When Joe Biden departs on Wednesday for a vacation on Kiawah Island, South Carolina, he will have reasons to be cheerful. Last Friday, the Labor Department reported that employers created more than half a million jobs in July, confirming that Biden was right when he said the economy isn’t in recession. The House of Representative looks set to pass the Inflation Reduction Act of 2022 later this week; Senate Democrats voted the legislation through over the weekend, and it includes parts of the President’s Build Back Better policy agenda.
Perhaps the most remarkable thing about the new legislation, which provides extensive tax breaks for clean energy and authorizes Medicare to negotiate the prices of certain prescription drugs, is that it survived at all. Just a month ago, when Senator Joe Manchin told Chuck Schumer, the Senate Majority Leader, that he wouldn’t support the bill, it seemed dead. Thanks to Manchin’s change of mind and Schumer’s cat-herding, the bill was resurrected and rushed through the Senate before the summer recess, a feat that prompted at least one Democratic senator—Brian Schatz, of Hawaii—to shed tears.
Going into the midterms, Biden and the Democrats will also be able to tout other legislative accomplishments. In June, Congress passed the first gun-control bill in thirty years, which tightened background checks for young buyers and provided incentives for states to expand “red flag” laws that allow the authorities, with the approval of a judge, to disarm dangerous individuals. In the past couple of weeks, two more bills have been passed. The CHIPS Act provides more than fifty billion dollars to encourage the manufacture of semiconductor chips in the United States. A new veterans’ bill creates an entitlement program for veterans who may have been exposed to toxic waste from fires on military bases known as “burn pits.”
Taken together, these pieces of legislation should put to bed the notion that Biden and the Democrats can’t get anything done, and they also demonstrate that his election pledge to pursue bipartisan initiatives wasn’t an empty one. Despite the hyper-partisanship in Washington, three of the four bills gained some Republican support. And Senate Democrats, after months of disarray, held together and passed the Inflation Reduction Act on a party-line vote of fifty-one to fifty using the reconciliation process. “I was one of the folks who was first in supporting now President Biden when he was candidate Biden and I think he’s done good things for our country,” the Delaware Senator Chris Coons told ABC News’s George Stephanopoulos on Sunday. “I think he’s got a strong record of accomplishments to run on.”
The Inflation Reduction Act—so-named to placate Manchin—contains the biggest effort to tackle climate change that the U.S. government has taken. Right now, thanks largely to the retirement of coal-fired electricity plants, the country is on track to reduce its carbon emissions by about thirty per cent by 2030, compared to 2005. By providing about $370 billion in tax credits over ten years for solar and wind producers, as well as for the purchase of electric vehicles, the new bill will increase the emissions reduction to about forty per cent, according to several expert analyses.
Although hitting that figure would fall short of the White House’s initial target of a carbon reduction of fifty per cent, it would represent a historic move in the right direction. In addition, the bill should boost employment in the clean-energy and clean-manufacturing sectors, which are already attracting significant private investment. How big a boost? A study, from the Political Economy Research Institute at the University of Massachusetts Amherst, says that the new legislation bill would create more than nine million jobs in this sector over the next ten years.
Another important element of the bill is that it would empower Medicare to use its heft to negotiate lower prescription-drug prices. Other public health-care systems, such as the United Kingdom’s National Health Service, have long haggled over the prices that they pay pharmaceutical companies. In this country, the Big Pharma lobby has managed to maintain a system in which drug companies can largely dictate their own prices. At last, Congress has challenged this cozy arrangement, albeit in a modest way. The new legislation would cover ten drugs starting in 2026. As critics have pointed out, that’s not very many. But it seems likely that this number will expand once the general principle is accepted.
The legislation also places an annual cap on prescription-drug outlays for people covered by Medicare. In this way and others, it reflects some long-standing progressive priorities. “The best that can be said of the bill is that it represents a significant reorientation of policy in a number of areas,” Felicia Wong, the president of the liberal Roosevelt Institute, told me. “It starts things in the direction we need to be going.” As additional examples, Wong cited the eighty-billion-dollar boost to the I.R.S. budget, which is designed to enable the agency to go after wealthy tax dodgers more effectively; and the taxing of stock buybacks, which is intended to incentivize corporations to invest in capital equipment and research rather than boosting their stock prices.
Wong also emphasized that the new spending bill doesn’t go far enough—a point that is indisputable. For all the worthwhile things it contains, many others got left out from Biden’s original agenda. A short list incudes the enhanced child income-tax credit, which dramatically reduced child poverty before being phased out last year; paid leave; guaranteed pre-school for four-year olds and expanded child care; a reversal of the high-income tax cuts in Trump’s 2017 tax bill; and an end to the carried-interest loophole for private equity and hedge funds, which represents another indefensible blemish on the tax code.
The common theme is that efforts to tackle pressing social problems and rising inequality got left out. Unlike private-equity tycoons, poor and working-class families don’t have the entire Republican Party, platoons of highly-paid lobbyists, and a certain Democratic senator from Arizona looking out for their interests. Unlike green-energy producers and manufacturers of electric vehicles, they aren’t making hefty investments that need tax breaks to succeed in shifting the economy away from fossil fuels. As often before, their needs will have to wait.
That’s more an endemic failing of the American political system, and a fifty-fifty Senate, than of this particular piece of legislation. In making a serious commitment to green energy, the enactment of the bill would be a landmark moment in U.S. policymaking. In demonstrating that this generation of Democrats can pass major legislation unaided, it would upend the previous narrative of a faltering Biden Administration. Relative to where things stood a couple of months ago, the change seems momentous. ♦
