Biden Signs Climate, Health Bill Into Law as Other Economic Goals Remain

WASHINGTON — President Biden signed into law a landmark tax, health and energy bill on Tuesday that takes significant steps toward fulfilling his goal to modernize the American economy and reduce its dependence on fossil fuels.

The legislation will lower prescription drug prices for seniors on Medicare, extend federal subsidies to health insurance, and reduce federal deficit. It will also allow electric utilities to switch to cleaner-emissions energy sources and encourage Americans who qualify for tax credits to purchase electric cars.

However, it does not provide workers with many of those other sweeping economic reforms that Mr. Biden promised would help Americans make more money and live in the comforts of a middle class life.

Inflation Reduction Act is the name Democrats give it. Mr. Biden signed it in the White House State Dining Room. The success of the legislation was viewed by him and his associates as a miracle considering it took more than a year to negotiate among congressional Democrats. In his remarks, Mr. Biden proclaimed victory as he signed a compromise bill that he called “the biggest step forward on climate ever” and “a godsend to many families” struggling with prescription drug costs.

“The bill I’m about to sign is not just about today; it’s about tomorrow. It’s about delivering progress and prosperity to American families,” Mr. Biden said.

According to administration officials, Mr. Biden passed far more of the economic agenda than they could have hoped for given Republican opposition to many of his tax and spending agenda and razor-thin Democratic majorities at the House and Senate. His wins include a $1.9 billion economic rescue plan lastyear to help workers and business through the pandemic. He also passed a pair bipartisan bills aimed to American competitiveness, a $1 trillion infrastructure bill, and $280 billion in spending for domestic semiconductor manufacturing to counter China.

There is no doubt that Mr. Biden was unable to persuade legislators to agree with his greatest economic goal: investing in workers, families, and other people.

Both parts of the equation — modernizing the physical backbone of the economy and empowering its workers — are crucial for Mr. Biden’s vision for how a more assertive federal government can speed economic growth and ensure its spoils are widely shared.

In a warming world with increased economic competition from sometimes adversarial nations, Mr. Biden considers investment in low-emission energy sources and advanced manufacturing critical to American businesses and the nation’s economic health.

Biden also believes that human investment is crucial. The American economy still relies heavily on service industries, such as medicine and restaurants. Its recovery from the pandemic recession has been stunted, in part, by breakdowns in support for some of the workers who should be powering those industries’ revival. Many potential workers are being left out by the cost and availability for child care, which is causing a glut of unfilled job opportunities and costing business owners money.

However, Mr. Biden has failed to deliver on many of his programs that he promised to help Americans balance their work responsibilities with caring for their children and aging parents. He was unable to secure universal prekindergarten and free tuition at community colleges. He couldn’t find support to finance child care subsidies, or to extend a tax credit intended to combat child poverty. His plans to spend hundreds upon billions of dollars on home health services for seniors, disabled and the elderly have also failed.

These omissions amount to what liberal economists call an opportunity missed to help Americans work harder and earn more, and make the economy more efficient.

According to Lindsay Owens, executive director at the liberal Groundwork Collaborative, in Washington, Mr. Biden has been more successful in convincing Democrats and some Republicans to invest in the physical economic system and to embrace a more interventionist view on federal power. By embracing industrial policy and government-induced emissions reduction, she said, “He’s moved to an economic system and an economic agenda where the government is really throwing its weight around, putting its thumb on the scale,” she said.

But, she added, “we didn’t get the care agenda. That’s a huge miss. Until we get affordable child care, our economy’s not going to be at full strength.”

In Congress, that agenda, which Mr. Biden largely packed into his “American Families Plan,” always faced a much rockier path than the competitiveness efforts in his “American Jobs Plan.” It had almost no support from Republicans, ruling out the bipartisan path that delivered Mr. Biden wins on infrastructure, research and development and domestic manufacturing. It ran into problems in the Senate with Senator Democrats Joe Manchin III (West Virginia) who pushed early for Mr. Biden’s limit on the size and scope.

Opposition from another critical Senate Democrat, Kyrsten Sinema of Arizona, forced Mr. Biden to drop much of what he promised would be an overhaul of the tax code to “reward work, not wealth.” He did not, as he repeatedly proposed, end up raising top marginal income tax rates for high earners, or taxing investment returns for millionaires at the same set of rates as income earned from wages, which he had promised would help reduce economic inequality.

The legislation that he signed Tuesday is expected to raise taxes by around $300 billion. It mainly imposes new levies against large corporations. The law contains a new tax on stock repurchases by corporations and a minimum tax for large companies that use deductions or other methods to lower their tax bills. It also increases funding for Internal Revenue Service in an attempt to crack down tax evasion.

These increases represent a small fraction of the tax revenue that corporations and high-earners have provided to Mr. Biden to fund his agenda.

“On the tax side, the president fell far short of his promises,” said Steve Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Center in Washington. “On the other hand, what he did accomplish was substantial.”

Ben Harris, who was a campaign economic adviser to Mr. Biden and is now the assistant Secretary for economic policy at the Treasury Department, stated that the increased I.R.S. Enforcement against tax evasion by high-earners and corporations would help to balance the tax system in favor workers.

“The work-not-wealth emphasis was obviously central to his campaign,” Mr. Harris said, “and across the various policies ranging from tax enforcement to the book minimum tax to stock buybacks, the president got a lot of wins out of this bill.”

Other officials defend Mr. Biden’s achievements, which include securing some long-promised programs that are popular with voters but struggle to pass in Washington, like reducing prescription drug costs and improving infrastructure. They also note that the bills he’s signed seek to use federal purchasing to boost wages and promote unionization.

“Every piece of the puzzle is designed in a way to empower workers, empower individuals across the country to make a good living wage,” said Stefanie Feldman, the policy director for Mr. Biden’s 2020 campaign who is now a deputy assistant to the president and senior adviser to the domestic policy adviser.

Tuesday’s bill signed Tuesday by Vice President Biden includes $370 billion in tax credits as well as spending on low-emission forms and energy to combat climate change. It is designed to help the United States reduce greenhouse gas emissions by approximately 40 percent below 2005 levels by 2030. That would put the country within striking distance of Mr. Biden’s goal of cutting emissions at least 50 percent over that time period.

It extends federal health care subsidies and allows the government negotiate prescription drug prices for seniors on Medicare. This will reduce the federal budget deficit to about $300 billion over the next 10 years. Administration officials consider the health components vital to millions of workers. They also believe that climate components will lead to high-paying union jobs within an emerging clean-energy economy.

The climate provision is also instructive about what Mr. Biden has not been able to deliver. Mr. Biden called on Congress to create a civilian climate corps — what he described in his American Jobs Plan outline as a $10 billion effort to create “the next generation of conservation and resilience workers.”

The bill that passed the House in November was patterned after the Civilian Conservation Corps, which employed more than three million men to build roads, parks, cut trails, and plant trees across the country.

It was a direct capital investment in workers. After Mr. Manchin had walked away from the deal, negotiations were restarted in this year to reach a new agreement. The package was left on the cutting room floor.

But Mr. Manchin who is from a coal state signed on to a wide range of climate provisions. As Mr. Biden signed his bill on Tuesday, Mr. Manchin stood alongside him. The president thanked him for his important role in getting this compromise package passed into law.

“Joe,” Mr. Biden said, “I never had a doubt.”

Lisa Friedman, Emily Cochrane Michael D. ShearContributed reporting