Biden signs Inflation Reduction Act into law: ‘The American people won’

After nearly 18 months of ups and downs, fits and starts, and premature reports of the death of his domestic policy agenda, President Joe Biden put pen to paper and signed into law the $739bn Inflation Reduction Act, capping a summer of legislative productivity that has resusitated his presidency and left Democrats energised heading into the November midterm elections.

Mr Biden’s added his signature to the sweeping climate, health care and tax reform package shortly after returning from Kiawah Island in South Carolina, where he’d been for the last week on holiday with his wife, children and grandchildren. The hastily-arranged signing ceremony came just days after the House of Representatives approved the legislation in a party-line vote last week.

Flanked by Senate Majority Leader Chuck Schumer and House Majority Whip Jim Clyburn, in the state dining room of the White House, the president called the legislation “one of the most significant laws in our history”.

“With this law the American people won and the special interests lost,” Mr Biden said.

Passed under so-called “reconciliation” rules which allowed the evenly-divided Senate to approve the legislation with just 51 votes (requiring a tie-breaker from Vice President Kamala Harris), the newly-enacted spending package is a far cry from the multi-trillion-dollar Build Back Better Act which the 46th president had laboured unsuccessfully to pass for most of the first year of his term, only to see it die after West Virginia Senator Joe Manchin announced late last year that he could not support such a massive expenditure of funds at the same time inflation was rising to levels unseen since the 1970s.

But it was Mr Manchin — after secret negotiations with Mr Schumer — who birthed and shepherded the IRA through the upper chamber, much to the dismay of Republicans who had believed Mr Biden’s domestic programme to be dead and buried after GOP members had announced that they would withhold votes for a bipartisan package to boost domestic semiconductor production if Democrats moved forward on a a prior attempt at a reconciliation bill.

Mr Manchin sat in the front row for the signing ceremony and got a round of applause after Mr Schumer credited him with helping secure the legislation’s success.

Mr Biden also acknowledged Mr Manchin’s role in moving the sweeping spending package through the upper chamber — climate provisions and all — even after the West Virginia senator had spent months on the receiving end of attacks from progressive Democrats and climate activists, many of whom accused him of tanking the climate spending-laden Build Back Better Act for his own financial interests.

"Joe, I never had a doubt,” he said.

Continuing, the president called the bill “one of the most significant laws in our history” and contrasted the successful passage of the spending package with the challenges his administration faced when he was sworn in 18 months ago.

“This administration began amid a dark time in America ... a once in a century pandemic devastating joblessness, clear and present threats to democracy and the rule of law, doubts about America's future itself. And yet, we've not wavered. We've not flinched, And we've not given in,” he said. “Instead, we're delivering results for the American people. We didn't tear down, we built up — we didn't look back, we looked forward, and today ... offers further proof that the soul of American is vibrant, the future of America is bright and the promise of America is real”.

The signing ceremony, which the White House has said will be followed by a larger celebration on 6 September, is the latest legislative triumph for Mr Biden and congressional Democrats, who in the last two months have seen enacted into law the first gun control legislation in three decades, a sweeping bill to boost US microchip manufacturing and increase competitiveness with China, and a similarly massive bill establishing new benefits for veterans exposed to toxic substances during their military service.

Put together with the trillion-dollar infrastructure law Mr Biden signed into law last year, the combined output of his administration and the Democratic-led Congress has surprised many historians and political observers, some of whom have compared it to the series of landmark bills enacted in the 1960s as part of then-president Lyndon Johnson’s “Great Society” agenda.

Although the new law is far smaller than the New Deal-like package Mr Biden and his progressive allies had pined for during the first year of his presidency, Democrats hope it will be transformative enough to boost their chances of retaining both the House and Senate in November by including a number of provisions which Mr Biden’s advisers have said are overwhelmingly popular with voters from across the political spectrum.

The legislation includes two more years of expanded subsidies for health insurance plans purchased using health care exchanges established under the Affordable Care Act, the landmark 2010 health care law enacted under former president Barack Obama. According to the White House, the extended subsidies will assist approximately 13 million Americans by helping them save an average of $800 a year on their health insurance premiums, as well as assist approximately 3 million more who would not be able to afford insurance otherwise.

It also repeals a provision of the 2004 law which established a Medicare prescription drug benefit for seniors which had prevented the Centre for Medicare and Medicaid Services from negotiating with drug manufacturers for lower prescription drug prices, and caps seniors’ out-of-pocket prescription costs at $2,000 per year.

And although a provision capping the price of insulin at $35 for a month’s supply was stripped out as applied to private insurers, seniors on Medicare will now enjoy the benefit of an insulin price cap. The White House has estimated that negotiations will allow between five million and seven million Americans to enjoy lower prescription drug costs, while the benefit of a $2,000 per year out-of-pocket cap will assist an estimated 50 million Medicare recipients.

On the tax front, the new law will bring in hundreds of billions of dollars by instituting the 15 per cent corporate minimum tax that has been a signature piece of Mr Biden’s legislative programmme, as well as a newly-instituted tax on stock buybacks that Senate Democrats added to the bill to make up for the retention of the “carried interest” tax deduction that was insisted on by Arizona Senator Kyrsten Sinema

The legislation also represents the biggest investment ever made by the US government to tackle the climate crisis. While it is far less ambitious in cost and scope than the aborted Build Back Better package, multiple independent analyses of the new law have found that the $369bn it will channel into climate and clean energy investments will cut US carbon emissions to just 60 per cent of levels recorded in 2005, and will do so by the year 2030.

The 40 per cent reduction in greenhouse gas production will put the US within striking distance of a pledge Mr Biden laid out last year to cut US emissions in half by the end of the decade.

The enactment of such sweeping climate legislation marks a significant turn of events for Mr Biden, whose chance for meaningful climate action during his presidency appeared doomed just weeks ago after Mr Manchin, a conservative Democrat whose state has long counted coal mining as one of its’ most important industries, appeared to have pulled his support for the any effort at including climate provisions in a reconciliation bill.

But the agreement announced last month by Mr Manchin and Mr Schumer surprised climate activists by including the $369bn in climate-related spending, which Mr Manchin has said he agreed to in exchange for future action on a bill to streamline the permit process for oil and gas pipeline projects.

The West Virginia Democrat’s reversal — and the bill’s enactment with Mr Biden’s signature — means billions of dollars for tax incentives that will help to expand use of renewable energy sources such wind and solar, battery storage and nuclear power over the next 10 years.

The new law will also provide tax credits to support electric vehicles purchases, help farmers cut agricultural emissions, and fund improvements in minority and low-income communities who are most harmed by climate and environmental pollution.

The climate provisions that are now the law of the land in the US represent a major step forward in fighting the climate crisis which has contributed to a wave of disasters this summer, including devastating flooding in Kentucky which left 38 people dead; dozens of wildfires in at least 15 states, and tens of millions of Americans under dangerous heat warnings.

In a “dear colleague” letter to House Democrats, House Speaker Nancy Pelosi said the enactment of the Inflation Reduction Act marks “a glorious day for America’s families and for our children’s future”.

“As we confront a climate crisis ‘Code Red for Humanity,’ this package powers our nation toward a clean energy future with the most consequential climate action in human history,” she said, adding that House Democrats “can take particular pride in this victory” because the “overwhelming majority” of climate provisions originated in the House during the long-running talks over the Build Back Better Act.

Dr Mona Sarfaty, executive director of the Medical Society Consortium on Climate & Health which represents more than 70 per cent of all US doctors, said the new law has "the potential to bring substantial benefits to the health of the US population across the country, preventing nearly 4,000 deaths and 100,000 asthma attacks every year by 2030".

But Dr Sarfaty’s group also warned that the new law also has provisions that have "the potential to harm those who have already been made most vulnerable to climate change, especially people with lower incomes, Indigenous or Native Americans, people of color, or those living in rural areas".

"The health community has a stronger imperative now than ever to help prevent increases in fossil fuel production, and we believe we can do this through preventive action from the Administration, legal challenges, and continued activism,” she said. “The Consortium is committed to working with partners to ensure that this law and the Infrastructure Act are implemented with health equity at the centre”.