DemDaily: Rundown on the Inflation Reduction Act

August 16, 2022

Today, at 3:30pm, President Joe Biden signed the Inflation Reduction Act of 2022, a sweeping $750 billion health care, climate and tax bill -- delivering a triumphant victory for his administration and his party going into the final months of the midterm elections.

The landmark legislation, one of the most consequential pieces of economic policy in recent US history, aims to lower prescription drug costs, address global warming, raise taxes on wealthy corporations and reduce the federal deficit.

"With this law, the American people won and the special interests lost. We are in a season of substance,” said President Biden today upon signing the act. “This administration began amid a dark time in America,” said Biden, citing the coronavirus pandemic, joblessness, and threats to democracy and the rule of law. “And yet we’ve not wavered, we’ve not flinched and we’ve not given in. Instead, we’re delivering results for the American people. We didn’t tear down. We built up. We didn’t look back. We look forward. And today, today offers further proof that the soul of America is vibrant, the future of America is bright, and the promise of America is real.”

Passed by the US House and Senate along party lines, the bill was delayed by months of internal negotiations among Democrats, ultimately resting, once again, on the vote of moderate Democratic Senator Joe Manchin (WVA). To the shock of even close colleagues, Manchin and Senate Majority Leader Chuck Schumer announced a deal July 27.

The 725-page bill resurrects major components of Biden's earlier, more ambitious Build Back Better Act, although at a significantly reduced price tag.

The Inflation Reduction Act

Health Care
Cutting Prescription Drug Cost
* Americans pay two to three times what citizens of other countries pay for prescription drugs.
* 5-7 million Medicare beneficiaries could 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 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.

Defeating Special Interests
* $187 million: The amount the Pharmaceutical industry has spent on lobbying in 2022.
* 1,600: number of lobbyists the pharmaceutical companies had in 2021 -- three times the number of Members of Congress.
* 33 years: the amount of time Congressional Democrats have been trying to lower prescription drug costs by allowing Medicare to negotiate drug prices.
* 19 years: number of years Medicare has been blocked from negotiating prescription drug costs

The bill represents the largest climate investment in US history, authorizing $369 billion in energy and climate change programs over the next decade, with the aim of reducing carbon emissions by nearly 40% by 2030.

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 per year.
* 7.5 million more families will be able to 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 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, and 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 two million acres of national forests.
* Creating millions of good-paying jobs making clean energy in America.

Reducing Harmful Pollution
* Reduce greenhouse gas emissions by about one gigaton in 2030, or a billion metric tons -- 10 times more climate impact than any other single piece of legislation ever enacted.
* Deploy clean energy and reduce particle pollution from fossil fuels to avoid up to 3,900 premature deaths and up to 100,000 asthma attacks annually by 2030.

The legislation aims to bring in more than $300 billion in revenue, primarily through a 15% minimum tax for corporations making $1 billion or more in income. Biden reiterated his campaign promise that no one making under $400,000 a year would pay “a penny more” in taxes.

Making the Tax Code Fairer
* $0: how much some of the largest, most profitable corporations pay in federal income tax.

* 55: the number of America’s largest, wealthiest corporations that got away without paying a cent in federal income taxes in 2020.
* $160 billion: how much the top one percent of earners is estimated to evade each year in taxes.
* 15%: the minimum tax on corporate profits the Inflation Reduction Act imposes on the largest, most profitable corporations.
* $124 billion: savings over 10 years the Inflation Reduction Act will generate from collecting taxes already owed by wealthy people and large corporations, according to the Congressional Budget Office.
* And no family making less than $400,000 will see their taxes go up a penny.

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 seven Nobel Laureates, two former Treasury Secretaries, two former Fed Vice Chairs and two former CEA Chairs -- have said reducing the deficit will help fight inflation and support strong, stable economic growth.

The White House announced that in the coming weeks Biden will meet with the Cabinet regarding implementation of IRA, which will be celebrated at a September 6 White House event. The President and Cabinet members will also embark on a “Building a Better America" tour to promote the benefits of the law to the American people.

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Kimberly Scott

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Sources: White House, Washington Post, Vox, Time, Forbes

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