US President Biden signed a USD 700bn bill aimed at fighting climate change and healthcare costs while raising taxes primarily on the rich.
The left-winged President has been vocal about his support to combat climate change since he came into office. The act includes measures to materialise the decades of promises made by the Congress to control the price of prescription drugs. The final version of the bill is more modest in scope than first envisioned by the Democrats.
The flagship of Mr. Biden’s presidential agenda, the bill can help him garner support in the midterm elections. Voters casting their ballots in November will decide whether Mr. Biden’s Democrats will control Congress for more than two years.
The bill provides a package of USD 375bn to fight climate change. It is one of the most prominent federal investments in climate change history. It is projected to lower US carbon emissions by up to 44 percent by 2030. The bill does not require companies to reduce their emissions, but includes tax incentives for firms to invest in renewable energy and rebates for people who buy electric cars or invest in energy-efficient home improvements.
The package also gives the government the ability to negotiate lower prices for a few prescription medicines. On Tuesday, Mr. Biden said the measure was a “historic moment”, adding: “Every single Republican in Congress voted against this bill.”
But Republican Senate leader Mitch McConnell said the legislation “means higher taxes, higher energy bills, and aggressive IRS [tax] audits”.
Although the package is called the Inflation Reduction Act (IRA) it will have naught measurable impact on inflation. The bill has set a minimum 15 percent tax for corporations, and Democrats have pledged it will entail no tax hikes for those whose income is below USD 400,000 annually.
by Amna Sheikh