The estimated 740 billion dollar package heads next to the House, where lawmakers are poised to deliver on President Joe Biden’s priorities in a stunning turnaround for what had appeared to be doomed proposals.
Cheers broke out as Senate Democrats held united, 51-50, with Vice President Kamala Harris casting the tie-breaking vote after an all-night session.
“Today, Senate Democrats sided with American families over special interests,” Mr Biden said in a statement from Rehoboth Beach, Delaware. “I ran for President promising to make government work for working families again, and that is what this Bill does — period.”
The House seemed likely to provide final congressional approval when it returns briefly from summer recess on Friday.
“It’s been a long, tough and winding road, but at last, at last we have arrived,” said Senate Majority Leader Chuck Schumer, ahead of final votes.
“The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century.”
Senators engaged in a round-the-clock marathon of voting that began Saturday and stretched late into Sunday afternoon.
Democrats swatted down three dozen Republican amendments designed to torpedo the legislation.
Confronting unanimous Republican opposition, Democratic unity in the 50-50 chamber held, keeping the party on track for a morale-boosting victory three months from elections when congressional control is at stake.
The Bill ran into trouble at midday over objections to the new 15% corporate minimum tax that private equity firms and other industries disliked, forcing last-minute changes.
Despite the momentary setback, the Inflation Reduction Act gives Democrats a campaign-season showcase for action on coveted goals.
It includes the largest-ever federal effort on climate change — close to 400 billion dollars — caps out-of-pocket drug costs for seniors on Medicare to 2,000 dollars a year and extends expiring subsidies that help 13 million people afford health insurance.
By raising corporate taxes, the whole package is paid for, with some 300 billion dollars extra revenue for deficit reduction.
Barely more than one-10th the size of Mr Biden’s initial 10-year Build Back Better initiative, the new package abandons earlier proposals for universal pre-school, paid family leave and expanded child care aid.
That plan collapsed after conservative Democratic Senator Joe Manchin opposed it, saying it was too costly and would fuel inflation.
Non-partisan analysts have said the Inflation Reduction Act would have a minor effect on surging consumer prices.
Republicans said the new measure would undermine an economy that policymakers are struggling to keep from plummeting into recession – with some stating that such a policy would impact the economy and job creation.
They said the Bill’s business taxes would hurt job creation and force prices skyward, making it harder for people to cope with the nation’s worst inflation since the 1980s.
“Democrats have already robbed American families once through inflation, and now their solution is to rob American families a second time,” Senate Minority Leader Mitch McConnell said.