The US House of Representatives passes the Inflation Reduction Act. The bill now awaits President Biden’s signature. There are many electric vehicle and renewable energy elements. This is the largest bill to address climate change the US has ever passed.
According to the Senate Democrats page, “The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. The bill will also finally allow Medicare to negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025.”
Here are some key highlights from the summary.
Taxes
- Closes tax loopholes used by wealthy: a 15% corporate minimum tax, a 1% fee on stock buybacks and enhanced IRS enforcement
- Protects families and small business making $400,000 or less
- Not mentioned is the bill authorizes a modernization of the IRS and increases customer service support. If you are waiting on a tax refund, this is welcome news.
- It DOES fund 87,000 employees over the next 10 years, half of them to replace retiring employees. Only a small proportion will fund audit agents. Myth: the bill funding 87,000 enforcement agents only.
Healthcare
- Expands Medicare benefits: free vaccines (2023), $35/month insulin (2023) and caps out-of-pocket drug costs to an estimated $4,000 or less in 2024 and settling at $2,000 in 2025
- Lowers health care costs: saves the average enrollee $800/year in the ACA marketplace, allows Medicare to negotiate 100 drugs over the next decade, and requires drug companies to rebate back price increases higher than inflation
- Not mentioned, this is the first time Medicare can directly negotiate with pharmaceutical companies. You can imagine the pharma companies are fiercely against such provisions, as it will reduce profits and executive bonuses.
- The cap on insulin and overall drug costs will be a huge lifeline to reduce costs for seniors.
Clean economy and renewable energy
- Lowers energy bills: cuts energy bills by $500 to $1,000 per year
- Makes historic climate investment: reduces carbon emissions by roughly 40% by 2030
- Creates manufacturing jobs: more than $60 billion invested will create millions of new domestic clean manufacturing jobs
- Invests in disadvantaged communities: cleaning up pollution and taking steps to reducing environmental injustice with $60 billion for environmental justice
- We’ll be covering the clean economy and renewable energy portion in more detail over the coming days.
- Not mentioned, the US can rightfully claim to be a world leader at scale on reducing carbon dioxide emissions after this bill.
Along with the signing of the CHIPS Act, which invests in domestic semiconductor manufacturing and localizes supply chains, the US is investing in industrial policy after many decades.
Industrial policy is investing in certain areas, contrary to what the free market dictates. Free markets work best when both sides have a similar set of values. Free markets are not good at valuing externalities. This is a strong modification of the last 40 years of globalization and saying profits don’t matter more than anything else.
It was historic legislative week for the nation.
Sincerely yours,
smilingdad
smilingdad 