U.S. Senate Passes Historic Anti-Inflation Budget Reconciliation Bill to Lower Deficit and Rx Drug Costs, Invest in American Clean Energy Production, & Combat Climate Change

WASHINGTON, DC -- The U.S. Senate today voted 51-50 to pass a historic anti-inflation package that includes key health, climate, and deficit reduction initiatives. Vice President Kamala Harris cast the tie-breaking vote.

U.S. Senator Jack Reed voted for the Inflation Reduction Act and says it will help generate real savings for Americans -- lowering costs that strain family budgets and reducing the federal deficit while also supporting U.S. job growth, making America more energy-efficient and energy-independent, and combatting climate change.

"The bill will help relieve key inflationary pressures and boost the purchasing power of working Americans and seniors on fixed-incomes. It focuses on deficit reduction, historic investments in clean energy and climate change, and long overdue reforms to lower health costs. It saves taxpayers billions on prescription drugs and will help keep health premiums more affordable for all. It will help avoid inflated costs due to foreign supply chains," said Senator Reed. "Republicans still have their heads buried in the sand when it comes to climate change. The American people see for themselves the negative impacts of increased flooding, heat waves, drought, wildfires, and extreme weather. This bill takes meaningful climate action. It's a major down payment on cutting pollution and reaching our climate goals. It strengthens American energy security and will make American homes more energy efficient while creating good-paying American jobs growing our renewable energy manufacturing sector."

The legislation raises about $740 billion in revenue by empowering Medicare to negotiate lower prescription drug prices; imposing a 1 percent excise tax on Wall Street stock buybacks; enforcing the tax code and ensuring the biggest corporations pay a minimum 15 percent tax rate.

"This bill will help working families, lower deficits, create jobs, and boost private investment. For the first time, the Senate voted to lower drug costs for seniors by finally giving Medicare bargaining power, and addresses the climate crisis in a historic way. If you care about the cost of medicine, if you care about the cost of health insurance, if you care about making sure the wealthiest corporations pay at least a minimum tax, and if you care about fighting climate change - this bill is for you," noted Reed.

Highlights of the bill include:

Prescription Drug Price Reform: Allowing Medicare to Negotiate for Lower Prices

Under current law, the federal government is prohibited from directly negotiating drug prices. The bill would allow Medicare to directly negotiate prescription drug prices with big pharmaceutical companies, saving the federal government an estimated $288 billion over the next decade.

"I've been advocating for years to empower Medicare to negotiate lower prescription drug prices and offer new benefits for seniors. Passing this bill is a major leap forward. It will open the door to achieving real cost savings on prescription drugs," said Reed.

The bill also includes a $2,000 out-of-pocket cap for older adults buying prescriptions from pharmacies, would provide free vaccinations for seniors, and helps keep health insurance affordable for millions of Americans.

Reed also pushed to include a $35 monthly cap on insulin in the final bill, which would have benefitted thousands of Rhode Islanders. Tragically, Republicans blocked the attempt to lower and cap insulin at $35 for patients enrolled in private insurance.

Investing in American Clean Energy Production & Tackling Climate Change

The bill would invest $369 billion over the next decade to help fight climate change by ramping up America's wind, solar, geothermal, battery storage, and other clean energy technologies. The package represents the single biggest climate investment in U.S. history and would bring down consumer energy costs while putting America on a path to cut greenhouse gas emissions 40 percent over 2005 levels by 2030. The bill would extend clean energy tax credits for American households and create significant incentivizes for the production and manufacturing of American-made clean energy technologies.

It will also expand tax credits for electric vehicles and provide new consumer rebates energy-efficient home appliances and retrofits.

"This bill isn't radical or revolutionary, and frankly we should do more to combat climate change. But it will steer us toward a cleaner energy future by ensuring renewable energy competes on a much more even playing field with fossil fuels. That's a significant departure from the status quo. It also ensures that working families and communities, not just corporations, reap the economic gains of clean energy investments. And notably for the Ocean State, the bill provides billions to protect our coastal habitats and help make coastal communities more resilient to climate disasters," said Reed.

Paying Down Deficits

The non-partisan CBO's preliminary estimates found the legislation would actually cut the deficit by more than $100 billion over the next decade, and outside experts project the bill will generate over $200 billion in additional deficit reduction by enhancing the Internal Revenue Service's ability to crack down on tax avoidance by the wealthiest individuals and corporations. CBO projects this will generate a total of over $300 billion in deficit reduction.

The bill also ensures the very biggest corporations pay their fair share. The current statutory corporate tax rate is 21 percent. However, the largest corporations often use tax loopholes to drastically lower their actual rate each year, and some are even able to avoid paying any corporate taxes at all. The corporate alternative minimum tax (AMT) provision in this bill would ensure hugely profitable corporations pay their fair share in taxes by imposing a 15 percent minimum tax on adjusted financial statement income for corporations with annual profits in excess of $1 billion. Corporations would generally be eligible to claim net operating losses and foreign tax credits against the AMT, and would be eligible to claim a tax credit against the regular corporate tax for AMT paid in prior years, to the extent the regular tax liability in any year exceeds 15 percent of the corporation's adjusted financial statement income.

"This bill is fiscally responsible and reduces the deficit," said Reed. "It pays for expenditures chiefly by ensuring massively profitable big corporations pay a minimum tax. For too long, some have gamed the system to avoid paying taxes for far too long. And it will prevent multi-national corporations from inflating CEO bonuses at the expense of average workers."

In addition to passing this measure, Reed says Congress must work together to address additional issues that impact inflation, such as affordable housing, child care costs, food prices and other key factors that are taking a bite out of Americans' wallets.

Reed also credited President Joe Biden and Senate Majority Leader Chuck Schumer (D-NY) for their steady approach to making progress.

"Politics is the art of the possible and a lot of folks didn't think this big a reconciliation bill would or could get done. President Biden demonstrated that patience, persistence, and principled compromise can help our nation make meaningful progress. Even after others had given up, he and the Majority Leader kept working behind the scenes to find common ground and bring people together," concluded Reed. "Families have been hit hard by rising prices. Republicans refuse to do anything to help. This was a heavy lift to help alleviate some of the key financial burdens American families are facing."

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