American politics, often full of twists and turns, did not fail to live up to its reputation on Wednesday July 27th. To everyone’s surprise, after more than a year of interminable negotiations, the Democrats and the White House announced that they had found common ground on a bill aimed at combating global warming and increasing taxation. multinationals and the wealthy.
Titled Inflation Reduction Act (IRA), it will, if adopted, be the largest climate investment plan in American history and should help the United States meet its commitments to cut greenhouse gas emissions in half by 2030 , compared to the 2005 level.
Joe Biden and his followers are about to strike a blow by putting ecology back at the center of American political priorities and by giving some hope to those who are concerned about the environmental issue. News that comes at the right time for a Democratic majority weakened by an economic situation that is getting a little more tense every day, with the probable arrival of a recession and the continuous rise in inflation.
Calibrated to be profitable
Although all the provisions of the text are not yet known, the key elements were made public in the hours following the formalization of the agreement. This plan includes climate investments, additional tax revenue and a deficit reduction target. Some 370 to 385 billion dollars will thus be dedicated to energy security and the fight against global warming.
The challenge is to stimulate the manufacture and deployment of renewable energies, develop projects for the capture and storage of CO2 or even helping households, public services and companies to modify their energy production and consumption methods thanks to financial incentives and in particular tax credits.
This package of measures will complement the ecological measures included in the major infrastructure modernization plan voted in the last quarter of 2021 by Congress. The objective for the coming decade is threefold: to accelerate the energy transition, to adapt society to climate change and to reduce greenhouse gas emissions.
Particularity of this bill: it has been designed and calibrated to be profitable. Its financing is based on an increase in taxation on multinationals and on certain capital income, the strengthening of the fight against tax evasion and the renegotiation of the price of certain drugs covered by the health insurance program Medicare. It should thus make it possible to generate between 150 and 300 billion dollars in additional revenue for the State in ten years.
Remotivate the disappointed electorate
This Inflation Reduction Act is the result of a compromise, approved by the White House, between Senate Majority Leader Chuck Schumer and the very influential Democratic Senator from West Virginia Joe Manchin. It stems directly from Joe Biden’s political program and happens to be a slimmed down version of the ambitious Build Back Better Actwhich never saw the light of day because of disagreements within the Democratic camp last year.
Estimated at 1.800 billion dollars, the original version included significant investments in environmental protection and a whole panoply of measures to rebuild the American social model. The image of a divided majority reflected by this episode has also largely contributed to weakening the presidency and making Joe Biden an unpopular head of state.
However, the dialogue continued in the corridors of the Capitol and intensified as the mid-term elections approached, which will be held next November. As the very narrow Democratic majority in Congress could disappear on that date, it became imperative to find a way out and act to honor the promises made during the last presidential campaign, in order to re-motivate an electorate that was sometimes disappointed or resigned.
With the surprise formalization of this agreement, the Democrats will be able to try to prove to the Americans that they have the skills to govern and advance their agenda. An image that contrasts with that returned by the Republican Party, trapped in the excesses of Trumpism and for the time being unable to propose a political program facing the future.
A voice that could change everything
However, the adoption of this text can only be done through the so-called reconciliation procedure, which makes it possible to legislate by simple majority in the Senate – already used at the very beginning of Joe Biden’s mandate to pass the Covid plan of 1,900. billions of dollars – but whose use is limited to fiscal and budgetary measures.
Not having the sixty votes needed in the upper house to circumvent the parliamentary filibuster, the Democrats are forced to use this trick to carry out certain aspects of their economic program. In the current configuration, where the two parties have fifty senators, the majority will have to remain grouped and count on the presence of Vice-President Kamala Harris to decide between the vote in the event of a tie.
It remains to be seen what the Democratic Senator from Arizona Kyrsten Sinema will decide. This former left-wing activist who became pro-business after her election has so far often favored the interests of those who finance her campaigns, even if it means betraying her own camp. Without its vote, the IRA is doomed to remain in the cards and the United States will not have the possibility of respecting its climate commitments. The ball, or rather the future of the human species, is in his court.
