Barely a week ago the talk was of the ungovernability of the US, a gridlocked legislature, and a toothless president languishing in the polls as his party heads for unwinnable mid-term elections barely three months away.
And then, to the amazement of Joe Biden’s friends and foes alike, the president pulled not one but two enormous rabbits out of a hat – agreement on a remodelled $740 billion climate and tax package, held up for a year by a single Democratic senator, Joe Manchin, and cross-party agreement on a $280 billion package to boost the semiconductor industry, the Chips and Science Act. Shortly, a gay marriage bill may also garner enough votes from Senate Republicans to pass.
The climate and tax bill, “‘Build Back Better”, was rechristened somewhat dubiously the “Inflation Reduction Act of 2022″ in deference to Manchin, but it is hugely important not just in building back Biden’s political prospects, but in restoring US authority in global climate negotiations. Democrats claim it will contribute to reducing greenhouse emissions to 40 per cent below 2005 levels by 2030, less than Biden’s 50 per cent target, but it is an unequivocal response to countries like China, India and Brazil which had been using the US climate deadlock to justify their own failure to act.
The bill aims to tackle global warming by using billions of dollars in tax incentives to ramp up wind, solar, geothermal, battery and other clean energy industries over the next decade. Companies would receive financial incentives to keep open nuclear plants that might have closed, or to capture emissions from industrial facilities and bury them underground before they can warm the planet. Also included is $60 billion to address the disproportionate burden of pollution on low-income communities and communities of colour. The most immediate effect of the <NO1>bill<NO>Bill, energy experts say, will be to supercharge the growth of wind turbine, solar panel and electric vehicle production in the US.
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It is being described as the most important step yet taken by the US on climate change, a volte face on the denialism of the Trump era. The Bill would be paid for by introducing a 15 per cent minimum corporation tax – European states will welcome this in the context of the OECD tax agreement – and by allowing the government to negotiate cheaper drug prices with manufacturers.
The legislation is by no means yet on the statute books , but Manchin’s defection gives Democrats a 51 to 49 majority in the Senate while the House remains, for the time being, under the party’s control. If it get through, it will be a boost for the president, who has also claimed a success overseas, saying a US drone strike in Afghanistan killed al-Qaeda leader Ayman al-Zawahiri. But heading to mid-term elections in November, it is the domestic agenda which will matter most for voters.