Research shows the Inflation Reduction Act won’t reduce inflation but will increase taxes
Senator Joe Manchin and Senate Majority Leader Chuck Schumer announced a climate, health care, and tax package last week. CBS News reports that the bill:
…calls for $369 billion for energy security and climate proposals, raises taxes on the nation’s largest corporations, allows Medicare to negotiate for the price of prescription drugs starting in 2023 and extends enhanced Affordable Care Act subsidies through 2025.
Yet, despite the fact that the bill tackles none of the causes of inflation, CBS News goes on:
“This is fighting inflation,” Manchin said Sunday on “Face the Nation.” “This is all about the absolute horrible position that people are in now because of the inflation costs, whether it be gasoline, whether it be food pricing, whether it be energy pricing, and it’s around energy, mostly that’s driving these high inflation. This is going to take care of that.”
To show how serious they were, they even named it the Inflation Reduction Act:
Sadly, this is just desperate messaging for what is simply another big spending proposal, not a reflection of what the bill will actually do. Politico reports:
Democrats’ latest reboot of Build Back Better, specifically marketed to fight inflation, won’t actually do so until after the 2024 presidential election.
That’s the takeaway from a fresh analysis today, delivered by the budget experts at The University of Pennsylvania’s business school.
…the new budget modeling predicts the package Democrats are trying to pass along party lines “would very slightly increase inflation until 2024 and decrease inflation thereafter.”
Define ‘slightly’: The inflation impact would be incredibly minor and “statistically indistinguishable from zero,” the report says. So the budget analysts have “low confidence” that the package will have any impact on prices at all.
To make matters worse, while the Inflation Reduction Act won’t reduce inflation, it will put your taxes up. The nonpartisan Joint Committee on Taxation estimates the bill will hike taxes for every income bracket, with more than half of the tax increases on people making less than $400,000 per year – the very people President Biden has repeatedly said he won’t raise taxes on. Indeed, the Inflation Reduction Act – which won’t reduce inflation, remember – will increase taxes by over $16.7 billion in 2023 for households with income under $200,000.
This bill demonstrates yet again the administration’s complete inability to understand what is actually causing inflation in the United States and do anything useful about it.