(CNN) — The Senate voted Sunday afternoon to pass the sweeping Democratic health and climate bill, sending it to the House of Representatives, in a major victory for US President Joe Biden and his party.

The bill -called the Inflation Reduction Law- would represent the largest climate investment in US history and introduce important changes in health policy, giving Medicare for the first time the power to negotiate prices of certain prescription drugs and extend expiring health care subsidies for three years. The legislation would reduce the deficit, pay for it with new taxes — including a 15% minimum tax on large companies and a 1% tax on share buybacks — and increase the collection capacity of the Internal Revenue Service.

It would raise more than $700 billion in public revenue over 10 years and spend more than $430 billion to reduce carbon emissions and extend Affordable Care Act health insurance subsidies, and use the rest of new income to reduce the deficit.

The package is the result of painstaking negotiations, and its passage would give Democrats a chance to achieve important political goals before the upcoming midterm elections.

The Democratic-controlled House of Representatives must pass the bill on Friday, August 12, before Biden can sign it into law.

Senate Democrats, with a narrow 50-seat majority, stood together to pass the legislation, using a special process to pass the measure without Republican votes. The final approval came after a marathon series of contentious votes on amendments known as “vote-a-rama”, which lasted from Saturday night to Sunday afternoon.

How Senate Democrats passed the bill on a partisan vote

Senate Democrats had long hoped to pass a flagship legislative package incorporating the main points of the party’s agenda, but struggled for months to reach a deal that would gain the full support of their caucus.

Sen. Joe Manchin played a key role in crafting the legislation, which only moved forward after West Virginia Democrat and Senate Majority Leader Chuck Schumer announced a deal in late July, a breakthrough for Democrats after earlier negotiations had stalled.

Arizona Sen. Kyrsten Sinema offered decisive support Thursday night after party leaders agreed to change the new tax proposals, saying she would “go ahead” with the sweeping economic package.

But Sinema, Manchin and other senators worked throughout the weekend making crucial changes to the bill.

To avoid a last-minute collapse of the bill on Sunday, Democrats created a plan to win over Sinema, who was concerned about the impact of the 15% minimum corporate tax on private equity affiliates. Senate Democrats agreed to a smaller tax proposal, but instead of paying for it with a change in the state and local tax deduction, which would have been opposed by some House Democrats, they expanded the limitation on the amount of losses that businesses can deduct for another two years.

Republicans used the weekend to embarrass Democrats and force politically difficult votes. They also succeeded in removing a key provision to cap the price of insulin at $35 a month in the private insurance market, which the Senate MP ruled did not meet Senate conciliation rules. The US$35 limit for Medicare beneficiaries remains.

How the bill addresses the climate crisis

Although economists disagree about whether he package will live up to its name and reduce inflation, especially in the short term, the bill will have a crucial impact on reducing carbon emissions.

The nearly $370 billion clean energy and climate package is the largest climate investment in US history and the green movement’s biggest victory since the landmark Clean Air Act. It also comes at a critical time: This summer there have been heat waves and deadly floods across the country, which scientists say are linked to global warming.

Analysis from the office of Senate Majority Leader Chuck Schumer, as well as multiple independent analyses, suggest the measure would reduce US carbon emissions by as much as 40% by 2030. To meet the president’s goal Joe Biden to cut emissions by 50% by 2030 would require strong climate regulations from the Biden administration and action from states.

The bill also contains many tax incentives aimed at lowering the cost of electricity with more renewable energy and encouraging more American consumers to switch to electricity to power their homes and vehicles.
Lawmakers said the bill represents a monumental victory and is just the beginning of what is needed to combat the climate crisis.

“It’s not about the laws of politics, it’s about the laws of physics,” Democratic Sen. Brian Schatz of Hawaii told CNN. “We all knew coming into this effort that we had to do what the science tells us we have to do.”

Keys to the health and fiscal policy of the bill

The bill would empower Medicare to negotiate the prices of certain expensive drugs administered in doctors’ offices or purchased at the pharmacy. The Secretary of Health and Human Services would negotiate the prices of 10 drugs in 2026, and another 15 in 2027 and again in 2028. The number would rise to 20 drugs a year by 2029 and beyond.

This controversial provision is much narrower than what House Democratic leaders have endorsed in the past. But it would open the door to fulfilling a long-standing party goal of allowing Medicare to use its weight to lower drug costs.

Democrats are also planning to extend enhanced federal subsidies for Obamacare coverage through 2025, a year later than lawmakers recently discussed. In this way, they would not expire just after the presidential elections of 2024.

To increase revenue, the bill would impose a minimum 15% tax on income that large companies report to shareholders, known as countable income, as opposed to the Internal Revenue Service. The measure, which would raise $258 billion over a decade, would apply to companies with profits of more than $1 billion.

Concerned about how this provision would affect certain businesses, particularly manufacturers, Sinema suggested she win changes to the Democrats’ plan to reduce the way businesses can deduct depreciated assets on their taxes. Details remain unclear.

Sinema, however, rejected his party’s effort to tighten the transferred interest loophole, which allows investment managers to treat much of their remuneration as capital gains and pay a 20% tax rate on capital gains. long term, instead of income tax rates of up to 37%.

The provision would have lengthened from three to five years the time investment managers must hold interest on earnings in order to benefit from the lower tax rate. Closing this tax loophole, which would have raised $14 billion in a decade, had been a long-standing goal of Democrats in Congress.

In its place, a 1% excise tax on share buybacks by companies was added, raising another $74 billion, according to a Democratic adviser.

CNN’s Ella Nilsen, Tami Luhby, Katie Lobosco, Matt Egan and Kristin Wilson contributed to this report.

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