WASHINGTON -- US President Joe Biden on Tuesday signed into law the Inflation Reduction Act, a scaled-down version of the massive "Build Back Better" package he and many Democrats envisioned last year.

Touting it as a "historic bill," Biden said at the White House that it will lower costs for American families, combat the climate crisis, reduce the deficit, and finally make the largest corporations pay their fair share in taxes.

The bill includes a roughly 400-billion-US-dollar investment in fighting climate change, measures to make prescription drugs more affordable, and a 15-percent minimum tax on most corporations that make more than $1 billion per year. The legislation would generate nearly $300 billion of net revenue over a decade.

Democrats used a fast-track legislative process known as reconciliation, which allowed them to pass the measure without any support from Senate Republicans. Earlier this month, the evenly-divided Senate approved the bill by a vote of 51 to 50 along party lines.

On Friday, the bill cleared the House by a vote of 220 to 207, also along party lines.

Democrats had been eager to push through their domestic policy ambitions before the mid-term elections, but Republicans strongly opposed the bill, arguing that tax increases would impose burdens on US businesses and workers and hurt the economy.

"Democrats robbed Americans last year by spending our economy into record inflation. This year, their solution is to do it a second time," Senate Minority Leader Mitch McConnell said in a tweet.

"The partisan bill President Biden signed into law today means higher taxes, higher energy bills, and aggressive IRS audits," said McConnell, referring to the Internal Revenue Service, which administers and enforces US federal tax laws.

"You can't tax and spend your way out of an inflation crisis," House Minority Leader Kevin McCarthy said earlier, blaming the Biden administration's policies for the worst inflation in four decades.

The Tax Foundation, a nonprofit think tank, recently argued that by reducing long-run economic growth, this bill may actually worsen inflation by constraining the productive capacity of the economy.

Despite doubts over the effect on inflation, budget watchdog groups praised the bill.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, noted that lawmakers sent a message that "it's time to start working to get our budget back on a sustainable trajectory."

"This bill is proof that when something is worth doing, it's worth paying for, and reducing our nation's alarming national debt is just as important as other pressing issues we face," said MacGuineas.

The new bill is much smaller than the 3.5-trillion-dollar "Build Back Better" social spending bill Democrats initially attempted to advance last year.

In November 2021, the House passed a roughly 2-trillion-dollar spending package, but it didn't gain support from Senator Joe Manchin of West Virginia, a key centrist Democrat, who walked away from negotiations in December due to disagreements over the price tag.

Last month, a surprise announcement of an agreement between Manchin and Senate Majority Leader Chuck Schumer brought the bill back to life. A revised version of the bill then garnered support from another key Democrat, Senator Kyrsten Sinema, paving the way for its final approval.