SENATE PASSES CLIMATE, HEALTHCARE, AND TAX BILL

August 7, 2022

Linh Truong

NEWS

Source: CNN, CNBC, The New York Times, The Guardian

The Senate passed a $750bn climate, healthcare, and tax bill on Sunday afternoon. This victory put President Biden and the Democrats one step closer to achieving major policy objectives ahead of the crucial midterm elections. After a marathon overnight Senate session, the 51-50 vote was strictly along party lines, with all Democrats voting up and all Republicans voting down.

The legislation, known as the Inflation Reduction Act, would allocate $369bn for combat against greenhouse gas emissions and investment in renewable energy, including incentives for farmers and ranchers to reduce methane emissions; an extension of the electric vehicle tax credits; and the opening of a National Climate Bank. The bill also raises revenue through a new 15% tax on large corporations. Experts estimated that this package will reduce America’s emissions by 40% by 2030, compared to 2005 levels.

ANALYSIS

The package has a great impact on climate, healthcare, the economy, and society.

CLIMATE

With the packages, expensive prices for devices and vehicles powered by renewable energy will be curtailed because energy companies are able to pay lower production costs. This helps consumers to gain eco-friendly goods with more reasonable prices and results in the complete change to renewable energy in daily consumption and usage.

Currently, renewable energy suppliers cannot provide enough energy to replace gas because of a deficiency in financial sources and resources. The package will help energy companies boost their production and experiments. Hopefully, with great investment, renewable energy suppliers will be able to increase outputs to reach the whole society’s demand.

Investment in renewable energy programs helps the climate condition to get better which can be acknowledged as a long-term economic growth plan. With government funds, the change to production with renewable energy will be boosted since it takes a long time for companies to switch production to a new method and the transformation needs large budgets. Currently, businesses are all working towards sustainability. Since natural resources are running out and it takes ages, maybe a hundred or thousand years to replenish. Moreover, considering the pollutants that devices run by gas damage the environment enormously, companies gradually change gas to electricity and renewable energy like solar energy and wind energy. For example, car manufacturers, such as Ford, Cadillac, etc., aim to take steps toward an all-electricity future which means that there will be cars run on electricity instead of gas. The package can be used to install electricity chargers for vehicles on every street. It is remarkable that the majority of firms operate in adherence to ESG factors, for example, META updated their ESG reports quarterly and annually. ESG is also the framework that stakeholders use to analyze companies’ operation and to understand how firms manage risks and opportunities related to environmental, social, and governance factors alongside investments and contributions. The whole world is turning into an eco-friendly and sustainable operation.

HEALTHCARE

Workers’ health plays a key part in the productivity of the market. If their health is good, they will be able to complete higher-demanded tasks and a bigger amount of work. The bill augmented healthcare treatments and access to healthcare for workers.

ECONOMY

Households will have to pay lower costs for electricity with more renewables so more people will switch to electricity to power their devices. The bill helps households with their financial issues since the recent global economic crisis has had a great impact on households' finance. However, the act of subsidizing money during inflation is unfavorable since it extends the time to pull off the escalating prices.

Higher taxes on large corporations will provide the government with a source of money to replenish the loss of the bill but it isn't effective enough to fight inflation in a short time. The taxes also impact the revenue of big businesses which are also affected by the financial crisis and the income of workers in those corporations. Higher taxes mean that firms will raise prices to redeem the costs so that inflation can't be curbed effectively.

SOCIETY

Society will gain the positive externality of the reduction in carbon emissions, better healthcare, eco-friendly devices and vehicles, and sustainable economic growth; however, the short-term effect of higher taxes will be a toll on households and large firms.