In a signing ceremony at the White House Tuesday, Biden asserted the bill will be one of the “most significant laws in our history” and claimed that the bill was a win for “democracy,” though it was not supported by any Republicans in either the House or Senate. To applause, Biden also said that people who make less than $400,000 per year will “not pay a penny more” in taxes.
He was joined by House Majority Whip Jim Clyburn (D-S.C.) and Senate Majority Leader Chuck Schumer (D-N.Y.). “It shows how dedicated and persistent our caucus is. I want to give all 50 of my colleagues … huge credit for getting this bill over the finish line,” Schumer said of Democrats in the Senate.
The bill will direct spending, tax credits, and loans to bolster technology such as solar panels as well as equipment to reduce pollution at coal- and gas-powered power plants.
Another $64 billion would help 13 million people pay premiums over the next three years for privately bought health insurance under the Affordable Care Act, known as Obamacare.
Medicare would also gain the power to negotiate costs for pharmaceuticals, initially in 2026 for only 10 drugs. Medicare beneficiaries’ out-of-pocket prescription costs would be limited to $2,000 annually starting in 2025, and beginning next year would pay no more than $35 monthly for insulin, the diabetes drug.
Neither the White House nor top Democrats have said when the Inflation Reduction Act will begin to cut inflation.
The nonpartisan Congressional Budget Office concluded this month that the changes would have a “negligible” impact on inflation this year and next. Meanwhile, the University of Pennsylvania’s Penn Wharton Budget Model concluded that, over the next decade, “the impact on inflation is statistically indistinguishable from zero.”
Republicans have sounded the alarm over the bill calling for hiring 87,000 new Internal Revenue Service (IRS) employees, who critics fear may target ordinary Americans, particularly conservatives, with audits.
“Joe Biden is building an army of IRS agents to harass and bully the middle class. It’s something that should concern every American taxpayer,” Rep. Tom Emmer (R-Minn.), who is the chairman of the National Republican Congressional Committee, told Fox News last week. “The IRS targeted conservatives during the Obama administration, so it’s fair to wonder whether Joe Biden will use his new IRS army to attack conservatives.”
During a debate last week on the House floor, Democrats described the reportedly $740 billion bill as a needed respite for soaring inflation that would lower costs for American families.
“For too long, too many people in this country have felt like the work that happens in Washington isn’t meant to help them,” House Rules Committee Chairman Jim McGovern (D-Mass.) said last week. “And for a long time, they’ve been right.”
Republicans said the bill would only worsen inflation. At the same time, they accused Democrats of rushing the bill through Congress with virtually no Republican support. The bill passed in the Senate in a purely party-line vote, with Vice President Kamala Harris breaking the 50-50 tie for Democrats.
“This is the second time we’ve seen this legislative vehicle. The Democrats tried to push through partisan budget reconciliation—what does that mean? That means there is zero input from the Republican side of the aisle. And why is that important? You have a House and a Senate that are almost evenly divided,” Rep. Michael Burgess (R-Texas) said on the floor.
Meanwhile, a recent poll released by YouGov several days ago showed that only 12 percent of Americans believe the bill would actually reduce inflation. Thirty-six percent said it would increase inflation, 23 percent said it won’t change inflation, and 29 percent weren’t sure, according to the survey.
The Tax Foundation forecast a negative 0.2 percent long-run GDP and the loss of 29,000 full-time equivalent jobs because of the bill. Meanwhile, Moody’s Analytics forecast that by the end of 2031, or nearly 10 years from now, the consumer price inflation index will be 33 basis points lower and real GDP will be 0.2 percent higher.
JPMorgan chief U.S. economist Mike Feroli told Yahoo Finance that he believes the bill won’t impact inflation or GDP either way.
“There are some potential benefits to the supply side of the economy,” Feroli told Yahoo Finance, referring to the bill. “That said, in the longer term in theory at least, inflation should be under the control of the Fed. Over the horizon, where these things are visible in the next year or two, we don’t see big effects on either growth or inflation for that matter.”
After the bill passed in the House, numerous corporate news outlets and Democrat-aligned Twitter accounts argued that it represents a comeback of sorts for Biden, who has been in COVID-19 quarantine or on vacation for most of the past month, following recent polls showing his approval rating has cratered.
Making note of those reports, former House Speaker Newt Gingrich told the Washington Examiner that Biden will not be able to mount a comeback the way former President Bill Clinton did in the mid-1990s.
Biden “is not in the same league as Clinton,” Gingrich said this week. “Clinton was younger, more energetic, and, frankly, smarter,” he added.
The Associated Press contributed to this report.