Biden Signs Major Climate, Health Care, Tax Law

President Biden on Tuesday signed into law a massive bill that will send billions of dollars to states and local governments around the country to combat climate change.

In approving the Inflation Reduction Act, which also includes significant tax and health care provisions, Biden ended more than a year of debate over a sweeping domestic spending proposal he first put forward upon taking office.

While much of his initial plan was drastically scaled back in the Senate, disappointing advocates for housing, child care and other causes that were left out, Biden still described the legislation as one of the “most significant laws in our history.”

“This bill is the biggest step forward on climate ever,” he said.

The package includes nearly $370 billion for climate and energy programs, including ​$5 billion in grants states and municipalities will be eligible for, aimed at reducing greenhouse gas air pollution. Overall, the law marks the largest amount of federal funding ever allocated to address climate change in the U.S.

Advocates and others concerned about the consequences of climate change—like increasingly hot temperatures, flooding, wildfires and extreme weather, and plant and animal species dying off—are hailing the package as a turning point and critical victory for federal action on the issue.

For states and localities, the law will unlock billions in new funding that can be used to start or expand programs focused on a wide range of areas, such as improving the energy efficiency of homes and other buildings, curbing air pollution at ports and converting heavy duty vehicles like garbage trucks and school buses to low-emission models.

“Local leaders are on the frontlines of the climate crisis, and the provisions in the Inflation Reduction Act will support critical investments in renewable energy and reduce greenhouse gas emissions,” National League of Cities CEO and Executive Director Clarence E. Anthony said in a statement.

"This is an important step forward in our collective fight against climate change, and will help local leaders create more resilient communities in the years to come," he added.

The U.S. Conference of Mayors also applauded the law. “Mayors were among the earliest voices warning about the existential threat of climate change,” the group's CEO and executive director, Tom Cochran, said in a statement. “And, today, the federal government has responded in a big way.”

The legislation also gives Medicare the power to negotiate drug prices with pharmaceutical companies, and provides $64 billion to extend, for another three years, health insurance subsidies created in the American Rescue Plan Act. 

State health officials had been worried that about 3 million people would no longer be able to afford health care coverage if the subsidies were allowed to expire at the end of the year.

A major revenue provision in the package is a corporate minimum tax that would apply to large companies that currently avoid paying the standard 21% corporate tax rate.

Reflecting the partisan divide over a bill opposed by all Republicans in the House and Senate, 22 GOP governors in a joint statement earlier this month blasted the measure as “another reckless tax and spending spree.”

A spokesman for Mississippi Republican Gov. Tate Reeves, who signed onto the statement, doubled down on the criticism, arguing that the law’s name is misleading and that it will actually increase inflation—a charge Democrats and some economists dispute.

“If Democrats in Washington were a marketing firm, they’d be hauled into court for deceptive advertising,” Reeves’ spokeswoman, Shelby Wilcher, said in a statement to Route Fifty.

But a bipartisan group of 24 governors who've pledged to take action on climate change, made up of mostly Democrats and a handful of moderate Republicans, are backing the law.

“This law will combat the global climate crisis, strengthen our economy & safeguard the health and well-being of Americans,” that group, the U.S. Climate Alliance, said in a tweet.

Going forward, something notable to watch will be the extent to which Republican states choose to tap, or pass up, the funding available under the law.

After Biden’s domestic spending agenda ran into opposition in Congress earlier in his term, part of it dealing with infrastructure was split off and approved last year as the Infrastructure Investment and Jobs Act, allocating $1.2 trillion for roads, bridges, water systems, broadband and other public works. 

But the rest of the president’s plan remained in limbo for months on Capitol Hill, with moderate Democrats Joe Manchin of West Virginia and Kyrsten Sinema of Arizona withholding support. In late July, Manchin announced a surprise deal with Senate Majority Leader Chuck Schumer of New York and Democrats swiftly pushed the Inflation Reduction Act through Congress.

For the National Association of Counties and others, the fact that the legislation did not lift a $10,000 cap on the deduction people can claim on their federal tax returns for state and local taxes they pay was a disappointment. But NACo and even Democrats in Congress who have spearheaded efforts to get that limit raised lined up to support the bill, and said it was a win. 

Housing advocates, meanwhile, remain unhappy with the slimmed down package.

The National Low Income Housing Coalition and the National Housing Law Project marked the law's signing by writing top Biden administration officials, including Housing Secretary Marcia Fudge and White House American Rescue Plan coordinator Gene Sperling, asking that they, among other thing, urge state and local governments to use ARPA dollars to develop affordable housing and find long term solutions to address racial disparities in housing.

"The bill does nothing to address skyrocketing rents and dwindling housing supply," the groups wrote. "Without federal action, housing will be a persistent driver of inflation and rising rents will hit the lowest income Americans the hardest."