The New Climate Bill: Inflation Reduction Act
September 18, 2022
The Inflation Reduction Act (IRA), was passed just last month, and although the bill has become popular amongst voters for its clause on climate change, it acts upon many other pressing issues within the US. So, what is the Inflation Reduction Act and what does it mean in the long run?
Like most proposals, the IRA has a vast and turbulent history of negotiation and amendments. The bill got its start in Joe Biden’s Build Back Better Plan at the beginning of 2020. It consists of three parts: the American Rescue Plan (ARP), the American Jobs Plan (AJP), and the American Families Plan (AFP). Although the American Rescue Plan and aspects of the American Jobs Plan were introduced to the Legislature in March and November of 2021, valuable parts of the Build Back Better Plan were left untouched. Soon after, the Biden Administration combined unsuccessful parts of the AJP with the entirety of AFP and put them forward as the Build Back Better Act. Unfortunately, even with a reduced budget of $2.2 trillion instead of the desired $3.5 trillion the Build Back Better Act failed due to the opposition of Senator Joe Manchin who rejected the act due to its high price.
However, Senator Chuck Schumer then took it upon himself to negotiate with Manchin and developed the Inflation Reduction Act. Although the Act has a decreased budget of $737 billion, it includes resolutions for several of the most pressing issues in the country. It was introduced into legislation on August 16th, 2022.
The foundation of the Inflation Reduction Act is based on three main pillars: Healthcare, Clean Energy, and Taxes. The healthcare clause focuses mainly on cutting costs for prescription and health insurance. This aims to have free vaccines by 2023, lowering the cost of insulin to $35/month as well as forcing drug companies to curb prices to lower than inflation. If the plan comes to fruition, the White House says1 , up to three million Americans will be able to afford and obtain health insurance.
The Clean Energy Clause revolves around building the infrastructure for the development of clean and sustainable energy in the United States. The Act aims to build 950 million solar panels, 120 000 Wind Turbines, and 2300 grid-scale battery plants which should all contribute to creating homes with sustainable energy technology. In addition, the plan focuses on lowering the energy costs of non-sustainable households by $500 to $1000/year. The clause also has hopes of recovering our natural resources by devoting $60 billion of the budget to clearing pollution and preventing it by the reduction of greenhouse gasses by one gigaton in 2030.
The clause on taxes is where the Act got its name – it intends to make taxes fairer as well as lower the deficit reduction. It claims to close the loopholes utilized by the wealthy and therefore force them to pay more tax such as the 15% corporate minimum tax and 1% on stock buybacks. This would create a much more balanced ground for all taxpayers in the United States and generate an income of $124 billion in the next 10 years.
“By the Numbers: The Inflation Reduction Act.” The White House. The United States Government, August 15, 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/15/by-the-number s-the-inflation-reduction-act/.
“Inflation Reduction Act .” Senate Democratic Leadership. Chuck Schumer, August 11, 2022. https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_one_page_sum mary.pdf.
“Build Back Better Plan.” Wikipedia. Wikimedia Foundation, September 5, 2022. https://en.wikipedia.org/wiki/Build_Back_Better_Plan.