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Inflation Reduction Act of 2022
President signs scaled back reconciliation bill into law
On August 16, 2022, President Joe Biden signed the Inflation Reduction Act of 2022 into law. The bill was passed by Congress after a 220-207 vote in the House on August 12, 2022. This followed passage in the Senate on August 7, 2022 by a vote of 51-50, with Vice President Kamala Harris casting the tiebreaking vote. The Act provides investment in clean energy, promotes reductions in carbon emissions, and extends popular Affordable Care Act premium reductions. The Act is paid for through the implementation of a 15 percent corporate minimum tax, budget increases for the Internal Revenue Service to close the “tax gap,” an excise tax on stock repurchases, and changes to Medicare rules.
The vote in the Senate capped a flurry of activity in the upper chamber, with marathon voting sessions on amendments and a last second change in the Act’s revenue raisers. The activity in the Senate followed the surprise announcement of a breakthrough deal between Senate Majority Leader Charles Schumer (D-N.Y.) and Senator Joe Manchin (D-W.Va.). The House made a brief return from August recess to send the bill to President Biden’s desk.
The Inflation Reduction Act of 2022 is the remnant of President Biden’s Build Back Better Plan, a $6 trillion dollar proposal released in 2021 that comprised the majority of Biden’s domestic agenda. Part of that initial plan became law through the Infrastructure Investment and Jobs Act. During 2021, the remainder of the plan was negotiated down to $1.75 trillion and eventually passed in the House of Representatives on November 19, 2021. However, with an evenly divided Senate, the Build Back Better Act never even came up for a vote in the upper chamber as it did not have the support of all 50 Democrats.
For nearly a year, the proposal seemed dead. However, Schumer and Manchin surprised nearly everyone when they announced they had reached an agreement that Manchin, a key Senator in reaching the 50 votes required for passage, could support. This new version retains many of the key “green” provisions and carries a price tag under $1 trillion.
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