Category: US

It’s a deal set that is set to use hundreds of billion dollars over the coming decade to reshape the fight against climate change, how Obamacare works, the price of prescription drugs, and the US tax code’s treatment of big corporations.

Sens. Chuck Schumer (D-NY) and Joe Manchin (D-WV) surprised the world on July 27 when they released their sweeping bill known as the Inflation Reduction Act (IRA). Then on August 4, Sen. Kyrsten Sinema (D-AZ) propelled the deal closer to the finish line when she announced she would support the bill after of course making a few tweaks.

The so-called IRA — which still has plenty of hurdles to overcome before it becomes law — is a far cry from some early Democratic ambitions but nonetheless marks a potentially giant win for Biden and Democrats just a few months before November’s midterm elections.

The rapid turnaround on the bill has left Democrats celebrating and Republicans shell-shocked. On August 4, Biden said in a statement that Sinema’s support was “another critical step toward reducing inflation and the cost of living for America’s families.”

Republicans are expected to line up en masse against the proposal but it can pass with only the votes of all 50 Democratic senators because of the rule of reconciliation.

The bill has gained the support of figures like former Treasury Secretary Larry Summers, who notably predicted the Biden administration’s post-pandemic stimulus efforts would stoke inflation. He reportedly helped shape this deal and said in a recent Yahoo Finance interview, “I think that the total effects of this bill could very likely be positive.”

Here’s what the IRA will do:

About $390 billion for climate change and energy efforts

The centerpiece of the bill is a giant allocation toward climate change and energy efforts. Schumer has noted repeatedly that this bill “will be the largest action on climate change ever passed by the Congress.”

If enacted, it will spread money all around the green economy, from $9 billion toward a program to retrofit homes to $20 billion to manufacture more electric vehicles. Automakers like GM (GM), Tesla (TSLA), and Toyota (TM) are expected to benefit from the money as well as the expansion of a $7,500 EV tax credit included in the deal.

story continues

Approximately $385 billion in total will fund clean manufacturing, agriculture efforts, and other sectors.

Advocates for the package say it will reduce US carbon emissions by roughly 40% by 2030. The news has climate activists, who had largely given up on the chances of action from Washington DC this year, ecstatic. As one example, Evergreen Action Executive Director Jamal Raad said in a statement that the bill could “mitigate the worst impacts of climate change, reduce energy costs for working families, and save countless lives.”

The bill also has provisions that would impact the energy industry more widely, including new rules around federal land sales that may lead to oil drilling and a fund to permanently extend the Black Lung Disability Trust Fund. That will help many former coal miners in Manchin’s home state of West Virginia. In total, the bill has many provisions that even the oil industry has gotten behind.

Late in the process, according to multiple news reports, Sinema secured an additional $5 billion in the bill to combat droughts around the country. The provision will be welcomed in her home state of Arizona and others in the Southwest that are suffering a drought that, by one measure, is the worst in 12 centuries.

Changes to the health care system

The bill also makes significant changes to the health care system. One key provision will allow Medicare to negotiate for prescription drug prices. Current law prohibits Medicare from intervening in the talks between drug makers and health plan sponsors. The new rules would allow the government to weigh in to push down prices and save consumers — and the government — billions.

The bill would also add an inflation cap on drug prices to stabilize monthly costs and cap out-of-pocket drug expenses through new rules on rebates. All told, budget experts expect the combined changes will bring $320 billion into the US Treasury in the coming decade.

The IRA also extends subsidies for health insurance costs that began in the 2010 Affordable Care Act for an additional three years. That provision comes with a price tag of about $64 billion. The subsidies had previously been extended in the American Rescue Plan and are currently set to expire this fall. If the bill doesn’t pass, millions of Americans could see price increases in the fall.

Over $300 billion for the deficit

A cherry on top for advocates of the package is that the bill will reduce the deficit by over $300 billion over the coming decade through a series of “pay fors” (more on that below).

Manchin made deficit reduction a must-have portion of the bill to earn his support and noted “it is past time for America to begin paying down our $30 trillion national debt” in announcing his support for the deal.

Questions have been raised about the current inflation-fighting powers of the bill, most notably in the Penn Wharton Budget Model. Their first estimate of the bill and found little inflation impact. It “would very slightly increase inflation until 2024 and decrease inflation thereafter,” it stated.

During his conversation with Yahoo Finance, Summers cited deficit reduction as the key reason he expects the bill will reduce inflation and push back hard on the Wharton analysis, saying it “takes no account of lower prescription drug prices [and] takes no account of increased energy supply” but, even then, he noted “the Wharton analysis acknowledges that this legislation is doing great things for the environment, great things for health access, great things for fairness, without contributing to inflation.”

Other estimates have found slightly higher inflation impacts, leading to partisan sniping on the issue and whether the bill is misnamed.

New taxes to pay for it

To pay for it all, in addition to health care savings, the bill makes three changes to the tax code.

There is a new minimum corporate tax that would apply to corporations that have made over $1 billion in book profits in recent years. That idea was initially projected to raise $313 billion, but a change from Sinema around rules about depreciation that manufacturers had loudly complained about is expected to lower the returns by about $40 billion.

The deal will also put aside billions to help the IRS chase down tax dodgers. Experts predict a hefty return on investment: The $80 billion added to the IRS budget is expected to bring in $203 billion in taxes.

Finally, the deal would reportedly add a new 1% excise tax on stock buybacks. That provision, another late addition to gain Sinema’s support, will reportedly bring in $73 billion to the US Treasury. Removed from the deal was a plan to lessen the so-called “carried interest loophole,” which wealthy money managers can use to pay lower taxes on their capital gains.

Some figures, including the investor Kevin O’Leary, contend that things like the new minimum corporate tax could make the US less competitive. “That’s not a good move because you want to keep our economy competitive,” he told Yahoo Finance,

But from the perspective of Democrats in Washington, the overall tax effort will “begin to restore fairness to the tax code,” as Biden put it recently.

He and others note that the minimum tax would target the biggest companies in America, including the 55 members of the Fortune 500 that paid no federal income tax in 2020.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, flip board, LinkedIn, Youtubeand reddit.

US military leaders strive to maintain open lines of communication even with potential adversaries such as China to prevent accidents and other miscalculations that could turn into a full-blown conflict.

But the last call Milley had with his Chinese counterpart, Chief of the Joint Staff Gen. Li Zuocheng, was on July 7, the Pentagon said. The two spoke by secure video teleconference about the need to maintain open lines of communication, as well as reducing risk, according to a readout from Milley’s office. Austin, meanwhile, met in person with Chinese Defense Minister Gen. Wei Fenghe in June on the sideline of the Shangri-La Dialogue in Singapore.

“The secretary has repeatedly emphasized the importance of fully open lines of communication with China’s defense leaders to ensure that we can avoid any miscalculations, and that remains true,” Todd Breasseale, the Pentagon’s acting press secretary, told POLITICO in an email.

China on Friday announced that it was halting certain official dialogues between senior-level US military commanders, including the regional commanders, as well as talks on maritime safety. The announcement does not specifically apply to Austin and Milley’s counterparts, and officials said they are still open to communication between those leaders.

White House spokesperson John Kirby said while the announcement “does not completely eliminate the opportunities for senior members of our military to talk,” it increases the risk of an accident.

“These lines of communications are actually important for helping you reduce the risk of miscalculation and misperception,” Kirby said Friday. “You have this much military hardware operating in confined areas, it’s good, especially now, to have those lines of communication open.”

China is conducting military drills around Taiwan that have broken multiple precedents and fundamentally changed the status quo in the region. Beijing this week launched missiles into Taiwan’s territory, including at least one that appears to have flown over the island, and has sortied ships and aircraft across the median line separating Taiwan’s territorial waters from mainland China.

The US, which does not officially recognize Taiwan’s independence but sells weapons to the island, wants to avoid a situation such as on April 1, 2001, when a US Navy EP-3 signals intelligence aircraft and a Chinese J-8 fighter collided in mid -air, prompting an international dispute.

The risk of such an incident is increasingly high. China has recently ramped up aggressive activity in the Pacific, particularly the East and South China seas, alarming US officials. Chinese aircraft and ships have buzzed and harassed US and allied pilots, even conducting an “unsafe” intercept with a US special operations C-130 aircraft in June.

Yet canceling military dialogue is significant, but not unprecedented, experts said.

“Historically this is definitely part of the playbook,” Schriver said. “Thousand thousand [communications] historically it is on the chopping block when we have problems with China.”

But Kirby condemned the move as “irresponsible” at a time of escalating tensions.

“We find the shutting down of military communications channels at whatever level and whatever scope and at a time of crisis to be an irresponsible Act,” Kirby said.

A Minnesota jury ruled Friday that a pharmacist who refused to fill a prescription for a morning-after pill because of his “beliefs” did not violate a woman’s civil rights under state law but inflicted emotional harm and said she should be entitled to $25,000 in damages .

But the lawyer for pharmacist George Badeaux said Andrea Anderson is not likely to get a dime because the jury concluded she was not discriminated against because of her sex.

“We are incredibly happy with the jury’s decision,” attorney Charles Shreffler said in a statement. “Medical professionals should be free to practice their professions in line with their beliefs.”

Anderson, who filed the civil lawsuit against pharmacist George Badeaux in 2019 after she was forced to make a 100-mile round trip to get the contraceptive, said she intends to appeal the jury verdict to the Minnesota Court of Appeals.

“I can’t help but wonder about the other women who may be turned away,” Anderson said in a statement. “What if they accept the pharmacist’s decision and don’t realize that this behavior is wrong? What if they have no other choice? Not everyone has the means or ability to drive hundreds of miles to get a prescription filled.”

Anderson was represented by lawyers for Gender Justice, which is based in St. Paul, Minnesota.

“To be clear, the law in Minnesota prohibits sex discrimination and that includes refusing to fill prescriptions for emergency contraception,” Gender Justice Legal Director Jess Braverman said. “The jury was not deciding what the law is, they were deciding the facts of what happened here in this particular case. We will appeal this decision and won’t stop fighting until Minnesotans can get the health care they need without the interference of providers putting their own personal beliefs ahead of their legal and ethical obligations to their patients.”

In what appears to be a first-of-its-kind case, Anderson filed the lawsuit against Badeaux and the pharmacy he works for three years ago under the Minnesota Human Rights Act.

A mother of five, Anderson sought the morning-after pill Ella in January 2019 at the only pharmacy in her hometown, McGregor (population 391), after a condom broke during sex.

But Badeaux, who had been dispensing drugs from the McGregor Thrifty White pharmacy for four decades and is also a local preacher, refused to fill Anderson’s prescription, claiming it would violate his “beliefs,” according to the complaint.

“Badeaux informed her that there would be another pharmacist working the next day, who might be willing to fill the medication but that he could not guarantee that they would help,” the complaint stated.

Badeaux also warned Anderson against trying to get the prescription filled at a Shopko pharmacy in a nearby town and refused to tell her where else she could try, as required by state law, the complaint stated.

Another pharmacist at a CVS in the city of Aitkin also blocked Anderson from getting the prescription filled.

Anderson wounded up driving for hours, “while a massive snowstorm was headed to central Minnesota,” to get the prescription filled at Walgreens in the city of Brainerd, according to the complaint.

During the trial, which was held in Aitkin County District Court, Badeaux insisted he “wasn’t seeking to interfere with what she wanted to do,” the Minneapolis Star Tribune reported. “I was asking to be excused.”

While Aitkin County District Judge David Hermerding, in a pretrial order, ruled that Badeaux’s religious rights are not the issue at stake in the case, the pharmacist spent the bulk of his time on the stand explaining the religious reasons why he has refused to fill contraception prescriptions for Anderson and three other customers during his career.

“I’m a Christian,” he said, according to the Star Tribune. “I believe in God. I love God. I try to live the way he would want me to live. That includes respecting every human being.”

The Badeaux trial, which began earlier this week, came as the once-dormant debate over contraception was rekindled by the Supreme Court decision to overturn Roe v. Wade—and by prominent lawmakers like Sen. Marsha Blackburn, R-Tenn., openly questioning the constitutionality of birth control.

Two weeks ago, the US House passed a bill that would guarantee the right to contraception under federal law.

Badeaux currently holds “an active license with the Minnesota Board of Pharmacy,” agency spokeswoman Jill Phillips said in an email to NBC News before the verdict was announced.

Badeaux, in testimony, said he objected to dispensing Ella because it could possibly prevent a fertilized egg from implanting in the uterus.

“It’s my belief, based on lots of thinking and reading, that this [fertilized egg] is a new life,” Badeaux said. “If I do anything that prevents that egg from implanting in the uterus… the new life will cease to exist.”

But Ella doesn’t induce abortions. It is a prescription drug that prevents a woman from becoming pregnant when it is taken within five days of unprotected sex, according to the manufacturer.