The signing of the Inflation Reduction Act will set off a flurry of action from the Federal administration to sell the bill to the public, but it will not have any direct and immediate effect to reduce inflation. It will go a long way to reducing the costs of prescription drugs, cutting back on the deficit, and helping fight climate change. Meanwhile, some economists say that Biden could now feel confident to go for another stimulus check buoyed by the success of the bill.
The bill will improve American lives immediately in some key areas that include energy-efficient home improvements, key healthcare provisions, and tax credits for electric vehicles. They will all serve as a key to reducing home expenses. The President promised recently that a lot was going to happen when asked about what to expect following the signing of the bill.
President Biden’s top economic adviser, Brian Deese, said that this significant legislation will immediately impact the lives of Americans and have an effect on the long-term economy. He said that the future course would be to do what fiscal policy can achieve in the present economic situation.
But policymakers concur that the majority of the provisions of the bill will be slow-acting and take time to kick in. Here is some way that the more immediate provisions of the bill could be felt before the midterms in November.
The first benefit to kick the right way will be tax credits revolving around energy and the homes of Americans. It will lead to an immediate lower cost of fuel in homes. The new 30% tax credit for the installation of heat pumps, energy-efficient windows, and newer models of the appliance will benefit households a lot. The second tax credit will encourage people to install roof solar panels. Much of the energy and energy-efficiency provisions are applicable right away.
The bill includes rebates of up to $14,000 that people can use when buying heat pumps and similar energy-efficient appliances for their homes. It will significantly reduce energy bills. All the tax credits and rebates can be regarded as another stimulus check by themselves.
The 30% tax credit for installing solar panels on roofs will make the prices more affordable. It will lead to incredible savings for Americans on energy bills over the life of the installation.
Another aspect that could lead to savings for Americans under the bill is the expanded tax credits worth up to $7,500 for new electric vehicles and up to $4,000 for used electric vehicles that are immediately effective.
Changes In Health Care That Could Benefit A Much As A Stimulus Check
Some health care provisions of the bill will also be effective immediately and will benefit Americans economically. Insulin payments will be limited to $35 a month starting next year. all pocket drug costs will be capped at $4,000 annually in 2024, with it being further lowered to $2,000 in 2025.
Around 1.4 million Americans are expected to directly benefit each year from these changes in health care leading to substantial savings in expenses even without stimulus checks. They stand out as just one specific example of the quick impact of the Inflation Reduction Bill.
The bill also managed to avert a major change that would have been effective if no further action had been taken. The Affordable Care Act (ACA) of 2010 included the provision of subsidies on health insurance that would have ended this fall. It has now been extended for 3 years which will entail a cost of around $64 billion.
Around 13 million Americans will continue to benefit from the lower health care premium thanks to the extension of the ACA. The letters that will go out in October will see a lower premium thanks to this part of the legislation. But a major provision of the bill that will allow Medicare to negotiate for the prices of prescription prices is not expected to happen until 2026. Despite concerns that persistent inflation could lead to a recession, States have fallen back on their budget surplus to help residents with inflation relief stimulus checks.
States Fall Back On Financial Reserves To Send Stimulus Checks Thanks To All-Time High Budget Surplus
After the early decline of the COVID-19 pandemic, and also thanks to the infusion of billions under ARPA funds, the states have collectively amassed their largest ever fiscal cushion on record by the end of 2021. The tax revenues were way higher than expected and drove the total held in savings and leftover budget dollars to new highs.
Despite the devastating fallout of the pandemic on the economy that led to a recession, the total emergency funds of the 50 states saw only a temporary drop in the 2020 fiscal year. it was followed by a historic increase at the end of the first full budget year of the pandemic.
In the 2021 fiscal alone, states saw a $37.7 billion rise in the collective rainy day fund. It was roughly 50% more than a year earlier. It drove the total held by all states to $114.6 billion, a record high. And with a widespread surplus in the budget, states have reported the largest ever annual increase in ending balance in the past 21 years.
Such state reserves and balances have a vital use in managing budgetary uncertainty including in natural disasters such as the pandemic, and subsequently emergency stimulus checks. The financial cushion enjoyed by the states has softened the need for an increase in tax revenues or spending cuts when states need to balance their budgets and allowed them more room for stimulus checks.
And it has come in handy for states to declare inflation relief stimulus checks even as federal support waned at the end of 2021, largely due to Republican opposition to any further stimulus checks for low and moderate-income citizens.
But unfortunately, they continue to press for more concessions as they continue to stay the party of the rich. Their policy of abandoning the poor and the middle class to pursue their relentless agenda of tax cuts for the wealthiest one percent has brought them billions in funds over the years and helped them propagate their misguided propaganda.
The modern version of the GOP has undergone a grotesque and radical transformation, reorganizing itself around an outrageous proposition that the wealthy should grow wealthier while they in turn continue to pour billions into the Republican coffers. They are a little worried about the consequences for the rest of us.