s projected to help cut greenhouse gas emissions by about 40 percent from 2005 levels by the end of the decade. They applauded and hugged during the vote on final passage.

The legislation also aims to prevent large corporations from exploiting tax breaks to pay little if any tax, and it would allow Medicare to negotiate drug prices for the first time. It’s forecast to make the first substantial cut to budget deficits in more than 10 years. 

Biden applauded Senate Democrats for pushing it through to passage.

“It required many compromises. Doing important things almost always does,” Biden said in a statement hailing the vote. 

Republicans, united in opposition, argued it wouldn’t stop the historic levels of inflation and would impose taxes that could tip the U.S. economy into recession. 

Senate GOP leader Mitch McConnell argued that “hundreds of billions of dollars in tax hikes during a recession will kill jobs.”

The Senate vote was the culmination of a year and half of intraparty squabbling among Democrats about the scope of the bill, which Biden had once hoped would be so sweeping as to rival Franklin Delano Roosevelt’s New Deal. In the end it came down to two holdout moderate Democrats, Senators Joe Manchin and Kyrsten Sinema, whose votes were essential in the 50-50 Senate and who balked at both larger tax increases and more spending. Biden negotiated with Manchin and Sinema in the early goings, but the deal that revived the bill was entirely hammered out on Capitol Hill. 

The legislation was passed through reconciliation, a Senate procedure that exempts certain tax and spending measures from a filibuster and requires only a simple majority to pass. 

Trimmed from its original $6 trillion price tag to one of around $437 billion, the bill will nonetheless be a cornerstone achievement of Biden’s first term and one Democrats are eager to campaign on before the November midterms where they are fighting to retain control of Congress. 



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