Summertime Biden Legislation

Ambika Gupta and Finnian Harrison

Finn Harrison ‘23 reenacts Joe Biden signing the Inflation Reduction Act. (Photo by Ambika Gupta)

Amidst rampant inflation, new legislation appears poised to offer many relief. President Biden has had a low approval rating throughout his presidency, but this new legislation—a big win for Democrats—has boosted Biden’s approval ratings. These pieces of legislation, coming a few months before midterms, will most likely play a significant role in what the senate will look like in the coming years. 

Over the summer, Congress passed the Inflation Reduction Act, IRA, a bill that in some form had been making its way around the halls of Congress for over a year. The bill, signed into law on August 16, is the Biden administration’s tentative response to recent inflation; it includes Biden’s, thus far, most ambitious responses to both social and climate related issues. 

Starting last year as the ‘Build Back Better Bill’- Biden’s claimed centerpiece legislation – the IRA represents a slimmed down version of this bill. Despite the Democrat’s majority in Congress, within the more moderate wing of the party certain parts of the bill were deemed too radical. Senator Joe Manchin from West Virginia was often the most vocal voice of dissent within the Democratic party. Yet, after months of renegotiation, Congress passed the IRA with the slim Democratic majority. 

Unlike the Build Back Better Bill which was supposed to be 1.7 trillion dollars, the IRA allocates 740 billion dollars. The act includes a new 15% corporate tax on companies with at least a billion dollars in income. This will include a one percent excise tax on stock buybacks. Stock buybacks being a way for a company to buy back its own shares. However, the bill includes no new taxes on individuals or households. The bill is expected to have an almost negligible effect regarding its namesake purpose of inflation reduction.  Although the bill is expected to reduce the national deficit by 124 billion, the primary legislative changes do not actually lie in the economy but in taxation reform and climate reform, although the bill is expected to reduce the deficit by 124 billion.

On his first day in office, President Biden reentered the Paris Climate agreement and has made it clear that climate change reform is a priority for his administration. However, until now, no legislative change had been made. Within the IRA, Congress has made tremendous steps toward climate change reform. The bill promises to reduce emissions by 40 percent which is the first act within the US that demonstrates a legislative effort to follow the Paris Climate Agreement. A more than a 70 billion dollar investment will go towards clean domestic manufacturing. Additionally, 60 billion dollars will be invested towards clean energy, including a tax credit for installation of solar panels. This new cohesive groundwork policy for climate change may afford the United States a better bargaining chip when seeking climate reform for less developed countries. On the whole, the bill will put 369 billion dollars into climate solutions and environmental justice.

The IRA tackles another important issue within America: health care. Medical expenses in America are among the highest in the world with Americans spending about $4,000 more per person a year compared to other high-income nations. Due to inflation, the Kaiser Family Foundation, a policy analysis non-profit, expects health insurance premiums to rise 10% this coming year. The Department of Health and Human services has reported an all-time low of only 8% of the population uninsured (roughly 26 million people remain without insurance). 

For the first time due to these provisions, federal officials will be able to negotiate prices of prescription drugs. In addition, a copay cap for seniors was implemented: $35 on insulin products for Medicare beneficiaries and rebates if drug prices rise too quickly. Overall, the White House has allocated $70 billion for the next three years in order to keep costs low for roughly 13 million individuals. According to estimates from the Centers for Medicare and Medicaid Services, those with plans with the government saved on average $700 this year. Overall, these updates to the Affordable Care Act continue to aid those well below the poverty line with medical costs and continued subsidies that were offered last year in the Coronavirus Relief Bill.

Beyond the IRA, Biden recently announced a new Student Loan Relief program. Within the last 50 years, the cost of college has tripled, but Pell Grants, federal support for low income families, has not kept up. Previously, Pell Grants covered 80% of the cost of a four-year public college but now only covers a third of such costs. Due to these rising costs, the Department of Education will provide up to $20,000 in debt cancellation for Pell Grant recipients and $10,000 in debt cancellation for non-Pell Grant recipients. Only individuals earning less than $125,000 qualify for this relief. Additionally, the pause on student loan interest will continue through December 31, 2022. In addition to this program, a new rule has been proposed that those with student loans who have worked at a nonprofit, in the military, or in the government will receive additional loan forgiveness. 

When asked for his thoughts on this legislation, Ben Wetherbee, Associate Dean of College Counseling, said “I was glad to see Biden deliver on one of his campaign promises, addressing student loan forgiveness in some capacity. Unfortunately, I think loan forgiveness is more of a band-aid solution to an otherwise larger problem—the rising cost of college in this country. Hopefully, this move leads to more conversation around this topic on Capitol Hill, as I think greater transparency around what college costs and what students and families will be asked to pay, or pay back, will improve access to higher education, especially among populations that have historically been underrepresented at colleges and universities.”

All these new pieces of legislation have received both applause and heavy criticism. Many conservatives worry about the financial repercussions of these acts, such as worsening inflation. As such, only democrats supported the extended health care subsidies amongst other bills. Within the LFA community, some seniors and most faculty will be voting in the upcoming midterms, and these bills will undoubtedly influence how many vote.