The Inflation Reduction Act of 2022 (IRA) HR 5376 was signed into law by President Joe Biden on August 16, 2022, after a tortuous route through the legislative process.
HR 5376 grew out of the Build Back Better Act (BBB) which passed the House on September 27, 2021, but failed to pass in the Senate. The provisions of BBB did, however, become the vehicle for helping move President Biden’s legislative initiatives forward.
Moving ahead to August 6, 2022, and after considerable debate, the Senate Majority Leader Chuck Schumer proposed an amendment to the previous bill with text of the Inflation Reduction Act of 2022. On August 7 the Senate passed the bill (as amended) on a 57-50 vote, and on August 12 the amended bill was passed by the House on a 220-207 vote. As noted earlier, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law and it became Public Law Number 117-169. For a more detailed view of actions leading up to the Presidential signing of HR 5376 into law, see All Actions H.R. 5376 – 117th Congress (2021-2022).
AN OVERVIEW OF THE INFLATION REDUCTION ACT
The Inflation Reduction Act of 2022 is a slimmed down version of the Build Back Better (BBB) bill, which was once hailed as the most transformative safety net package in American history. The new Bill, now Public Law 117-169, stands to be the single largest investment in climate and energy to date. According to the highly respected Penn Wharton Budget Model, IRA contains the following policy changes: extension of expanded Affordable Care Act subsidies; climate and energy provisions; minimum tax on corporations’ book income; tax on share repurchases; extension of excess non corporate losses limitation; prescription drug reforms—including allowing Medicare to negotiate the price of certain prescription drugs; and the appropriation of approximately $80 billion over the next decade for IRS enforcement activities.
As for the numbers, according to a Summary of IRA issued by Senate democrats on August 11, 2022, [this] legislation is expected to raise $737 billion, require total investments of $437 billion and result in a deficit reduction of $300 billion. On August 15, 2002, the White House issued a document containing numbers showing how the Inflation Reduction Act impacts Americans. These numbers are grouped into the categories: Health Care, Clean Energy, Taxes. and Reducing the Deficit.
Those who need to consult a more detailed but manageable review of the Inflation Reduction Act of 2022, a good source is “ Inflation Reduction Act of 2022—Everything you need to know at a glance”, published August 10, 2022, on the Denton’s law firm website.
WHAT ABOUT INFLATION?
For those interested in reading about the impact of IRA as related to prices, we suggest: What the Inflation Reduction Act Does and Doesn’t Do About Rising Prices. By Julia Kim, published by NPR on its website.
Although this legislation is known as the Inflation Reduction Act, the issue of whether IRA will actually reduce inflation is one of considerable contention. Proponents say it will have at least a modest effect in coming years; many opponents say it will have no effect at all. We offer two examples to illustrate this divide.
- In an August 1, 2022, blog post published by the Committee for a Responsible Federal Budget, “IRA Will Help Fed Fight Inflation”, the writer states that “ultimately we expect the IRA to very modestly reduce inflationary pressures in the near term while lowering the risk of persistent inflation over time and thus make it easier for the Federal Reserve to reduce inflation without causing a recession”.
- In their analysis of the impact of the Inflation Reduction Act on inflation, The Tax Foundation concludes that “inflation is driven by expectations regarding the likelihood that the federal government will be able to repay its debt over the long term, which is a function of the expected performance of the economy, tax collections, and spending. By reducing long run economic growth, the bill [now Public Law 117-169] worsens inflation by constraining the productive capacity of the economy.”
Given the broad scope of the Inflation Reduction Act of 2022, the competing interests it needs to serve and the tortuous route through the legislative process mentioned earlier, it is not surprising that there has been an outpouring of reaction to the Act in the form of commentaries both in favor of and in opposition to its provisions.
In the interests of fairness and brevity, we have chosen four commentaries: two in favor of and two in opposition to the IRA as listed below:
Business Support Statement for the Inflation Reduction Act of 2022.
Medicare Rights Group Urges Swift Passage of the Inflation Reduction Act of 2022.
Alliance for Aging Research Releases Statement on the Inflation Reduction Act of 2022.