[Congressional Record Volume 168, Number 133 (Saturday, August 6, 2022)]
[Senate]
[Pages S4210-S4212]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INFLATION REDUCTION ACT OF 2022
Mr. CARDIN. Madam President, Senate Democrats have stepped up and
passed legislation that will make it easier for American families to
afford health insurance coverage and prescription drugs and lower
energy costs and boost domestic job creation in the growing clean
energy sector. We have done so while reducing the deficit and without
raising taxes on families and small businesses. The Inflation Reduction
Act--IRA--tackles climate change, makes the Tax Code fairer, and
invests in long-overdue environmental justice programs. This is an
historic bill, and polling indicates that large majorities of Americans
support its major provisions.
While a simple majority of Senators can pass a budget reconciliation
bill, there was nothing to prevent our Republican colleagues from
joining us in supporting this measure to lower essential costs for
American families and enhance our economic and national security. These
are policies that all Senators and all Members of Congress should
embrace, and this legislation contains many bipartisan policies.
Reconciliation does not have to be a partisan process. Just in the past
year, the Senate passed the Infrastructure Investment and Jobs Act--
IIJA--the CHIPS + Science semiconductor manufacturing bill, the
Honoring Our PACT Act, and Treaty Document No. 117-3, which contains
Protocols to the North Atlantic Treaty of 1949 on the Accession of the
Republic of Finland and the Kingdom of Sweden, with strong bipartisan
majorities. I regret that our Republican colleagues did not join us
today in passing the IRA.
As for me, if asked to choose between the status quo or lowering
health coverage costs for Maryland families and having large companies
pay a minimum, fair share of taxes, there is no contest. I will choose
Maryland families every day. I find it incomprehensible that anyone--
other than perhaps some billionaires--thinks it is acceptable that
teachers, nurses, and mechanics and most small businesses often pay a
greater percentage of their income in Federal taxes than the
ultrawealthy or a company that makes billions of dollars in profits.
The bill we passed today changes that calculation and holds the richest
Americans and companies that make over a billion dollars accountable
for paying their fair share of taxes, like everyone else in this
country.
This past Wednesday, Timothy F. Geithner, Jacob J. Lew, Henry M.
Paulson Jr., Robert E. Rubin and Lawrence H. Summers issued the
following statement:
As former Treasury Secretaries of both Democratic and
Republican Administrations, we support the Inflation
Reduction Act, which is financed by prudent tax policy that
will collect more from top-earners and large corporations.
Taxes due or paid will not increase for any family making
less than $400,000/year. And the extra taxes levied on
corporations do not reflect increases in the corporate tax
rate, but rather the reclaiming of revenue lost to tax
avoidance and provisions benefitting the most affluent. The
selective presentation by some of the distributional effects
of this bill neglects benefits to middle-class families from
reducing deficits, from bringing down prescription drug
prices, and from more affordable energy. This legislation
will help increase American competitiveness, address our
climate crisis, lower costs for families, and fight
inflation--and should be passed immediately by Congress.
The original top-line estimates from the Congressional Budget
Office--CBO--and the Joint Committee on Taxation--JCT--were that the
bill would raise $725 billion in revenue, invest $433 billion, and
apply the balance--nearly $300 billion--to deficit reduction. These
numbers will change some with the final score, but they illustrate the
magnitude of what this bill will accomplish. The IRA will help to build
a better America for all Americans.
Let's start with health care. The bill we passed today will lower
prescription drug prices and make healthcare more affordable for
millions of Americans. Finally, the Secretary of Health and Human
Services will have the authority to negotiate lower drug prices for the
Medicare Program, benefitting both millions of seniors on fixed incomes
and taxpayers. In the private sector, no plan sponsor or manager would
ever accept responsibility without the ability to decide how to
negotiate. Medicare negotiation will ensure that patients with Medicare
get the best deal possible on high-priced drugs, saving Medicare
approximately $100 billion.
The IRA will further lower drug costs for seniors by capping out-of-
pocket costs for part D prescriptions at $2,000 each year, requiring
drug manufacturers to pay penalties if they raise their prices faster
than inflation, and delaying of the Trump administration's drug rebate
rule. Although these provisions alone will lower beneficiary costs, the
IRA also lowers costs through a redesign of the Medicare Part D
formula, expansion of the low-income subsidy--LIS--in part D, and
Federal coverage for vaccines.
The IRA also invests $64 billion to extend ACA healthcare premium
subsidies through 2025. These subsidies, first provided through the
American Rescue Plan, have guaranteed millions of Americans access to
affordable health insurance. Access to affordable health insurance
saves lives and reduces costs because people get the care they need and
they get it sooner. As Benjamin Franklin said, ``An ounce of prevention
is worth a pound of cure.'' The IRA will save Maryland families with
median income about $2,200 annually.
The IRA raises several hundred billion dollars by making the Tax Code
fairer through three major provisions. The first provides up to $80
billion to the Internal Revenue Service--IRS--to modernize its computer
systems, some of which are 60 years old, and rebuild its workforce to
ensure greater tax compliance. CBO estimates that investing $80 billion
in tax enforcement and compliance will generate $203 billion in
additional revenue over the next 10 years.
Since 2010, the IRS budget has been cut by roughly 20 percent, and
the budget earmarked for enforcement has dropped by 24 percent. Audit
rates for the largest corporations and the ultrawealthy have fallen
dramatically, by 54 and 71 percent, respectively. We now have the
perverse situation where the poorest American families are audited at
about the same rate as the top 1 percent richest taxpayers, even though
that 1 percent is responsible for 28 percent the ``tax gap,'' the
difference between taxes owed and collected. According to recent
polling, nearly three-quarters of Americans believe the IRS should
conduct more tax audits of large corporations and millionaires.
The IRA provides 10-year funding for the IRS as follows: $3.2 billion
for taxpayer services; $45.6 billion for enforcement; $25.3 billion for
operations support; and $4.8 billion for business systems
modernization.
These appropriated funds are to remain available until September 30,
2031, and no use of the funds is intended to increase taxes on any
taxpayer with taxable income below $400,000.
The bill also makes it easier for the IRS to establish a free, direct
e-file tax return system. The IRS currently outsources its free e-file
program to private, for-profit tax preparers. Not surprisingly, only 3
percent of taxpayers--of 70 percent eligible--use the existing free e-
file option.
The second major provision establishes a minimum corporate income tax
of 15 percent of book income on fewer than 200 of the Nation's largest
corporations that currently pay less than the statutory corporate tax
rate, which is 21 percent. The corporate alternative minimum tax--
CAMT--proposal would impose the 15 percent minimum tax on adjusted
financial statement--``book''--income for corporations with profits in
excess of $1 billion. Corporations would generally be eligible to claim
net operating losses and 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
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the regular tax liability in any year exceeds 15 percent of the
corporation's adjusted financial statement income.
In 2020, 50 of the biggest corporations paid $0 in Federal corporate
income tax, despite recording substantial profits. Some of these
companies effectively had a negative Federal income tax because they
received more in credits and rebates than they paid in taxes. The AMT
makes the existing corporate tax structure fairer, especially for
smaller businesses that often pay their taxes at higher rates than the
largest corporations. Consider that many small businesses pay taxes
through the individual tax code, where the highest tax rate is as much
as 37 percent. Setting a baseline of taxes to be paid by the largest
corporations gives small businesses a better chance to compete and
succeed.
The third provision is a 1 percent excise tax on stock buybacks.
Corporations can choose to distribute profits either by issuing
dividends or buying back shares of stock, which inflates stock prices.
Stock buybacks are taxed at a lower rate than dividends and create
profit gaming opportunities for companies, which have been abused over
time. By levying a small 1 percent tax on these buyback transactions,
it improves tax efficiency and raises revenue that will significantly
contribute to deficit reduction.
The IRA's tax provisions will increase compliance and close the tax
gap, which costs the U.S. $1 trillion per year in unpaid taxes,
according to the IRS. That is important for the revenue they raise. It
is also important that millions of hard-working Americans who play by
the rules and pay their taxes believe that the system is fair and that
the ultrawealthy and large corporations aren't dodging their financial
responsibilities.
We need to address climate change by rapidly reducing our dependence
on fossil fuels and cutting our greenhouse gas emissions. The IRA does
that. It will cut our emissions by 40 percent or more by 2030 and put
us on track to meet 70 percent of our Paris agreement obligations. It
contains a Methane Emissions Reduction Program to reduce leaks from the
production and distribution of oil and natural gas.
The IRA contains roughly $370 billion in clean energy, energy
security, and climate change investments that will lower Americans'
electricity bills and prices at the pump and create as many as 9
million good-paying jobs here in America in the clean energy sector
over the next decade.
I am pleased the IRA includes a provision I have championed, a
production tax credit for our existing fleet of nuclear reactors. They
are an essential source of baseload power and provide 20 percent of the
Nation's electricity and over 50 percent of our carbon-free
electricity.
According to the non-partisan Resources for the Future, all told, the
IRA will drive down retail costs of electricity by 5.2-6.7 percent over
the next decade, saving electricity consumers $209-$278 billion. The
average household will experience approximately $170-$220 in annual
savings from smaller electricity bills and reductions in the costs of
goods and services over the next decade. The clean energy investments
will help to insulate ratepayers from volatility in natural gas prices,
with electricity rates projected to decrease even under a high natural
gas price scenario. More importantly, the IRA will bolster our economic
and national security by strengthening our grid and reducing reliance
on foreign energy supplies.
The legislation also includes a historic expansion of a tax program I
have led, the section 179D energy efficient commercial buildings
deduction, which provides a tax deduction for energy efficient building
investments. Energy efficiency is good business and good policy. This
legislation will expand section 179D, which was made permanent in 2020
under my leadership, to increase the deduction amount, improve its
administration, allow more nonprofits to use the deduction, and expand
its use to building retrofits.
In addition to the important steps the IRA takes to advance clean
energy and reduce greenhouse gas emissions, the bill delivers major
Federal investments to make our communities healthier, safer, and more
resilient in the face of increasing impacts of climate change. It
provides Federal assistance for monitoring environmental quality,
mitigating the harmful impacts of air pollution and excessive heat, and
enhancing walkability in our neighborhoods. It does this through $3
billion for Neighborhood Access and Equity Grants and $3 billion for
Environmental and Climate Justice Block Grants. By targeting resources
to disadvantaged or underserved communities, the bill advances equity
in our infrastructure planning and investments.
Climate change is happening now. We need to address its impacts on
the ground. The IRA invests $2.6 billion for the conservation,
restoration, and protection of coastal and marine habitats and
resources, including fisheries, to enable coastal communities to
prepare for extreme storms and other changing climate conditions, as
well as $250 million to rebuild and restore units of the National
Wildlife Refuge System and State wildlife management areas.
The bill supports America's farmers and rural communities, with
around $20 billion in funds for climate-smart agricultural practices
through existing farm bill conservation programs, including the
regional conservation partnership program--RCPP--and $1 billion for the
Natural Resources Conservation Service, to provide technical assistance
on conservation to producers. Many sustainable practices such as
expanding cover crops and riparian buffers that mitigate greenhouse gas
emissions and help farmers adapt to climate change also cost-
effectively reduce pollution to the Chesapeake Bay.
The IRA makes investments to accelerate clean energy deployment, help
achieve our climate goals, and create millions of jobs over the next
decade. These investments include an expanded tax credit to support
domestic manufacturing of clean energy technologies, including solar
panels, wind turbines, and batteries; and tax credits that will make
battery and fuel cell electric vehicles--EVs--more affordable for
millions of families. The bill provides over $9 billion for Federal
procurement of American-made clean technologies, including $3 billion
for the U.S. Postal Service to purchase zero-emission vehicles, helping
to create a stable market for clean, Made in America products.
Researchers Robert Pollin, Chirag Lala, and Shouvik Chakraborty at
the University of Massachusetts-Amherst's Political Economy Research
Institute estimate that the IRA's more than 100 climate, environmental,
and energy provisions will generate an average of about 912,000 jobs
each year over the next decade through combined annual public and
private investments of $98 billion.
The IRA tax credits and other provisions won't just help create jobs;
they will help create jobs that pay prevailing wages. The middle class
has experienced wage stagnation for half a century. Income inequality
has grown. The IRA will help to rebuild the middle class. Unions from
the Communication Workers of America and the United Auto Workers to the
National Treasury Employees Union and the International Federation of
Professional and Technical Engineers all support the IRA because it
promotes union jobs and apprenticeships and because it will lower
healthcare costs.
In May, the Treasury Department estimated that the budget deficit
this year will decline by $1.5 trillion. As President Biden noted at
the time, ``The bottom line is that the deficit went up every year
under my predecessor before the pandemic and during the pandemic. And
it's gone down both years since I've been here. Period.'' The IRA is
fiscally responsible and will help reduce our budget deficits.
Deficits remain too high, of course, but one of the best ways to
address them is by getting unemployed Americans back to work. The July
jobs report released on Friday put the unemployment rate at 3.5
percent, matching the lowest it has been in 50 years. The U.S. economy
added 528,000 jobs in July, more than twice the number economists
anticipated. As Myles Udland, Senior Markets Editor of Yahoo! Finance,
stated,
This staggering increase in employment completes a
milestone for the U.S. economy: Pre-pandemic employment is
now fully restored.
In February 2020, the last month before the COVID-19
pandemic tipped the U.S. economy into recession, there were
152.504 million people employed in the U.S.
As of July 2022, 152.536 million people in the U.S. were
working.
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And despite the labor market contraction during the
pandemic being the sharpest in modern history, the bounce
back marks the second-fastest job market recovery since 1981.
In a little over two years, we've seen job losses that
topped 20 million at one point be fully erased.
This recovery stands in stark contrast to the malaise we
saw in the labor market following the financial crisis, when
it took the better part of a decade for pre-crisis employment
levels to be restored.
Inflation is also too high, but its root causes are COVID-19
pandemic-related supply chain disruptions and Vladimir Putin's war on
Ukraine. The IRA tackles these disruptions by promoting domestic
manufacturing and supply chains and reducing our reliance on foreign
energy. On August 2, 2022, over 120 prominent economists wrote a letter
to Senate and House leadership stating that the IRA ``addresses some of
the country's biggest challenges at a significant scale. And because it
is deficit-reducing, it does so while putting downward pressure on
inflation.''
There is much to celebrate in this bill, but there are many
priorities that we were not able to add. This ``to do'' list includes
reinstating the expanded child tax credit and making child care
accessible and affordable. My priority list includes legislation I have
long championed to expand dental coverage to Medicare beneficiaries, as
well as to Medicaid beneficiaries, along with expansions to home and
community-based and maternal health services. Congress also needs to
address housing supply and economic development priorities, including
the Neighborhood Homes Investment Act, the Low-Income Housing Tax
Credit, the New Markets Tax Credit, and the Historic Tax Credit. While
the IRA will help create good-paying union jobs, we need to do more to
protect and enhance workers' rights to form and join unions and engage
in collective bargaining. And I will continue working to fund water
infrastructure programs the IIJA created to address urgent
affordability and resilience issues.
While that seems like a long list, we must not let the perfect be the
enemy of the good, and the IRA is so much better than good. It is
transformational legislation, and I am proud to support it. I want to
commend Majority Leader Schumer and so many of my colleagues who have
worked diligently both in the spotlight and behind the scenes to bring
us to this point. I also want to acknowledge committee and personal
staff; CBO and JCT staff; Senate Parliamentarian Elizabeth MacDonough
and her crew; leadership, floor, and cloakroom staff; the Senate
legislative counsels; and others. You toil anonymously, but I hope you
know how important you are. The Senate could not function without you.
You are among our Nation's finest public servants, and you are making a
critical difference in the lives of all Americans.
The American essayist Charles Dudley Warner famously said,
``Everybody complains about the weather, but nobody does anything about
it''--a quote commonly misattributed to his friend Mark Twain. Passing
a reconciliation bill is like that. We all complain about the process,
especially the so-called vote-a-rama, which is grueling and grinding
and befuddling to just about everyone, but we don't fix it. In fact, it
seems to get worse each time, not better. I know I would prefer not to
go through the process again, but the Inflation Reduction Act and the
American Rescue Plan before it have been worth it.
Dahlia Rockowitz, Washington director of Dayenu: A Jewish Call to
Climate Action, noted that the Senate consideration of the Inflation
Reduction Act began on the Shabbat and Tisha B'Av, a Jewish day of
collective mourning for historic destructions. But as she pointed out,
`` . . . according to Jewish tradition, this day of despair is also the
day that new hope and the potential of a rebuilt, reimagined, redeemed
world is born. These investments in clean energy and transportation can
help us emerge from climate-fueled disasters to a more hopeful, clean
energy future for generations to come.''
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