The United States Senate had passed 51-50, with Vice President Kamala Harris using her tie-breaker vote to pass a $430 billion Inflation Reduction Act, which will create tax credits for clean energy alternatives, including incentives for solar, wind, nuclear power, and for electric cars. The Republicans have opposed it tooth and nail, but the Democrats worked hard to muster the wafer-thin number to get it through. The bill now goes to the House of Representatives, where the Democrats have a clear majority, and then it will go to President Joe Biden to be signed into law. While Republicans have said that this bill would not in any way help reduce carbon emissions while it would affect the efforts of the corporates to create jobs. One of the key elements of the legislation is the 15 per cent minimum corporate tax on companies with an earning of more than a billion dollars, and another one per cent tax on corporates buying back shares.

“The Senate is making history,” exclaimed Senate Majority (Democrats) Leader Chuck Schumer at the end of the narrow passage of the bill. He said, “To Americans who’ve lost faith that Congress can do big things, this bill is for you.” The bill provides for $375 billion spend on climate change issues like shifting to green energy modes in manufacturing and transport over a period of 10 years. President Biden had a more ambitious plan of $3.5 trillion of Building Back Better for the decade, but conservative Democrats shot it down. It is expected that this could boost the prospects of Democrat candidates in mid-term Congressional elections this November 8.

While climate change activists have hailed the measure, however limited it is, there are others who think that if is either wasteful expenditure which would be a burden on the private sector, which would not be able to create jobs, and Republican critics of the bill say this. But there are others who think that this does not go far enough. Gregory Wetsone, president of the American Council of Renewable Energy, thinks that this is the first time that Congress had taken measures to deal with the challenge of climate change. On the other hand, Senate Minority (Republican) leader Mitch McConnell thinks that this will hurt the economy’s growth prospects at a time when policymakers are struggling to avert a recession.

One of the major components of the legislation is the negotiation with pharma companies over reduction of prices in prescription drugs, which will save the federal government $288 billion over a decade. Similarly, the government will be collecting $700 billion over the same period through its minimum corporate tax of 15 per cent on companies with profits of over $1 billion and those corporates buying back their shares.

It is calculated that there would $740 billion through revenue and $440 billion through new investment, which promises to put the reduction of deficit at $300 billion. Whether this would work out the way it is planned may be open to question because of the volatility in the economy due to external factors like the war in Ukraine.

Republican presidents and Republican majorities in the Congress had resolutely resisted any move to tackle the question of climate change saying that they would not want to sacrifice the growth prospects of the economy. But with the increasing extreme weather events with its undeniable economic costs has made it necessary to face the climate change issues squarely.

The United States, a rich economy, cannot any more shirk its responsibility in fighting climate change. This would force the Americans to invest money in future green technologies, which then could be shared with other countries as well.