WASHINGTON – Major changes to the Affordable Care Act. The nation’s biggest-ever climate bill. The largest tax hike on corporations in decades. And dozens of lesser-known provisions that will affect millions of Americans.

The legislation Democrats muscled through the Senate on Sunday would represent one of the most consequential pieces of economic policy in recent U.S. history – though still far smaller than the $3 trillion the Biden administration initially sought. Some of the overall figures changed in last-minute tweaks as the Senate worked through the weekend, but Democrats had not yet released an updated fiscal score for the legislation by Sunday afternoon.

The nonpartisan Committee for a Responsible Federal Budget estimates that the bill would put about $385 billion into combating climate change and bolstering U.S. energy production through changes that would encourage nearly the whole economy to cut carbon emissions. With the planet rapidly warming, Senate Majority Leader Charles Schumer, D-N.Y., has said the bill would reduce carbon emissions by roughly 40% by 2030, close to President Joe Biden’s goal of cutting U.S. emissions by at least 50% to 52% below 2005 levels by 2030. Sen. Joe Manchin III, D-W.Va., whose vote Democrats secured in late July after months of negotiations, has also emphasized that it would spur American energy independence more broadly, including by encouraging natural gas, as the war in Ukraine has exposed domestic reliance on petrostates’ fossil fuel production.

The bill uses two main levers: major new incentives for private industry to produce far more renewable energy, and other incentives for households to transform their energy use and consumption. Democrats say this second set of incentives will also offer immediate consumer relief for the higher energy prices that have bedeviled the Biden administration.

The agreement would also raise hundreds of billions in new revenue through new tax provisions – the biggest of which will fall on the country’s large corporations. After years of rising concern about widening wealth inequality, Democrats failed in their efforts to repeal Republicans’ 2017 tax law. The new bill leaves intact most of the corporate and individual income tax cuts President Donald Trump signed into law, largely because Sen. Kyrsten Sinema, D-Ariz., had insisted on leaving them untouched. Sinema said Thursday night she would advance the measure in exchange for some changes to its tax provisions, including stripping a tax change Manchin and Schumer had agreed to impose on investment managers.

But it would still raise taxes significantly, and it would give the badly underfunded Internal Revenue Service its biggest budget increase in its history.

On health care, Democrats campaigned in 2020 on major changes, and this deal fulfills two major pledges: allowing Medicare to negotiate the price of prescription drugs, and making health care more affordable for millions of Americans. The prescription drug provisions were dialed back on Saturday, after the Senate’s parliamentarian ruled that Democrats’ attempt to limit some drug prices to the rate of inflation ran afoul of the procedure the party is using to pass the bill with a simple majority and bypass a filibuster. Republicans also defeated an attempt to set a price cap on insulin on Sunday.

The bill falls short on plugging one of the biggest gaps of the Affordable Care Act and other key items long sought by the party’s more liberal members. Still, it amounts to the biggest changes to the health system in roughly a decade.

The bill left out many key policy ambitions of Democrats – excluding, for instance, plans for new child care, housing, eldercare and paid-leave programs. But after months of gridlock and false starts, the House of Representatives is expected to approve the bill on Friday, sending it to Biden to sign.

Meanwhile, Republicans have warned that the measure will hurt the U.S. economy with higher taxes as fears of a recession are growing. Steve Miran, who served as a senior official in the Treasury Department under President Donald Trump’s administration and is the co-founder of the investment fund Amberwave Partners, said the plan’s tax provisions would exacerbate inflation by leading to a decline in supply.

But Democrats from Biden on down argued that the deal was a big step forward.

Here is a summary of what’s in the more than 700-page bill, according to Senate Democratic officials – and what’s not.

$260 BILLION IN CLEAN-ENERGY TAX CREDITS

New and extended credits would incentivize solar, wind, hydropower and other sources of renewable energy. Private firms and publicly owned utilities could get tax subsidies both for the production of renewable energy and for manufacturing a specific part essential to a renewable project, such as wind turbines or solar panels. The goal? To make new green energy production cheaper for utilities to build than fossil fuel plants are.

$80 BILLION IN NEW REBATES 

Buyers of new electric vehicles would get a $7,500 tax credit applied at the point of sale. That would also apply to vehicles whose manufacturers are no longer eligible for an existing EV credit, such as Tesla and General Motors. Couples who earn less than $300,000 a year or individuals who earn less than $150,000 would be eligible. A new $4,000 tax credit would also apply to purchases of used EVs. Tens of millions of people would qualify for these credits. Other consumer rebates would subsidize the installation of more-efficient heat pumps and water heaters, up to as much as $14,000 in total rebates. Installation of home solar panels would be eligible for a 30% credit until 2032, when that would drop to 26% through 2034. Additional consumer subsidies in the bill include $840 for an electric induction cooktop and up to $9,100 for improvements to electric panels, wiring and home insulation.

If consumers claim the subsidies in the bill, they could save as much as $1,840 on their annual energy bill on average, according to an analysis by Rewiring America, a climate analysis group. (That would also require spending significantly to buy things such as an EV, a heat pump and solar panels.)

$1.5 BILLION FOR CUTTING METHANE EMISSIONS

A new Methane Emissions Reduction Program would reward oil and gas companies that slash their emissions of methane and penalize those that don’t. The program, crafted by Senate Environment and Public Works Chair Thomas R. Carper, D-Del., originally would have provided $775 million upfront to oil and gas companies to cut their methane emissions. The current agreement doubles that money to $1.5 billion, according to a Senate Democratic aide. Methane traps far more heat in the atmosphere than carbon dioxide, the most abundant greenhouse gas.

$27 BILLION ‘GREEN BANK’ 

A Clean Energy and Sustainability Accelerator, commonly referred to as a green bank, would leverage public and private funds to invest in clean-energy technologies and infrastructure. In states where green banks have already been established, public money has been used to leverage six to 20 times more dollars in private investment in clean energy.

SUPPORT FOR FOSSIL FUEL PROJECTS

To secure Manchin’s vote, Democratic leadership pledged to mandate new oil and gas leasing in the Gulf of Mexico and off the coast of Alaska, where industry groups are pushing for a major expansion in oil production. Manchin views drilling in those areas as important for the country’s domestic energy independence.

Manchin also said in a statement that Biden, Schumer and House Speaker Nancy Pelosi, D-Calif., had “committed to advancing” a permitting reform bill that would make it easier for developers to override environmental objections when building pipelines, natural gas export facilities and other energy infrastructure. This falls outside the rules of the Senate procedure the party is using to pass the economic package, meaning Democratic leadership will have to try to secure GOP support for the permitting changes.

SUPPORT FOR COAL MINERS WITH BLACK LUNG

The agreement would permanently extend funding for the Black Lung Disability Trust Fund, which covers benefits for roughly 25,000 coal miners suffering from black lung disease, including those in Manchin’s coal-rich state of West Virginia. The version of the bill that passed the House last year only provided a four-year extension of a tax on coal sales that pays for the trust fund.

AGRICULTURE, STEEL, PORT

The bill contains numerous smaller measures aimed at specific parts of the economy with high emissions: $20 billion for agriculture subsidies to help farmers reduce emissions, $6 billion to reduce emissions in chemical, steel and cement plants, and $3 billion to reduce air pollution at ports.

15% CORPORATE MINIMUM TAX

The biggest tax hike in the plan would apply to all U.S. corporations that earn more than $1 billion per year in profits. Under current law, U.S. corporations ostensibly pay a 21% tax rate. But dozens of Fortune 500 companies pay no federal income tax at all, by claiming deductions for research and development and other credits.

The plan would attempt to close off that option by subjecting large corporations to a tax on their financial statements. Corporations would still be able to claim tax credits, though, since renewable energy groups raised concerns the minimum tax could undercut the effectiveness of the climate tax credits. As part of their agreement with Sinema, Democrats also agreed to tweak the minimum tax to allow firms to keep deducting some investment expenses. They also on Sunday amended the legislation to exempt firms owned by private equity from the new minimum tax.

$124 BILLION FROM IRS ENFORCEMENT INCREASES

The IRS would scale up dramatically in an attempt to close the “tax gap” – the difference between what people and corporations owe and what they actually pay. Democrats say that their plan to invest $80 billion in the IRS would more than pay for itself, in part because the tax agency’s budget was cut by 20% between 2010 and 2020. Former IRS commissioner Charles Rossotti and current Treasury official Natasha Sarin previously estimated the IRS could raise $1.4 trillion in additional tax revenue with more funding.

While Democrats are celebrating the measure, Republicans say it represents a political vulnerability for the administration if more Americans face audits or other scrutiny from the tax collector. It remains to be seen whether all the new revenue Democrats hope to raise will come from wealthy tax cheats, as they have pledged.

NEW TAX ON COMPANIES REPURCHASING SHARES

As part of their last-minute negotiations with Sinema, Democrats agreed to limit the extent of the corporate minimum tax and instead inserted a new tax on corporations that purchase shares of their own stocks – a maneuver known as a “stock buyback.”

Democrats have for years complained that these buybacks enrich wealthy shareholders, because a firm drives up the value of its stock by buying it. Liberal tax experts have said that rather than spending money to increase their stocks’ values, large corporations should spend it on improving worker pay or investing in new research and development. After the 2017 GOP tax law, 10 drug companies spent roughly $75 billion on buybacks – in the same year, they spent roughly $72 billion on research and development, according to the Roosevelt Institute, a left-leaning think tank.

The 1% tax on stock buybacks would raise roughly $73 billion, according to a Senate Democratic aide. Conservatives will oppose the bill as likely to discourage investment, because the tax makes investors less likely to give their money to companies when rewarding them with buybacks becomes more expensive. The provision could also hurt retirement pension plans, said John Kartch, a spokesman for Americans for Tax Reform, a conservative group.

LOWERING PRESCRIPTION DRUG PRICES

The deal allows Medicare to negotiate drug prices for the first time and would prevent future administrations from refusing to do so. It’s a major win for Democrats, who have long pledged to lower the cost of medicines, particularly for seniors. The government would start by negotiating the price of 10 drugs and gradually scale up to 20 by 2029.

But it isn’t clear how many Americans with Medicare coverage would see lower out-of-pocket costs – or how much money they could save. That depends on which drugs wind up being negotiated and how much prices drop, according to the Kaiser Family Foundation.

The bill also includes other policies aimed at curbing the sky-high cost of drugs. For instance, it caps seniors’ drug costs under Medicare to $2,000 per year, forces drug companies to pay a rebate if they increase prices faster than the rate of inflation in Medicare and provides free vaccines for seniors. The drug-pricing components are a key money saver – congressional scorekeepers had estimated these policies would reduce the deficit by nearly $288 billion over a decade.

Democrats had originally sought to also require drugmakers to pay rebates when they hike prices faster than inflation in the private insurance market, but they were forced to strip that provision out of the bill.

The arbiter of the Senate’s rules – known as the parliamentarian – determined that applying the penalty to the private market wouldn’t fly under the fast-track budget maneuver Democrats are using to circumvent a Republican filibuster. Under such a maneuver, each provision must primarily affect government spending or revenue; if not, it can be stripped from the bill. Nixing the policy quickly raised concerns from employers and some health plans which have long argued that the measure is critical to ensuring drugmakers don’t hike prices for millions of people with private insurance to make up for lost revenue.

“I am disappointed that the calculation for the Medicare inflation rebate that included commercial units sold was ruled out of compliance, but the legislation nevertheless puts a substantial check on Big Pharma’s ability to price gouge,” Sen. Ron Wyden (D-Ore.), the chair of the Senate Finance Committee, said in a statement Saturday.

The legislation would also impose a $35 monthly cap on the cost of insulin – which people with Type 1 diabetes need to stay alive, and which many people with Type 2 diabetes use to manage their blood sugar levels – for patients enrolled in Medicare. Democrats had sought to extend the same cap to people with private insurance, but Republicans nixed such a policy on the Senate floor, arguing it didn’t comply with reconciliation’s rules.

EXTENDING HEALTH INSURANCE SUBSIDIES

Last year, Democrats’ pandemic aid law boosted financial help for low-income Americans with plans on the Affordable Care Act’s insurance exchanges and extended the subsidies to middle-income earners for the first time. But the enhanced tax credits are set to expire at the end of this year, raising the specter of roughly 13 million Americans learning that their health premiums would soon increase – in some cases by hundreds of dollars per person annually – just weeks before the elections.

The deal would extend the tax credits for three more years, through 2025. Lawmakers had been haggling over the timeline, hoping to ensure as long an extension as possible. Earlier this month, it appeared that Manchin favored a two-year extension, but allowing the financial help to continue through 2025 helps Democrats avoid another funding cliff before the 2024 presidential election.

REDUCING FEDERAL DEFICIT

The original version of the legislation would have brought down the federal deficit by about $300 billion over 10 years, according to Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget. That would be more than any other legislation has done since 2011. The savings would shrink somewhat if Congress later extends the Affordable Care Act subsidies, which only last for a few years in the current version of the bill. Last minute changes to assuage the parliamentarian – and secure the final support of all Democrats – have changed some of the bill’s components and the amount of money they raise. Democrats say it is still far more than needed to offset its costs, and could perhaps deliver the full $300 billion in deficit reduction. But party leaders had yet to furnish a final fiscal analysis of the legislation by Sunday morning.

Democrats have sought to reclaim the mantle of fiscal responsibility from Republicans after the 2017 GOP tax act increased the federal deficit by $1.5 trillion. Most of the deficit reduction from the bill, however, will not occur for a few years, because the prescription drug provisions largely do not take effect until after 2026.

WHAT’S MISSING?

• Climate: Democrats had already abandoned a pivotal program last year that would have punished electric utilities that didn’t deploy more clean energy: the Clean Electricity Performance Program, which would have accounted for nearly 42% of the original bill’s emissions cuts, according to a chart released by Schumer’s office last year. But it fell out early amid opposition from Manchin, who said it would accelerate the country’s energy transition too quickly and leave it more dependent on foreign governments.

• Taxes: Most of Democrats’ earlier proposed tax reforms were dumped. Biden initially proposed more than $3 trillion in new tax hikes on the rich and corporations, and even those proposals were smaller versions of the multi-trillion-dollar “wealth tax” plans pushed by Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., during the 2020 presidential campaign. Higher taxes on wealthy investors and heirs, also proposed by Biden, are out as well.

The legislation also excludes relief from a cap on how much state and local taxes Americans can deduct off their federal taxes, which has been a top priority for some Democrats in high-tax states. Sen. Robert Menendez, D-N.J., told Axios on Wednesday that the matter “should be addressed” in a final bill.

To secure Sinema’s support for the bill, Democrats dropped what tax experts have characterized as a loophole primarily benefiting the private-equity industry. That provision would have raised roughly $13 billion.

• Health Care: Democrats will have to come to terms with the failure of their ambitions to expand health care to two other groups – millions of poor Americans in Republican-controlled states and senior citizens.

President Barack Obama’s Affordable Care Act required states to expand Medicaid to those earning up to 133% of the federal poverty level. But the Supreme Court made such a move optional, and many GOP-run states refused. Advocates had hoped to ensure the plan extended Medicaid to cover these groups, which would have expanded coverage to roughly 2.2 million people, many of whom live in the South. It was a huge priority for several vulnerable Democrats, such as Sen. Raphael G. Warnock (Ga.).

Last summer, more-liberal Democrats were also pushing for a major expansion of Medicare – allowing the program to cover vision, dental and hearing services. But that’s been out of talks since the fall.

The deal also cut some of Biden’s priorities, such as infusing hundreds of billions into home care for the elderly and those with disabilities.

And it doesn’t include provisions that could help provide health insurance for new mothers who earn low incomes, as well as some of the nation’s most vulnerable children. Earlier versions would have permanently funded coverage for low-income kids and expanded Medicaid to provide benefits for a year after giving birth in every state.

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