Bernie Sanders Explains the Good, the Bad, and the Very Ugly of the Inflation Reduction Act

The following are the prepared remarks delivered by Sen. Bernie Sanders (I-Vt.) on the floor of the U.S. Senate on Tuesday, August 2nd, 2022 regarding the Inflation Reduction Act calling for an amendment process ahead of an expected.

Statement on Reconciliation

M. President: I want to say a few words about the so-called "Inflation Reduction Act" which I believe may be coming to the floor this week.

At this moment in American history we have more wealth and income inequality than at any time in the last 100 years with 3 people owning more wealth the bottom half of American society and CEOs of large corporations making 350 times more than their average workers.

But, before I do, I want to put this reconciliation bill into the context of where we are as a nation politically. And that is not a good place.

According to the most recent Gallup poll the approval rating for Congress is at 16% with massive numbers of people disapproving of the work we are doing here.

Further, according to a recent University of Chicago poll, a strong majority of Americans believe that the government is "corrupt and rigged against me."

Further, according to a [USA Today] poll a very strong majority no longer believes that the Democratic or Republican parties are responding to their needs and we need to move to a multi-party system. And, most frighteningly, there is a growing number of Americans who believe that they may have to take up arms against their own government in order to accomplish what they think needs to be done.

All of this speaks to a very dangerous moment for American democracy and resembles the conditions that existed in Europe in the 1920s and early 1930s which led to fascism and totalitarianism.

Watch the floor speech:

And I should mention that, as we speak, while working families are falling further and further behind economically the billionaire class through their super-PACs are doing everything they can to elect members of Congress who will support the wealthy and the powerful against the needs of average Americans.

The people of this country believe, in my view correctly, that we have a corrupt political system dominated by the rich and the powerful and we have a rigged economy in which large corporations are seeing huge profits while the middle class and working families continue to decline.

We don't talk about it much here in the Senate or in the corporate media, but at this moment in American history we have more wealth and income inequality than at any time in the last 100 years with 3 people owning more wealth the bottom half of American society and CEOs of large corporations making 350 times more than their average workers.

That is the overall context in which this reconciliation bill is coming to the floor.

Now, I have heard from some of my colleagues that the Build Back Better legislation passed by the U.S. House of Representatives and supported by some 48 out of the 50 members of the Senate Democratic caucus and by the President of the United States is dead.

Now, I don't know if that is absolutely true or not. But I do know that if it is true it would be a disaster for working families all across this country who are desperately trying to survive economically.

So let me very briefly tell you what was in the original Build Back Better bill which is not in the so-called Inflation Reduction Act.

And everyone of the provisions that I'm going to mention has overwhelming support from the American people according to poll after poll after poll.

At a time when the United States has the highest rate of childhood poverty of almost any major nation on earth, this bill does not extend the $300 a month per child tax credit that you had last year.

If you are a parent today paying $15,000 a year for childcare, the average cost in America, this bill ignores that crisis completely and does absolutely nothing for you.

And, of course unlike the original Build Back Better plan this bill does not provide free and universal Pre-K.

At a time when 45 million Americans are struggling to pay student debt and when hundreds of thousands of young people every year are unable to afford a higher education this bill does nothing to help them. The original Build Back Better plan provided 2 years of free education at community colleges. Not enough, but an effort to begin addressing the crisis of higher education in this country. Needless to say, this bill ignores that issue completely.

If you are an elderly American, one of the millions who are unable to afford to go to a dentist or buy the hearing aids or eyeglasses that you need, this bill does nothing to expand Medicare to cover these basic healthcare needs. Millions of seniors will continue to have rotten teeth and lack the dentures, hearing aids or eyeglasses that they deserve.

This bill does nothing to address the major housing crisis that we face or build one unit of safe and affordable housing.

Further, at a time when millions of elderly and disabled Americans would prefer to stay in their homes rather than be forced into nursing homes, this bill does absolutely nothing to address the home healthcare crisis in America. We will continue to lack the decent-paid staffing that we need to address this crisis.

Everybody agrees that we have a major housing crisis in this country. Some 600,000 people are homeless sleeping out on streets across the country. In addition, nearly 18 million households are spending an incredible 50 percent of their incomes for housing. Yep, you guessed it. This bill does nothing to address the major housing crisis that we face or build one unit of safe and affordable housing. Just another issue that we push aside.

M. President, one of the criticisms against the original Build Back Better plan is that it would be inflationary because it would increase federal spending. That criticism is untrue. Every nickel spent in this bill would be fully paid for by increased taxes on the wealthy and large corporations. Unlike the recently passed micro-chip corporate welfare bill that adds $79 billion to the federal deficit, unlike the proposed military budget that came out of the Senate Armed Services Committee which would increase defense spending by $45 billion more than the Pentagon even requested, Build Back Better would not have increased the deficit at all.

Now, M. President, let me say a few words about what is in this legislation, a bill which has some good features, but also some very bad features.

Prescription Drugs

The good news, M. President, is that the reconciliation bill finally begins to lower the outrageous price of some of the most expensive prescription drugs under Medicare.

According to the most recent data, if we do nothing, Medicare will spend about $1.8 trillion over the next decade on prescription drugs and our nation, as a whole, will spend $5 trillion. That is simply unsustainable.

But, M. President: here's the bad news.

The prescription drug provisions in this bill are extremely weak, they are extremely complex, they take too long to go into effect and they go nowhere near far enough to take on the greed of the pharmaceutical industry whose greed is literally killing Americans.

The prescription drug provisions in this bill are extremely weak, they are extremely complex, they take too long to go into effect and they go nowhere near far enough to take on the greed of the pharmaceutical industry whose greed is literally killing Americans.

Under this legislation, Medicare, for the first time in history, would be able to negotiate with the pharmaceutical industry to lower drug prices.

That's the good news. The bad news is that the negotiated prices would not go into effect until 2026 - 4 years from now.

Further, in 2026, only 10 drugs would be negotiated with more to come in later years.

Moreover, with the possible exception of insulin, this bill does nothing to lower prescription drug prices for anyone who is not on Medicare.

Under this bill, at a time when the pharmaceutical companies are making outrageous profits, the pharmaceutical industry will still be allowed to charge the American people, by far, the highest prices in the world for prescription drugs.

M. President, if we are really serious about reducing the price of prescription drugs we know exactly how we can do it.

For over 30 years, the VA has been negotiating with the pharmaceutical industry to lower the price of prescription drugs. Moreover, for decades, virtually every major country on earth has done exactly the same thing for all of their people.

The result: Medicare pays twice as much for the exact same prescription drugs as the VA and Americans, in some cases may pay ten times as much for a particular drug as the people of any major country on earth.

In other words, when it comes to reducing the price of prescription drugs under Medicare - we don't have to reinvent the wheel.

We could simply require Medicare to pay no more for prescription drugs than the VA.

And, M. President, if we did that, we could literally cut the price of prescription drugs under Medicare in half in a matter of months, not years. In February, I introduced legislation with Senator Klobuchar that would accomplish that goal.

Under that legislation, we could save Medicare $900 billion over the next decade. That is nine times more savings than the rather weak negotiation provision in this bill. And, by the way, that money could be used to add comprehensive dental, vision and hearing benefits to every senior in America. It could be used to lower the Medicare eligibility age to at least 60. And it could be used to extend the solvency of Medicare.

What are the other prescription drug provisions in the reconciliation bill?

Well, under this legislation, pharmaceutical companies would essentially be prohibited from increasing prescription drug prices above inflation pegged to the year 2021.

Should we be making sure that pharmaceutical companies cannot increase their prices above inflation? Yes. But let's be clear. This provision would lock in all of the outrageous price increases the pharmaceutical industry has made in recent years and would do nothing to lower those outrageous prices.

The good news is that if this legislation is signed into law it would provide far more funding for energy efficiency and sustainable energy than has ever been invested before.

Under this legislation, out-of-pocket prescription drug costs for seniors would be capped at $2,000 a year. That is a good provision that will benefit up to 2 million seniors who currently pay over $2,000 a year for prescription drugs. But the $25 billion cost of this provision would be paid for not by the pharmaceutical companies making record-breaking profits. No. It would be paid for by increased premiums on virtually every senior citizen in America, although there is a provision to "smooth out" those premium increases.

The current reconciliation bill would also provide free vaccines for seniors - the only population for which vaccines are not already free. That is a good thing that should have been done a long time ago.

Finally, M. President, in terms of prescription drugs, it looks like the reconciliation bill will cap co-pays for insulin at $35 a month - which is a good step forward for people with health insurance, but would do nothing to lower the cost of insulin for the 1.6 million diabetics who are uninsured and who need our help the most.

Affordable Care Act

Moreover, M. President, this legislation will extend subsidies for some 13 million Americans who have private health insurance plans as a result of the Affordable Care Act over the next three years. Without this provision, millions of Americans would see their premiums skyrocket and some 3 million Americans could lose their health insurance altogether. This is a good provision, but let's not fool ourselves. The $64 billion cost of this provision will go directly into the pockets of private health insurance companies that made over $60 billion in profits last year and paid their executives exorbitant compensation packages.

It would also do nothing to help the more than 70 million Americans who are uninsured or under-insured and it would do nothing to reform a dysfunctional healthcare system that is designed not to make people well, but to make the stockholders of private health insurance companies extremely rich.

Climate Change

Now, M. President, this legislation also provides $370 billion over the next decade to combat climate change and to invest in so-called energy security programs.

The good news is that if this legislation is signed into law it would provide far more funding for energy efficiency and sustainable energy than has ever been invested before.

This is substantially lower, however, than the $555 billion in the original Build Back Better plan which understood that climate change is an existential threat to the planet and has to be addressed in an extremely bold way.

But this legislation does provide serious funding for wind, solar, batteries, heat pumps, electric vehicles, energy efficient appliances and low-income communities that have born the brunt of climate change.

But, M. President, the ugly news that very few people in the media or Congress wants to talk about is that it includes a huge giveaway to the fossil fuel industry - both in the reconciliation bill itself and in a side deal that was just made public yesterday.

Under this legislation, the fossil fuel industry will receive billions of dollars in new tax breaks and subsidies over the next 10 years - on top of the $15 billion in tax breaks and corporate welfare that they already receive every year.

In my view, if we are going to make our planet healthy and habitable for future generations, we cannot provide billions of dollars in new tax breaks to fossil fuel companies that are destroying the planet. On the contrary, we should end all of the massive corporate welfare that the fossil fuel industry already enjoys.

The ugly news that very few people in the media or Congress wants to talk about is that it includes a huge giveaway to the fossil fuel industry - both in the reconciliation bill itself and in a side deal that was just made public

Under this legislation, up to 60 million acres of public waters must be offered up for sale each and every year to the oil and gas industry before the federal government could approve any new offshore wind development. To put this in perspective, M. President, 60 million acres is the size of Michigan.

M. President let me read to you the headline that appeared in a July 29th article in Bloomberg: "Exxon Loves What Manchin Did for Big Oil in $370 Billion Deal."

According to Bloomberg, the CEO of Exxon Mobil called the reconciliation bill "a step in the right direction" and was "pleased" with the "comprehensive set of solutions" included in the reconciliation bill.

Barrons recently reported that Exxon Mobil, Chevron, and Occidental Petroleum are just a few of the fossil fuel companies that could benefit the most under this bill.

Now, M. President, if the CEO of Exxon Mobil, a company that has done as much as any to destroy this planet, is "pleased" with this bill then I think all of us should have some very deep concerns about what is in this legislation.

Further, under this bill, up to 2 million acres of public lands must be offered up for sale each and every year to the oil and gas industry before leases can move forward for any renewable energy development on public lands.

In total, this bill will offer the fossil fuel industry up to 700 million acres of public lands and waters to oil and gas drilling over the next decade - far more than the oil and gas industry could possibly use.

And, M. President, that's not all. The fossil fuel industry will not just benefit from the provisions in the reconciliation bill. A deal has also been reached to make it easier for the fossil fuel industry to receive permits for their oil and gas projects.

This deal would approve the $6.6 billion Mountain Valley Pipeline - a fracked gas pipeline that would span 303 miles from West Virginia to Virginia, and potentially on to North Carolina.

This is a pipeline that would generate emissions equivalent to that released by 37 coal plants or by over 27 million cars each and every year.

M. President, let me quote a statement from 350.ORG on this subject: "This latest bill has a few good pieces: lengthening the tax credits for green energy projects from two to ten years to ensure steady growth in the wind and solar industry; providing incentives for consumers to buy electric vehicles; and installing heat pumps to make green energy use more widespread. However, the amount of giveaways to the fossil fuel industry is so wide in scope, that it turns all of the gains in addressing the climate crisis into a moot point."

Here is what the Center for Biological Diversity had to say on this bill: "This is a climate suicide pact. It's self-defeating to handcuff renewable energy development to massive new oil and gas extraction. The new leasing required in this bill will fan the flames of the climate disasters torching our country, and it's a slap in the face to the communities fighting to protect themselves from filthy fossil fuels."

In my view, we have got to do everything possible to take on the greed of the fossil fuel industry, not give billions of dollars in corporate welfare to an industry that has been destroying our planet.

Tax Reform

Finally, M. President, at a time of massive income and wealth inequality; at a time of soaring corporate profits; and at a time in which we have a broken tax system riddled with all kinds of loopholes for the rich and the powerful, this bill makes a few modest changes to reform the tax code.

Under this bill, corporations will be required to pay a minimum tax of 15%. That is the good news. The American people are sick and tired of companies like AT&T, Federal Express and Nike making billions of dollars in profits and paying nothing in federal income tax. This provision has been estimated to raise $313 billion over the next decade.

Further, under this bill, the IRS will finally begin to receive the funding that it needs to audit wealthy tax cheats. Each and every year, the top 1 percent are able to avoid paying more than $160 billion in taxes that they legally owe because the IRS does not have the resources they need to conduct audits of the extremely wealthy. This bill begins to change that.

Now is the time for every member of the Senate to study this bill thoroughly and to come up with amendments and suggestions as to how we can improve it.

This bill would also make very modest changes to the so-called carried interest loophole that has allowed billionaire hedge fund managers on Wall Street to pay a lower tax rate than a nurse, teacher or firefighter.

But the bad news is that this bill does nothing to repeal the Trump tax breaks that went to the very wealthy and large corporations. Trump's 2017 tax bill provided over a trillion dollars in tax breaks to the top one percent and large corporations. In fact, 83% of the benefits of the Trump tax law are going to the top 1% - and this bill repeals none of those benefits.

And M. President, let's not forget. It is very likely that Congress will be doing a so-called tax extenders bill at the end of the year that could provide corporations up to $400 billion over the next decade in new tax breaks. If that occurs that would more than offset the $313 billion in corporate revenue included in this bill.

So that, M. President is where we are today. We have legislation which unlike the original Build Back Better plan ignores the needs of working families in childcare, Pre-K, the expansion of Medicare, affordable housing, home healthcare, higher education, and many other desperate needs.

This is legislation which, at a time of massive profits for the pharmaceutical industry, and when we pay by far the highest prices in the world for prescription drugs, takes some very modest steps to lower or control the price of medicine.

This is legislation which has some good and important provisions pertaining to energy efficiency and sustainable energy, but, at the same time, provides massive giveaways to the fossil fuel industry whose emissions are destroying the planet.

This is legislation which appropriately ends the absurdity of large, profitable corporations paying nothing in federal income tax but, at the same time, leaves intact virtually all of Trump's tax breaks for the wealthy and very large corporations.

M. President this more than 700-page bill after months of secret negotiations became public late last week. Now is the time for every member of the Senate to study this bill thoroughly and to come up with amendments and suggestions as to how we can improve it.

I look forward to being part of that process.