The Democrats’ big IRA bill fulfills some Biden promises, leaves others behind

A bill on climate change, health care and corporate taxation advances some of the key promises President Joe Biden campaigned on in 2020. But the scaled-back bill also offers a reminder of other Biden campaign promises that had to be pushed off until later, if ever.

The bill is expected to receive Biden’s signature in short order. It passed with Democratic votes only in the 50-50 Senate, under special rules that allow passage with just a simple majority. The House passed it five days later on a similar party-line vote, 220-207.

Barring something unexpected, this bill is likely to be the last major piece of legislation Biden will be able to sign before the midterm elections in November. And if Republicans take control of one or both chambers of Congress in the midterms, the bill could represent Biden’s last opportunity to implement any of the items on his agenda that require congressional approval.

As we did for presidents Barack Obama and Donald Trump, we have tracked the progress, or lack thereof, of Biden’s significant campaign promises. For the Biden promises we monitor, we rate them as either Promise Kept, Compromise, In the Works, Stalled or Promise Broken.

Here’s a rundown of what the Inflation Reduction Act delivers for Biden’s campaign agenda, and where it falls short.

Significant climate change spending helps net-zero pledge

Biden’s key climate-change goal seemed out of reach until the breakthrough deal emerged at the end of July. Sen. Joe Manchin, D-W.Va., and Senate Majority Leader Chuck Schumer, D-N.Y., agreed to a clean energy package costing $369 billion over 10 years.

The measure provides $260 billion in clean-energy tax credits to boost investment in solar, wind, hydropower and other renewable energy. For households, it offers consumer rebates to help cover the cost of installing heat pumps and solar panels. Lower- and middle-income households can claim a $4,000 tax credit to buy used electric vehicles. It has more than $20 billion to support agriculture practices that release less carbon into the air.

Independent researchers said that taken together, by 2030, the legislation’s steps will cut greenhouse gas emissions by about 40% below emission levels in 2005. Biden set a goal of reducing emissions to 50% to 52% below the 2005 benchmark by 2030 as part of the U.S. pledge under the Paris Climate Agreement.

The bill "does about two-thirds of the remaining work needed to close the gap between current policy and the nation’s 2030 climate goal," said Princeton University’s Zero Lab.

For the U.S. to reach the net-zero target — the point at which the release and capture of greenhouse gases are in balance — it has to first hit the 2030 goal.

Researchers say the U.S. has the possibility but not the assurance of meeting net zero by 2050.

The significant gains in this promise are enough to move it from In the Works to Promise Kept.

Medicare can negotiate drug prices

The bill fulfills a major Biden health care promise by establishing the right for Medicare to negotiate prices with drugmakers on some medications.

For decades, the mandatory health insurance program for older Americans has lacked the authority to negotiate drug prices, which has translated into costs that are higher than those paid in other industrialized nations. 

Under the bill, the federal government will be able to negotiate the price of 10 drugs covered by Medicare Part D, the outpatient prescription drug use benefit, starting in 2026. In subsequent years, the number of drugs eligible for price negotiation would rise, with coverage expanding beyond Medicare Part D.

The list will not include brand-new drugs; the medications must have had Food and Drug Administration approval for several years.

Also, the out-of-pocket maximum for beneficiaries of Part D will be capped at $2,000 a year.

This promise moves from In the Works to Promise Kept.

Compromise on corporate tax

As a candidate, Biden proposed raising the federal tax rate on corporations from 21% to 28%, so that "wealthy Americans and big corporations pay their fair share."

But after pushback in Congress, Biden pursued a different approach. Under the Senate bill, taxes for some of the nation’s largest companies are poised to increase, though not in the across-the-board fashion Biden envisioned.

Corporations that have profits exceeding $1 billion for three consecutive years would face a new minimum 15% tax on corporate "book income," which generally means the amount companies report to investors. 

The provision, which would be effective for tax years beginning after Dec. 31, 2022, seeks to ensure that if companies are reporting large profits to investors, they can’t simultaneously game the system by reporting smaller profits for tax purposes.

The provision that passed in the bill does take aim at "big corporations," but there are significant differences in scope and method with what Biden had promised during the campaign.

"The minimum tax is a parallel tax that firms may, or may not, be subject to in a given year," said Kyle Pomerleau, a senior fellow with the American Enterprise Institute, a center-right think tank based in Washington, D.C.

The promise moves from In the Works to Compromise.

No penalties for offshoring

Biden promised to change the tax code to penalize "offshoring," or having U.S. companies set up facilities overseas to avoid paying taxes.

He began to follow through after taking office, proposing several tax changes that could affect offshoring, and some of those proposals made it into the initial version of legislation that passed the House in November 2021. But corporate taxation policies were significantly modified in the latest Senate version, and the offshoring provisions were taken out. 

"Some have tried to argue that the minimum book tax may impact foreign income," said Garrett Watson, a senior policy analyst with the Tax Foundation. "While that could be true, it’s not the main aim of that tax, and it would not necessarily impact decisions about foreign investment in the same way as the penalty proposed by the president previously."

This promise moves from In the Works to Stalled.

No tax credit for child care

Biden promised to ease the burden of paying for child care with an $8,000 tax credit, but this was not included in the final version of the bill.

An earlier version of the legislation would have substantially expanded funding and eligibility for federal child care assistance. It passed the House, but in the Senate, Democrats decided that they couldn’t agree on a measure that broad. 

"I don't see a path (to revive it) if the Democrats don't keep the Senate and the House," said Pomerleau.

This promise moves from In the Works to Stalled.

No universal preschool 

Biden promised to offer universal preschool to 3- and 4-year-olds. Although the idea survived a few rounds as his agenda was being advanced, it was not in the final bill that passed Congress.

Biden’s initial proposal called for a $200 billion investment in partnership with the states. It would ensure "low student-to-teacher ratios, high-quality and developmentally appropriate curriculum, and supportive classroom environments that are inclusive for all students." The version that passed the House included a provision on universal preschool.

The promise moves from In the Works to Stalled.

No paid family and medical leave

Biden sought to create a national paid family and medical leave program allowing all employees to take up to 12 weeks of paid time off. The U.S. is the world’s only industrialized country without a national paid family and medical leave policy that guarantees workers compensation when they take time off to have children.

After initially being negotiated out of the House version of Biden's proposed Build Back Better spending bill framework, the provision made a comeback, though in a more limited form than Biden had envisioned. The version of the bill that passed the House included four weeks per year of family and medical leave.

But in the Senate, a few Democratic lawmakers whose support was crucial to the measure’s passage objected to the measure’s scope. So it was dropped from the final version. 

The promise moves from In the Works to Stalled.

Affordable housing money largely stripped

While Democrats have long sought to ramp up investment in affordable housing, that goal fell by the wayside in the final version of the Senate bill.

In its earlier incarnation, the legislation included billions of dollars for affordable housing. But Will Fischer, senior director of housing and research at the Center for Budget and Policy Priorities, said the final version included only about $1 billion relating to affordable housing, all of it related to energy efficiency. This funding is for energy and water efficiency and climate resilience in federally subsidized housing, virtually all benefiting renters. 

The National Association of Home Builders expressed disappointment that the bill’s housing provisions were largely dropped. 

"With home prices and rents rising even faster than inflation, rising interest rates, and a growing scarcity of both entry-level owner-occupied housing as well as affordable rental units, Americans are being squeezed hard," the association stated. "Rent inflation increased in June at the fastest pace since 1986, yet the bill fails to include any resources to expand the supply of housing, including badly needed affordable rental housing."

The American Rescue Plan that Biden signed into law in early 2021 included nearly $50 billion in housing and homelessness assistance, but that was largely for temporary emergencies. 

The promise moves from In the Works to Stalled.

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