Democrats Deliver: The Inflation Reduction Act 2022 (IRA) - H.R. 5376
On August 16, 2022, President Joe Biden signed the Inflation Reduction Act into law. It will make a big difference in people’s lives, cutting health and energy costs and creating high-quality jobs. The Act will lower costs for families, combat the climate crisis, reduce the deficit, and finally ask the largest corporations to pay their fair share.
The bill will raise $739 billion in new revenue, according to the Congressional Budget Office (CBO) and the Joint Committee on Taxation. $313 billion will be raised through a 15% corporate minimum tax, $288 billion from lowering drug prices under Medicare, $124 billion from funding increased IRS enforcement of tax law, and $14 from closing the carried interest loophole that allows investment managers to pay lower tax rates.
The IRA focuses heavily on curbing inflation and will invest $300 billion into reducing the federal deficit to do so. As a result, the nation’s deficit is projected to fall by more than $1.5 trillion this year after falling by more than $350 billion last year. Will the IRA have an immediate effect on inflation? You won’t see a change today – and the Fed will likely continue to raise interest rates for another 4-6 months -- but those rates are expected to start falling in early 2023 as the IRA does start to work. Will the bill increase taxes? Modestly, and only on families and businesses making over $400,000 per year.
Senator Joe Manchin (D-W.VA), initially weary about spending due to rising inflation, said that this deal would fight inflation by reducing the federal deficit, adding “It is past time for America to begin paying down our $30 trillion national debt and get serious about the record inflation that is crushing the wages of American workers.”
This sweeping climate and health care package invests $369 billion in energy, climate, health, and justice over 10 years. Among other things, it’s a sweet defeat of a 30+ year campaign by special interests to thwart efforts to lower health care costs by finally allowing Medicare to negotiate drug costs. As a result of savings, Medicare will be able to cover dental, hearing, and vision care.
The IRA also provides billions in strategic investment to promote clean energy and climate justice – the strongest U.S. climate action ever. “It’s the most historic and significant investment toward tackling climate change that we’ve ever seen come out of Congress,” according to Alexandra Adams, senior director of the National Resources Defense Council’s Federal Affairs team.
This law moves us closer to President Biden’s pledge to cut climate pollution 50-52% by 2030. It’s a consequential investment to expand renewable energy, address air pollution, improve access to clean water supply, and reduce greenhouse gas emissions through greener transportation and infrastructure. Among other benefits, the rates of asthma are expected to plummet, welcome news for the 60+ million people who suffer from asthma, primarily in Black, Hispanic, and Indigenous communities. The bill also provides funding for coastal communities, coastal and marine habitats, weather forecasting, drought relief, forest restoration, wildfire prevention, the conservation stewardship program, the agricultural conservation easement program, climate change research, the Rural Energy for America Program, and more. This funding will have significant impacts in the Hudson Valley.
Who voted for this bill? Who voted against it? You won’t be surprised to learn that every republican in congress voted against this landmark legislation, every democrat voted for it.
In the Senate, Vice President Kamala Harris’ vote was needed to break a tie, resulting in a 51-50 split, sending the bill to President Biden’s desk.
Bottom line: If you want to continue to halt inflation, create new jobs, improve people’s health and the health of our planet, VOTE BLUE IN 2022.
Here’s a deeper dive into the specifics of the 2022 Inflation Reduction Act:
HEALTH CARE
Cutting Prescription Drug Cost
5-7 million Medicare beneficiaries are expected see their prescription drug costs go down because of the provision allowing Medicare to negotiate prescription drug costs.
50 million Americans with Medicare Part D will have the peace of mind knowing their costs at the pharmacy are capped at $2,000 per year, directly benefiting about 1.4 million beneficiaries each year.
3.3 million Medicare beneficiaries with diabetes will benefit from a guarantee that their insulin costs are capped at $35 for a month’s supply.
Lowering Health Care Costs
13 million Americans will continue to save an average of $800 per year on health insurance premiums
3 million more Americans will have health insurance than without the law.
The uninsured rate is at an all-time low of 8%, which the historic law will build on.
CLEAN ENERGY
Lowering Energy Costs
Families that take advantage of clean energy and electric vehicle tax credits will save more than $1,000 per year.
$14,000 in direct consumer rebates for families to buy heat pumps or other energy efficient home appliances, saving families at least $350 annually.
7.5 million more families will be able install solar on their roofs with a 30% tax credit, saving families $9,000 over the life of the system or at least $300 per year.
Up to $7,500 in tax credits for new electric vehicles and $4,000 for used electric vehicles, helping families save $950 per year.
Putting America on track to meet President Biden’s climate goals, which will save every family an average of $500-$1000 per year on their energy costs.
Building a Clean Energy Economy
Power homes, businesses, and communities with much more clean energy by 2030, including:
950 million solar panels
120,000 wind turbines
2,300 grid-scale battery plants
Advance cost-saving clean energy projects at rural electric cooperatives serving 42 million people.
Strengthen climate resilience and protect nearly 2 million acres of national forests.
A $60 billion investment to creating millions of good-paying jobs making clean energy in America.
A $60 billion investment in disadvantaged communities: cleaning up pollution and taking steps to reducing environmental injustice.
A billion-dollar investment to switch heavy-duty vehicles like school buses to clean energy.
TAXES
Making the Tax Code Fairer
Each year, the top 1% of earners evade paying $160 billion in taxes
15% is the new minimum tax on corporate profits the Inflation Reduction Act imposes on the largest, most profitable corporations.
There is a new 1% fee on stock buybacks.
There will be $124 billion in savings over 10 years generated from collecting taxes already owed by wealthy people and large corporations, according to the Congressional Budget Office. The CBO further predicts the IRA will reduce deficits by $305 billion over a decade.
No family or small business making less than $400,000 will see their taxes go up a penny.
The law also extends the Affordable Care Act health insurance premium tax credits for three additional years. These tax credits offset the cost of insurance premiums purchased through the ACA marketplace.
Reducing the Deficit
The Inflation Act will achieve hundreds of billions in deficit reduction.
The deficit is projected to fall by more than $1.5 trillion this year after falling by more than $350 billion last year.
126 leading economists – including 7 Nobel Laureates, 2 former Treasury Secretaries, 2 former Fed Vice Chairs and 2 former CEA Chairs – have said reducing the deficit will help fight inflation and support strong, stable economic growth.
#InflationReductionAct
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#VoteBlue2022
Sources:
https://www.crfb.org/blogs/whats-inflation-reduction-act
https://www.congress.gov/bill/117th-congress/house-bill/5376
https://www.senate.gov/legislative/LIS/roll_call_votes/vote1172/vote_117_2_00325.htm;
https://www.billsponsor.com/bills/192751/house-bill-5376-congress-117
https://www.nrdc.org/resources/inflation-reduction-act-big-step-toward-climate-safe-future