The US Senate passed legislation on Sunday that would make the most significant federal investment in history to counter climate change and lower the cost of prescription drugs, as Democrats banded together to push through major pieces of President Biden’s domestic agenda over unified Republican opposition.
The measure, large elements of which appeared dead just weeks ago amid Democratic divisions, would inject more than $370 billion into climate and energy programs. Altogether, the bill could allow the United States to cut greenhouse gas emissions about 40 percent below 2005 levels by the end of the decade.
It would achieve Democrats’ longstanding goal of slashing prescription drug costs by allowing Medicare for the first time to negotiate the prices of medicines directly and capping the amount that recipients pay out of pocket for drugs each year at $2,000. The measure also would extend larger premium subsidies for health coverage for low- and middle-income people under the Affordable Care Act for three years.
Initially pitched as “Build Back Better,” a multi-trillion-dollar, cradle-to-grave social safety net plan on the order of the Great Society, Democrats scaled back the legislation in recent months and rebranded it as the Inflation Reduction Act. It was projected to lower the federal deficit by as much as $300 billion over a decade, though it remained to be seen whether it would counter inflation or lower costs for Americans in the long term.
Passage of the measure was a major victory for Mr. Biden and Democrats, who are battling to maintain their slim House and Senate majorities in November’s midterm congressional elections. Facing unanimous opposition by Republicans, who have used filibusters to block many elements of their domestic agenda, Democrats took full advantage of the Senate’s special budget rules to force through as much of it as they could with the support of all 50 members of their caucus.
The final tally was 51 to 50, with Vice President Kamala Harris casting the tiebreaking vote. The House planned to interrupt its summer break to reconvene briefly on Friday to clear the measure, sending it to Mr. Biden for his signature.
“Today, Senate Democrats sided with American families over special interests, voting to lower the cost of prescription drugs, health insurance, and everyday energy costs and reduce the deficit, while making the wealthiest corporations finally pay their fair share,” Mr. Biden said in a statement.
“The caucus overwhelmingly is focused on what’s in this bill — not what’s not in the bill, even though every one of us would want more — because what’s in the bill is so incredible,” Senator Chuck Schumer of New York, the majority leader, said in an interview. “You had to thread the needle.”
However, Republicans did succeed in forcing the removal of a $35 cap on insulin prices for patients on private insurance, challenging it as a violation of Senate rules in a vote that Democrats were all but certain to use as a political weapon against them ahead of the midterms. The insulin price cap for Medicare patients remained untouched in the bill, with the potential to help millions of seniors.
As part of its landmark climate and energy initiative, which would put the Biden administration within reach of its aim to cut emissions roughly in half by 2030, the bill would offer tax incentives to steer consumers to electric vehicles and lure electric utilities toward renewable energy sources like wind or solar power. It also includes millions of dollars in climate resiliency funding for tribal governments and Native Hawaiians, as well as $60 billion to help disadvantaged areas that are disproportionately affected by climate change.
The measure fell far short of Mr. Biden’s original vision for the plan and the $2.2 trillion measure that the House passed in November. To accommodate the demands and concerns of two holdouts, Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, Democrats jettisoned billions of dollars for child care, paid leave and public education and set aside plans to roll back key elements of the 2017 Republican tax overhaul.
The legislation would allow Medicare to negotiate the cost of up to 10 prescription drugs initially, beginning in 2026, and give seniors access to free vaccines. Coupled with a three-year extension of expanded health care subsidies first approved last year as part of the $1.9 trillion pandemic aid law, the package amounts to the largest change to national health policy since the passage of the Affordable Care Act.
To finance much of the plan, the measure would institute a new 15 percent corporate minimum tax that would apply to the profits that companies report on their financial statements to shareholders, known as book income. It would impose a new 1 percent tax on corporate stock buybacks beginning in 2023. The measure also would pour $80 billion into the I.R.S. to bulk up the agency’s enforcement arm and crack down on wealthy corporations and tax evaders. That provision is estimated to raise $124 billion over a decade.
It was the second time in less than two years that Democrats muscled through a sprawling spending package without any Republican support, following passage of the $1.9 trillion pandemic aid package last year. Since inflation skyrocketed in the months after that measure became law, Republicans warned that Democrats were exacerbating the economic stress facing American families by passing the legislation.
Senator Lindsey Graham of South Carolina, the top Republican on the Budget Committee, announced Saturday evening that he had “thought long and hard about how to explain this to the American people, and the only thing I can tell you is insanity is defined as doing the same thing and expecting a different outcome.”
But there was little Republicans could do to stop passage once Mr. Manchin and Ms. Sinema said they would support it. Democrats moved the bill under the special process known as reconciliation, which shields budget measures from filibusters.
In cutting short his losses, Mr. Manchin ensured that the interests of his coal-producing state were reflected in the final bill. In addition to securing separate commitments to complete construction of a natural gas pipeline in West Virginia and votes on a measure to help fast-track permits for energy infrastructure, he fought to include tax credits for carbon capture technology and requirements for new oil drilling leases in Alaska’s Cook Inlet and the Gulf of Mexico.
Ms. Sinema extracted her own concessions, including $4 billion to help Western states combat historic drought levels and the preservation of a tax break that allows venture capitalists and hedge fund managers to pay substantially lower taxes on some of their income than other taxpayers.
She also preserved a valuable deduction known as bonus depreciation, used by manufacturers when they purchase equipment, that they could have lost or seen diluted under the new corporate minimum tax rules. And on Sunday afternoon, just as the measure appeared on a glide path to approval, she insisted on yet another change, backing a Republican proposal to shield hedge fund and portfolio companies from being hit by the minimum tax.
The concessions frustrated liberals, particularly Senator Bernie Sanders, the Vermont independent and Budget Committee chairman who had pushed for spending as much as $6 trillion on the domestic policy package. He proposed changes to the measure during the all-night voting session, though most Democratic senators opposed them in order to protect the final product.