[Asia Economy New York=Special Correspondent Joeslgina] Ahead of the midterm elections in November, the so-called 'Inflation Reduction Act,' an economic package promoted by the Biden administration, has passed the Senate hurdle. The bill focuses on securing funds through corporate taxes and investing in climate change response, drug price reduction, and energy security.
According to economic media CNBC and others, the U.S. Senate passed the Inflation Reduction Act on the 7th (local time) after marathon discussions with a vote of 51 to 50 in favor. With both the Democratic and Republican parties holding 50 seats each in the Senate, Vice President Kamala Harris, who is the Senate President, cast the deciding vote. The bill will be voted on in the House, controlled by the Democrats, on the 12th, followed by the President's signature and announcement.
Chuck Schumer, the Democratic Senate Majority Leader, said, "It was a long, tough, and winding road, but we have finally arrived," adding, "The Inflation Reduction Act will be one of the defining legislative achievements of the 21st century." CNBC reported that after Vice President Harris's vote, Democratic members gave a standing ovation.
The 755-page bill aims to provide a $430 billion (approximately 558 trillion won) government spending plan to alleviate the pain Americans are experiencing due to soaring inflation. Specifically, $369.3 billion will be allocated for climate change response, and $64 billion for nationwide health insurance to reduce prescription drug costs. It also includes imposing a minimum 15% corporate tax on large companies and strengthening IRS tax audits.
Locally, it is regarded as a scaled-down version of the 'Build Back Better (BBB)' plan that President Biden had previously promoted. Earlier, President Biden emphasized in a statement, "This law will help people save on prescription drug costs and health insurance premiums and make the tax system fairer by ensuring corporations pay their fair share."
Especially with the midterm elections just a few months away, the bill's passage in the Senate is seen as a political victory for President Biden. Facing a decline in approval ratings due to worsening economic conditions, Biden and the Democrats are putting great effort into passing this bill as a stepping stone to win votes in the November midterm elections, where control of the House majority is at stake.
The Republican Party is opposing the bill. In particular, there are claims that the 15% corporate tax will suppress corporate investment and harm U.S. exporters. There are also concerns that the Inflation Reduction Act could worsen inflation. It is explained that reduced corporate investment will shift the burden to workers and consumers, potentially leading to a recession. Republican Senate Minority Leader Mitch McConnell criticized, "What exactly are we recklessly spending hundreds of billions of dollars on?"
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