Why I’m Voting Yes Today for the Inflation Reduction Act
Over the past 18 months, the Biden Administration has sought to use the reconciliation process to advance massive, deficit-financed spending packages, from the American Rescue Plan to the extended debate around and ultimate failure to pass the Build Back Better (BBB) Act.
In considering each of those proposals, I hewed to a set of principles that guided my decision-making. Absent an emergency, like we experienced in early 2020 with the emergence of COVID-19, any major budget legislation should be targeted both in its scope and in its design, focusing on doing a few things well and ensuring that the individual policies are focused on those most in need. It should be fiscally responsible and, whenever possible, aim to reduce our national debt, particularly in the midst of an inflationary environment caused in part by the first of these reconciliation bills. In addition, it should focus any changes to the tax code on the corporate giants who for years have exploited loopholes to pay little or no taxes while passing on massive windfalls to shareholders. And it should finally deliver on key priorities lawmakers have been promising to seniors for years — namely, lowering prescription drug costs.
Time and again, reconciliation legislation that has come before the House has failed to meet many if not most of these conditions. As a result, I have voted not once, not twice, but three times against massive reconciliation packages designed by the Biden Administration. I have taken those positions not out of reflexive opposition but to consistently deliver the kind of representation to my constituents that I pledged I would bring to Congress: to stand up to anyone, regardless of party, in order to defend their interests and what’s best for the country.
After many fits and starts, and due to the willingness of a few Democrats in Congress, like Senator Joe Manchin, to stand against the poorly-targeted and fiscally irresponsible agenda put forward by the Biden Administration, Build Back Better and its many iterations are dead. What has emerged, the Inflation Reduction Act, is an entirely different approach that is focused on making hard choices, doing a few things well, and investing in the long-term health of our economy and the predictability of the policies that help shape it.
Today I am announcing my support for this common-sense legislation. It is fiscally responsible and is targeted on four key priorities: reducing the national debt and putting our country back on a fiscally responsible path, lowering the cost of prescription drugs and making health care more affordable, investing in an all-of-the-above energy strategy to significantly increase oil, gas, and renewable energy production to lower energy costs for Americans, and cracking down on the tax avoidance of billion-dollar multinational corporations.
REDUCING THE DEFICIT AND FIGHTING INFLATION
The Inflation Reduction Act is the first major legislation in over a decade to use the reconciliation process to produce a fiscally responsible budget bill that reduces deficits. The Congressional Budget Office estimates that the legislation will reduce deficits by nearly $300 billion, and other analysts predict it could be many times that over the longer term. Both the 2017 GOP Tax Cuts and the 2021 American Rescue Plan dramatically failed that test, with each law adding nearly $2 trillion to our national debt.
Reducing our national debt isn’t only a matter of fiscal prudence or national self-interest; a bipartisan group of 55 budget experts have recently written to Congress confirming that deficit reduction is an essential tool to fight inflation over the long term. Former Treasury Secretary Larry Summers who, like me, sounded the alarm on the inflationary potential of the American Rescue Plan, has said:
“This is an important step forward in fighting inflation… First, this reduces budget deficits, and so by reducing budget deficits, it reduces the level of demand in the economy. Second, this reduces prices directly by going after prescription drugs and getting lower prices and a better deal for taxpayers when they purchase prescription drugs. Third, this increases supply by stimulating energy production and by subsidizing and supporting our energy transition to renewables. So, less demand, more supply, and direct, better bargaining for lower prices, those are the things that are involved in reducing inflation.”
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, agrees — saying:
“To fight inflation, we want policies that will increase supply or reduce demand. And this [bill] does both. Almost every one of these policies, in and of itself, will fight inflation. And on net, the entire package most certainly will.”
While Congress cannot unilaterally legislate its way out of an inflationary environment, this bill is a positive step toward improving economic conditions over the medium term and establishing longer-term fiscal discipline, something sorely lacking in this Congress and its recent predecessors.
RX DRUG REFORM AND HEALTHCARE AFFORDABILITY
After years of politicians pledging to address skyrocketing healthcare and prescription drug costs for seniors, this legislation makes meaningful, common-sense reforms to the Medicare program to ensure that seniors in Maine and across the country can afford their healthcare needs. For too long, drug companies have been able to charge sky-high prices for prescriptions, making the United States a major outlier in the cost burden of prescription medication. Despite intense lobbying from moneyed interests, under this bill Big Pharma’s singular hold on the prescription drug market for seniors is at last being challenged.
First, this legislation finally empowers Medicare to begin to negotiate the price of prescription drugs for seniors. This provision alone is slated to save the Medicare program over $100 billion over ten years.
This bill also caps Medicare beneficiaries’ out-of-pocket costs at $2,000 per year, with the ability for seniors to spread the cost over 12 monthly payments. This provision will help limit prescription drug prices for the more than 262,000 seniors in Maine enrolled in Medicare Part D. Additionally, the legislation imposes a $35 monthly cap on insulin for Medicare beneficiaries, which will protect more than 15,000 people in Maine from insulin prices that have more than doubled in the last decade. This bill will also impose penalties on drug manufacturers that increase drug prices under Medicare faster than overall inflation.
Today’s legislation makes other important changes to Medicare Part D that will lower out-of-pocket costs for enrollees. For one, it would eliminate the five percent coinsurance requirement above the catastrophic threshold, which would save money for over 5,000 Mainers each year. This bill also extends the full low-income subsidies under Medicare Part D to individual seniors with incomes up to $20,385 and couples up to $27,465.
This legislation also helps lower healthcare costs for the many thousands of Mainers who are not Medicare-eligible by extending the enhanced subsidies under the Affordable Care Act, avoiding the possibility of premium hikes this fall and ensuring thousands of Mainers will be able to continue to afford healthcare for themselves and their families. This provision will prevent steep increases in marketplace premium payments for more than 45,000 people in Maine, saving them an average of $458 a year on health insurance.
Taken together, these changes to healthcare and prescription medication policies mean that thousands of Mainers will see their health care costs lowered or stabilized thanks to this legislation.
DOMESTIC ENERGY PRODUCTION AND ENERGY INDEPENDENCE
Rather than giving in to the extreme and unrealistic zero-carbon agenda of some of my colleagues, the Inflation Reduction Act takes a responsible, all-of-the-above approach to ensuring America’s energy independence now and well into the future by making significant investments in expanding our oil, gas, and renewable energy production capacity.
First, the legislation would require the federal government to auction off millions of acres of oil and gas leases in the Gulf of Mexico and Alaska that were previously stalled or rescinded by the Biden Administration to increase our domestic supply, bring energy prices down in the short-term, and ensure that we will never depend on foreign countries like Russia to keep the lights on. The bill would also require the Department of the Interior to continue to hold regular auctions for oil and gas leases and to prioritize those before any offshore wind or solar auctions can proceed.
At the same time, this legislation makes historic investments in renewables including wind, solar, hydrogen, and biomass that will help bring home energy prices down for working people, boost our domestic manufacturing and put millions of Americans to work. It does so by investing nearly $400 billion in individual and business tax credits to accelerate the adoption of new energy technologies.
Crucially, this bill puts affordable energy within reach of the American middle class. Under this legislation, a Maine household could receive up to $2,000 annually off their tax bill for making energy efficient upgrades to their homes — whether that’s installing solar panels, wood pellet stoves, or new doors and windows. That is in addition to a new rebate program created by the legislation for energy efficient upgrades, including a rebate up to $8,000 to households to install heat pumps that can both heat and cool homes, a rebate up to $1,750 for a heat-pump water heater, and $840 to offset the cost of a heat-pump clothes dryer or an electric stove. Due to the large number of homes that will need their electrical panels upgraded before these appliances could be installed, the program offers a $4,000 rebate for such improvements and up to $2,500 for improvements to electrical wiring. In total, a Maine household could collect up to $14,000 in rebates — that is real money in the pockets of the people I represent to lower their monthly energy bills and heat their homes.
The energy provisions in this bill will also make historic investments in American energy manufacturing while establishing technology-neutral tax credits that will accelerate energy deployment and reduce the price of energy for consumers. The energy tax credits for businesses in this bill are only available to those who meet prevailing wage standards as well as apprenticeship and domestic content requirements. This means that American union workers are going to play a major role in securing our nation’s preeminence in the energy sector now and into the future with American-sourced and manufactured products.
Lastly, I commend Senator Manchin for also securing a commitment from the White House and congressional leadership to pass meaningful energy permitting reform to cut red tape, avoid endless litigation that can delay project construction for years, increase capacity, and allow the Mountain Valley Pipeline project to proceed. I will continue to press congressional leaders to bring a permitting reform bill to the floor as soon as possible.
CRACKING DOWN ON TAX AVOIDANCE BY CORPORATIONS AND THE WEALTHY
Finally, the Inflation Reduction Act is a dramatic retreat from extremely misguided tax proposals put forward by Democrats in prior reconciliation bills this Congress, most notably through the bill’s explicit rejection of a massive giveaway to millionaires through the elimination of the cap on the State and Local Tax (SALT) deduction. That was an egregious policy proposal and we are right to reject it.
The Inflation Reduction Act takes a dramatically different approach to taxes, focusing on closing loopholes so that the wealthy and giant multinational corporations can no longer exploit the tax code to avoid paying taxes while working class Americans and small businesses foot the bill. I have called for this very approach for much of the last year. The legislation does so by:
- Establishing a minimum 15 percent corporate minimum tax on domestic companies, ensuring that small businesses in Maine aren’t put at a competitive disadvantage to massive companies like Amazon, Apple, and others who pay next to nothing in taxes year after year.
- Cracking down on corporations funneling their profits back to wealthy investors rather than into wages, research and development, or capital improvements by creating a one percent excise tax on corporate stock buybacks. Stock buybacks are on course to set new records in 2022.
- Increasing resources so that the Internal Revenue Service (IRS) can go after very wealthy Americans who too often use expensive accountants and lawyers to help them cheat the system and underpay their taxes with no consequences. The Treasury Department has already instructed the IRS not to use any of these new resources to increase the audit rates on households and small businesses with incomes under $400,00/year, and the current IRS commissioner (a Trump appointee) has assured Congress that its intentions are similarly aligned. These investments will go a long way toward modernizing IRS infrastructure and ensuring we have the ability to force the richest Americans and billionaire corporations to pay their fair share by enforcing the tax code we already have.
As always, there are parts of the bill that I think could have been improved upon had Congress gone through a more open legislative process. I don’t like that some of the Medicare prescription drug provisions take several years to kick in. That delay may well provide a future Congress the opportunity to capitulate to Big Pharma interests and further kick the can down the road. I also would have liked to have seen a further tightening around the income eligibility of certain energy tax provisions to ensure that the benefit flows to those who most need the added incentive.
I am especially frustrated that the Senate stripped out the original bill’s elimination of the carried interest loophole, which for too long has allowed wealthy hedge fund managers and executives to get taxed at a lower rate than working-class people. Finally, I am disappointed that the Senate scaled back the elimination of the Medicare drug rebate rule and simply delayed it for another decade. I believe the Biden Administration has the ability to eliminate this rule altogether, which would be good for seniors and help reduce our long-term debt, and I plan to work with my colleagues in Congress to urge the administration to do so.
Despite these issues, this legislation represents a dramatic turnaround from misguided efforts in the last 18 months to pass sweeping, ill-designed legislation that tried to accomplish too many things through budget gimmicks, setting up problematic fiscal cliffs in numerous programs and refusing to make the difficult decisions to allow for a fiscally responsible bill. Coming on the heels of a series of major legislative wins for the American people, including the bipartisan Infrastructure Investment and Jobs Act, an FY22 omnibus appropriations bill, the CHIPS and Science Act, and a bill to extend health care and benefits to veterans exposed to burn pits and other toxic substances, the Inflation Reduction Act is yet another common sense win for the American people.