Democrats’ $700 Billion Inflation Reduction Act Could Hurt US Consumers, Workers

Joseph LordAugust 10, 2022

On July 27, Sen. Joe Manchin (D-W.Va.) announced that he had reached a deal with Senate Majority Leader Chuck Schumer (D-N.Y.) to pledge his support for a $700 billion spending bill, which is supposed to bring in $725 billion in new revenue to the federal government and reduce the deficit by $292 billion annually.

But a look inside the text of the bill reveals a series of policies that will likely serve only to further increase consumer prices, suppress wages, expand the scope of federal audits, decrease the value of retirement portfolios, reduce medical innovation, and further escalate already high energy prices.

The bill, dubbed the Inflation Reduction Act, was the product of a year of harried negotiations, compromises, and disappointments for Democrats as they tried to pass the much larger $1.75 trillion Build Back Better (BBB) Act.

Ultimately, Manchin killed the BBB bill in December 2021 when he said he would unilaterally refuse to vote for it over continuing concerns about rising inflation.

Despite standing strong for months on his declaration that BBB was “dead,” the Inflation Reduction Act revived many of the Democrats’ key priorities from BBB: new taxes on corporations, expansion of the IRS, prescription drug pricing policies, and wide-reaching climate policies.

Manchin’s main demand in supporting any reconciliation bill—which under Senate rules is immune from the filibuster and thus can be passed along party lines—was that it reduce inflation and work toward getting the national debt under control.

Lower-Income People Will Still Pay More

A key claim for Democrats in both the BBB and the Inflation Reduction Act has been an emphasis that the bill will not raise taxes on households making less than $400,000 per year.

Technically, the Inflation Reduction Act’s tax code changes include no alterations to individual income taxes for earners at any income level. Rather, the