The $430 billion Inflation Reduction Act of 2022, which aims to combat climate change, cut medicine costs, and increase some corporation taxes, was approved by the U.S. House of Representatives on Friday.
On August 7, the Senate approved the budget reconciliation measure on a party-line vote of 51 to 50. The law now travels to President Joe Biden’s desk for his approval after passing the lower house by a party-line vote of 220 to 207.
Prior to the midterm elections, Democrats were anxious to advance their domestic policy goals, while Republicans vehemently opposed the proposal, claiming that tax hikes would burden American businesses and employees and harm the economy.
Inflation Reduction Act Does Not Seem Promising
House Minority Leader Kevin McCarthy criticized the Biden administration’s actions for the worst inflation in four decades, saying “You can not tax and spend your way out of an inflation issue.”
The Inflation Reduction Act includes provisions to lower the cost of prescription drugs, a roughly $400 billion investment in the fight against climate change, and a 15 percent minimum tax on the majority of corporations with annual revenues over $1 billion, which Democrats estimate will generate more than $300 billion in additional revenue.
The Inflation Reduction Act is less expansive than the $3.5 trillion “Build Back Better” plan that Biden and many Democrats had originally envisioned. Akbas emphasized that the measure takes three major steps to combat inflation. Its primary goal is to lower the Federal deficit.
In order to close the supply-demand imbalance and curb rising costs, it will also encourage the manufacture and production of commodities and renewable energy. Cost caps for prescription drugs were also included in the rules. However, the expert emphasized that the law does not instantly address the key inflationary causes—food and gasoline prices—and a sizable sum is anticipated to go toward balancing the budget.
