Inflation Reduction Act

Inflation Reduction Act of 2022
Great Seal of the United States
Long titleTo provide for reconciliation pursuant to title II of S. Con. Res. 14.
Acronyms (colloquial)IRA
Enacted bythe 117th United States Congress
EffectiveAugust 16, 2022
Citations
Public lawPub. L. 117–169 (text) (PDF)
Statutes at Large136 Stat. 1818
Legislative history
  • Introduced in the House as the "Build Back Better Act" (H.R. 5376) by John Yarmuth (D–KY) on September 27, 2021
  • Committee consideration by House Budget
  • Passed the House on November 19, 2021 (220–213)
  • Passed the Senate as the "Inflation Reduction Act of 2022" on August 7, 2022 (51–50) with amendment
  • House agreed to Senate amendment on August 12, 2022 (220–207)
  • Signed into law by President Joe Biden on August 16, 2022
Major amendments
Fiscal Responsibility Act of 2023

The Inflation Reduction Act of 2022 (IRA) is a United States federal law which aims to reduce the federal government budget deficit, lower prescription drug prices, and invest in domestic energy production while promoting clean energy. It was passed by the 117th United States Congress and signed into law by President Joe Biden on August 16, 2022.

It is a budget reconciliation bill sponsored by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV).[1] The bill was the result of negotiations on the proposed Build Back Better Act, which was reduced and comprehensively reworked from its initial proposal after being opposed by Manchin.[2] It was introduced as an amendment to the Build Back Better Act and the legislative text was substituted. All Democrats in the Senate and House voted for the bill while all voting Republicans voted against it.[3][4] It was described as a landmark piece of legislation.[5][6]

According to the nonpartisan Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), the law will raise $738 billion from tax reform and prescription drug reform to lower prices, as well as authorize $891 billion in total spending – including $783 billion on energy and climate change, and three years of Affordable Care Act subsidies.[1][7] It represents the largest investment towards addressing climate change in United States history.[8] According to several independent analyses, the law is projected to reduce 2030 U.S. greenhouse gas emissions to 40% below 2005 levels.[9][10] It also includes a large expansion of the Internal Revenue Service (IRS), including the hiring of up to 87,000 new employees to replace tens of thousands of recent departures, which led to over $1 billion being collected in past-due taxes from millionaires and other high-wealth individuals by July 2024.[11][12][a] The Act is not generally believed to have reduced inflation in 2022 and 2023,[13][14] although some economists predict it will bring down inflation in the medium-to-long term.[15][16]

  1. ^ a b Everett, Burgess (July 27, 2022). "Manchin and Schumer announce deal that includes energy, taxes". Politico. Retrieved July 27, 2022.
  2. ^ Zhou, Li (July 28, 2022). "How Democrats plan to overhaul taxes, climate spending, and health care before the midterms". Vox. Retrieved July 30, 2022.
  3. ^ Cite error: The named reference :10 was invoked but never defined (see the help page).
  4. ^ Cite error: The named reference :11 was invoked but never defined (see the help page).
  5. ^ Dennis, Brady (August 14, 2022). "As Congress funds high-tech climate solutions, it also bets on a low-tech one: Nature". The Washington Post. Retrieved August 29, 2022. The landmark Inflation Reduction Act that passed Friday includes $369 billion in climate- and energy-related funding — much of it aimed at high-tech solutions to help nudge the world's biggest historical emitter toward a greener future.
  6. ^ Kaufman, Anna (September 23, 2022). "What is the Inflation Reduction Act 2022? Answering your common questions about the bill". USA Today. Archived from the original on March 9, 2023. Retrieved March 9, 2023. The Inflation Reduction Act of 2022, a landmark piece of legislation passed this summer, has broad implications across multiple sectors of the economy. The policy package is less robust than the Build Back Better bill President Joe Biden tried to push through Congress last year but it's still ambitious in its targeting of prescription drug prices and carbon emissions.
  7. ^ "CBO Scores IRA with $238 Billion of Deficit Reduction". Committee for a Responsible Federal Budget. September 7, 2022. Retrieved September 21, 2022. Note the original September 7 CBO estimates are $391 billion for climate action, $108 billion for health care, $281 billion from health savings, and $457 billion from tax reform, for a net total of $238 billion in deficit reduction.
  8. ^ Nilsen, Ella (July 28, 2022). "Clean energy package would be biggest legislative climate investment in US history". CNN. Retrieved July 31, 2022.
  9. ^ Laco, Kelly (August 4, 2022). "Over 230 economists warn Manchin's spending bill will perpetuate inflation". FOXBusiness. Retrieved April 2, 2023.
  10. ^ Tankersley, Jim (August 16, 2022). "Biden Signs Expansive Health, Climate and Tax Law". The New York Times. ISSN 0362-4331. Retrieved August 18, 2022.
  11. ^ CFP®, Kate Dore (May 5, 2021). "Biden's $80 billion plan to beef up IRS audits may target wealthy small business owners". CNBC. Retrieved July 12, 2024.
  12. ^ "IRS tops $1 billion in past-due taxes collected from millionaires; compliance efforts continue involving high-wealth groups, corporations, partnerships | Internal Revenue Service".
  13. ^ Josh Boak; Paul Wiseman (August 13, 2023). "Yes, inflation is down. No, the Inflation Reduction Act doesn't deserve the credit". Associated Press.
  14. ^ https://www.cbo.gov/system/files/2022-08/58357-Graham.pdf "Enacting the bill would affect economic activity and inflation beyond 2023. CBO has not evaluated those effects."
  15. ^ Leber, Rebecca (August 12, 2022). "Fight climate change. End fossilflation. Here's how". Vox. Retrieved August 21, 2024. Reducing reliance on fossil fuels 'will significantly reduce its grip on inflation in the broader economy,' said Zandi. It's the reason why economists eventually expect the Inflation Reduction Act to live up to the bill's name.
  16. ^ Sahay, Richa (November 1, 2022). "How the US Inflation Reduction Act will impact the economy". World Economic Forum. Retrieved March 13, 2023. In the short term, the US government and investment banks will remain invested in assets that may have higher emissions. But in the medium- to long-term, the impact of the IRA is likely to be deflationary. This is because the IRA is not promoting divestments from fossil-fuel, but rather encouraging investment in clean technologies.


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