Senate Democrats are celebrating the passage of the Inflation Reduction Act, a legislative win for the Biden administration made possible by a Sunday vote of 51 to 50 along party lines. Vice President Kamala Harris acted as the tie-breaking vote.
But does the sweeping economic bill actually reduce inflation, like its name suggests? Some economic analyses say Americans will see little to no impact on inflation anytime soon.
A study out of University of Pennsylvania’s Wharton School said, “The Act would very slightly increase inflation until 2024 and decrease inflation thereafter…indicating low confidence the legislation will have any impact on inflation.”
In a letter to Sen. Lindsey Graham, R-South Carolina, the Congressional Budget Office said the bill would have a “negligible effect on inflation,” ranging between 0.1% lower to 0.1% higher in 2023.
“These are the same people that told you the American Rescue Plan would rescue you. This is a horrible idea, it doesn’t reduce inflation,” Graham said on Fox News.
Even some Democrats note it will not have an immediate impact.
“It may take a year or more” for the bill to help reduce inflation, Sen. Chris Coons, D-Delaware, said on ABC. “While we may not see huge impacts on inflation in the first or second year, Treasury secretaries who’ve served in both Democratic and Republican administrations support this bill, and the AARP, who I trust as the voice of seniors in America, says this will make a big impact on prescription drug prices.”
The Inflation Reduction Act misnomer has been subtly ditched in newspaper headlines around the country, as editors opt to call it a healthcare, tax and climate or energy bill instead.
The sweeping bill would allow Medicare to negotiate pharmaceutical prices, lowering the cost of health care. It would raise taxes on large corporations, which estimates say would lower the federal deficit by potentially hundreds of billions of dollars. And the bill’s credits and rebates could promote clean energy practices in the U.S.
Annual inflation, meanwhile, reached 9.1% in June, with July’s consumer prices report coming Wednesday, Aug. 10.