Inflation Reduction Act: What You Should Know

Lawmakers in Washington passed the Biden administration's historic Inflation Reduction Act after months of gridlock. Source: "Washington DC - Capitol Hill: United States Capitol" by wallyg is licensed under CC BY-NC-ND 2.0.

This past year Inflation rose to a forty-year high of 9.1%, according to the Bureau of Labor Statistics. In response to this crisis, the Biden administration along with congressional Democrats passed the Inflation Reduction Act of 2022, or IRA for short, on August 16.

This sweeping legislation included: a 15% corporate minimum tax, a cap on insulin and out-of-pocket drug costs, climate investment to lower carbon emissions by 40% within the next decade, energy initiatives that will lower costs for consumers, investment in new manufacturing jobs, as well as allowing Medicare to negotiate prescription drug prices among various other policy initiatives designed to combat inflation. 

The bill was passed with a vote of 220-207 in the House and 51-50 in the Senate with Vice President Kamala Harris breaking the tie. Not a single Republican joined Democrats in passing the bill. Immediately following the passage of the bill in the House, House Minority Leader Kevin McCarthy (R-Ca.) gave a 50-minute speech in which he claimed that the IRA was the “largest tone deaf bill I’ve seen in this chamber in 232 years.”

Republicans in the House and Senate claim that the spending initiatives within the bill with regard to healthcare and climate change will produce counterintuitive results in regards to driving down inflation. Sen. Ted Cruz (R-Tx.) released a statement critiquing the bill, stating “the Schumer-Manchin bill will drive up inflation and prices, hammer small businesses and American manufacturing, increase the price of gas, and sic the IRS on Americans, all while raising taxes on Americans in nearly every tax bracket including those who make less than $400,000 a year.”

Despite these claims, the Tax Policy Center’s analysis of the IRA found that the provisions within the bill would not increase taxes on households making $400,000 or less and in fact, may even lower the tax burden for said households. 

While Democrats unanimously joined together in both the House and the Senate to pass the IRA, the left flank of the party has levied serious criticisms against the bill. Sen. Bernie Sanders (I-Vt.) ultimately decided to support the bill despite claiming it only took “baby steps” forward. The prominent environmental action organization Greenpeace acknowledged the shortfalls of the bill, noting that “the IRA continues to sacrifice frontline communities in the name of fossil fuel industry expansion.” 

These concerns stem from the oil and gas mandate within the bill, which requires that for every new green energy project on public lands the government must first offer millions of acres of land for oil and gas leases. Brett Hartl, the government affairs director at the Center for Biological Diversity called this provision within the bill a “climate suicide pact”.  

Despite the perceived shortcomings of this bill, however, most Democrats and climate activists alike praise the funding the bill provides for renewable energy and climate investment. Congresswoman Cori Bush (D-Mo.) of the Progressive Caucus released a statement that reflected the general sentiment surrounding the IRA among the left: “While the final version of this bill does not contain everything we pushed for in a reconciliation package, the climate and health care investments within this legislation will bring us closer to a more livable and equitable future for all.”

While the effectiveness of the climate portion of this bill remains an intense debate, voters should see tangible benefits in regards to lowering healthcare and energy costs in the very near future.