One year later, the status of three key policy proposals in the Inflation Reduction Act.
One Year Later: Assessing the Impact of the Inflation Reduction Act
It’s been one year since the Biden administration passed the Inflation Reduction Act (IRA), a flagship policy aimed at tackling climate change, lowering prescription drug prices, and improving taxpayer compliance. This groundbreaking legislation includes hundreds of billions of dollars in funding to support these initiatives.
President Biden Takes to the Southwest to Promote IRA Policy Changes
This week, President Joe Biden embarked on a tour of the Southwest to promote the IRA policy changes. His goal is to confront climate change head-on and create new job opportunities for Americans.
INFLATION TICKED UP TO 3.2% IN JULY IN SETBACK FOR BIDEN AND FED
However, the IRA has faced significant pushback from companies and industries directly affected by its provisions. Notably, every single House and Senate Republican voted against the IRA, highlighting the contentious nature of this legislation.
“One year ago, the so-called Inflation Reduction Act passed a Democrat-run House and gave hundreds of billions in taxpayer subsidies to climate hoax special interests,” said Rep. Bob Good (R-VA) in an interview with the Washington Examiner. “Meanwhile, family budgets are still strained, small businesses are still hurting, and the Federal Government remains weaponized against the American people.”
Climate Initiatives: A Major Focus of the IRA
The IRA represents the largest climate measure in U.S. history, with a strong emphasis on clean energy and reducing greenhouse gas emissions. It includes significant clean energy tax credits to boost the transition to electric vehicles (EVs) and expand renewable energy production.
Thanks to the IRA, there has been a surge in investment in battery and EV manufacturing across the country. In fact, EV sales in the first quarter of 2023 increased by 25% compared to the same period last year, according to the International Energy Agency. This growth can be attributed to price cuts by automakers and the IRA tax credits, which can be worth up to $7,500 for consumers purchasing vehicles between 2023 and 2032.
The IRA has also allocated $6 billion to advance loans for the creation of clean vehicles and their components. Additionally, funding has been provided to tribal, state, and local governments to deploy clean heavy-duty vehicles, particularly in areas with poor air quality.
By placing emission mandates on the gas and oil industry, the IRA aims to reduce U.S. net greenhouse gas emissions by 32%-42% by 2030, according to the Rhodium Group. The Environmental Protection Agency (EPA) has received over $41 billion from the IRA, which has been used to open grant competitions and support various climate initiatives.
Lowering Prescription Drug Costs: A Key Provision of the IRA
The IRA includes multiple provisions to lower prescription drug costs for Medicare users and decrease government spending on drugs. One such provision is the Medicare Prescription Drug Inflation Rebate Program, which requires manufacturers to pay a rebate to Medicare if the price of a drug exceeds the rate of inflation.
Another provision, the Drug Price Negotiation Program, allows Medicare to directly negotiate with drug companies to lower the prices of expensive brand-name drugs covered under Medicare Part B and Part D. The Congressional Budget Office estimates that these drug negotiation measures will result in Medicare savings of $98.5 billion over 10 years.
However, the pharmaceutical industry, including the influential lobbying group Pharmaceutical Research and Manufacturers of America, has filed lawsuits to block these provisions. They argue that the measures will have little impact on healthcare costs and may discourage the development of new drugs.
Tax Reforms: Holding Profitable Companies Accountable
The IRA seeks to hold highly profitable corporations accountable by implementing a book minimum tax. This tax requires companies with at least $1 billion in net income or profits to pay a minimum tax rate of 15% based on their reported earnings. The effects of this tax are yet to be seen, as it will apply to tax years starting after December 31, 2022.
Major companies such as Amazon, Tesla, Ford, and General Motors are expected to face significant tax increases. In 2021, 19 Fortune 100 companies paid low or no taxes on their earnings, according to the Center for American Progress. Business organizations, including the U.S. Chamber of Commerce and the Business Roundtable, have strongly opposed the IRA, arguing that it will discourage investment and hinder economic growth.
Despite the pushback, the Biden administration remains committed to the transformative potential of the IRA. As the second year of implementation begins, the Environmental Protection Agency and other agencies will continue to award funds and provide support to communities, recognizing the urgency for climate action and environmental justice.
While the IRA has faced criticism and challenges, it represents a bold step towards addressing pressing issues such as climate change, prescription drug costs, and corporate accountability. As the effects of this legislation continue to unfold, its impact on American society and the economy will be closely monitored.
Oh — and Bidenflation is costing households thousands of dollars,” Good said. “Democrat policies continue to make everything worse and hurt average Americans.”
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