Yahoo Finance's Rick Newman breaks down what's included in the surprise climate and health care bill that Sen. Chuck Schumer (D-NY) and Sen. Joe Manchin (D-WV) announced Wednesday.
- Well, solar stocks are popping today. And reports of a near $740 billion spending bill brokered by Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin. The measure sets aside roughly $370 billion to fight climate change, along with provisions to lower prescription drug costs. For more on this, let's bring in Yahoo Finance's Rick Newman.
Rick, let's talk about what this bill is called because I think everybody remembers Build Back Better. That name is gone now. The $4 trillion, by the way, it was estimated also gone. But there's a lot of things that were included in this bill that came from that.
- The Inflation Reduction Bill.
RICK NEWMAN: It's the IRA, the Inflation Reduction Act. And I think it's worth saying outright that this was a total surprise to practically everybody. I mean, there's not much that's to surprise in Washington because of all the trial balloons, the leaks, and things like that. And everybody thought Build Back Better was dead.
And suddenly, it has a second life as the Inflation Reduction Act. So let's just get this out of the way. This is not going to do very much to reduce inflation. But inflation is what people care about. That's what Joe Manchin, the senator whose vote they have to get on this, that's what he cares about.
So they're calling it the Inflation Reduction Act. The only part of this that even comes close to addressing inflation is that there will be $300 billion of deficit reduction, supposedly. My understanding is that's over 10 years.
That's nothing. That's a nothing burger in terms of a national debt. It's, I think, $30 trillion right now. But look, these are the pieces they had to put together to get a deal. And it's actually going to be significant in terms of green energy investment if it finally passes.
- Yeah. And to that point, I mean, it could reduce prices also on drugs, for example. But some of those provisions might not happen until 2026. So in the immediate issue, probably not going to address inflation, at least, you know, at 9.1%. But wanted to ask about what else is in this bill because you do have some saying that even though the size of this is much smaller than originally intended, it covers a lot of things that were actually originally in the proposed bill. So what other types of provisions do you see in there, and, you know, what's important?
RICK NEWMAN: So prescription drug pricing, as you mentioned-- it will allow Medicare to negotiate lower drug prices on some drugs, probably not all drugs, probably just the most popular drugs. There would be a $2,000 cap per year on the amount that seniors pay. Now, this is not a done deal. So all of these things could change.
IRS-- better IRS tax enforce enforcement, more funding for the IRS-- this is actually a pretty good idea. The idea is that there are so many people who just don't pay the taxes they owe. And before we raise taxes on anybody, go get the money that people actually owe right now. And the IRS says, look, we need more auditors. We need better technology in order to do it. So there would be that.
A few other provisions-- oh, there would be a 15% corporate minimum tax on companies that are--
- To fund this, right.
RICK NEWMAN: Yeah, to fund it-- that earn more than $1 billion. So what's not in here are the social welfare provisions that were in Build Back Better. Essentially, none of that is in here. We should also mention a continuation of electric vehicle tax credits, including used electric vehicles.
- $7,500 versus--
RICK NEWMAN: For new, yeah.
- --and $4,000, right?
RICK NEWMAN: For used.
- So that's a pretty significant one. Although the new provision includes the fact that it has to be for those who are making $75,000 or less.
RICK NEWMAN: Which is fine, by the way, because the only people buying EVs--
- --are rich people.
RICK NEWMAN: --are rich people right now, yeah.
- You're right. [INAUDIBLE] Can we talk about the deal making part of this for just a bit? Because the big question, like you said, this caught everybody by surprise. You're-- you know, you're going down the list of things that are included in the bill. These are things we've heard before.
So it becomes, what changed for Joe Manchin? And on that front, you know, he was speaking to "Punchbowl News," saying that part of this was that he wanted extra investments in fossil fuels. It sounds like he got that.
RICK NEWMAN: Yes. So he wants faster permitting for things like natural gas pipelines that run through his home state of West Virginia. That's something the energy industry also has been asking for, also more clarity on permitting and leasing, which is another thing that the energy industry has been saying, look, you want us to produce more oil and gas? Here's what you need to do to do your part, Biden administration.
And those are a couple of the items they say. I think those are actually fairly sensible. It's basically just provide more clarity for the industry. And there are a lot of-- there's a lot of energy out there that cannot get to the consumers who need it because there's no pipeline. Or there's-- the transportation just isn't there. That's why on the East Coast, we get gasoline from-- and oil from the Middle East because it's easier to get it from the Middle East to refineries here than to get it from Texas or from North Dakota because the transportation's not there.
So all kinds of things going on here. And we're not even talking about the behind-the-scenes machinations that got-- that got this done. But it's quite interesting that something's actually happening in Congress.
- And there's going to have to be more machinations to get this thing passed.
RICK NEWMAN: There are, yeah.
- Although, you know, it seems like some optimism on Capitol Hill.
RICK NEWMAN: There is, yeah.
- All right. Yahoo Finance Rick Newman.
RICK NEWMAN: Thanks, guys.