Contradicting claims from Senate Democrats, a report from the independent Congressional Budget Office (CBO) indicates that the measures in the $740 billion Inflation Reduction Act of 2022 (IRA) would have a marginal to negative impact on inflation.
Citing from the Build Back Better Act, a proxy for the IRA, the CBO wrote that the “estimate of the deficit reduction [for the Build Back Better Act] was lowered by $11.0 billion over the 2022-2031 period.” Additionally, as CBO Director Phillip Swagel noted, if the bill passes, then “in calendar year 2023, inflation would probably be between 0.1 percentage point lower and 0.1 percentage point higher under the bill than it would be under current law, CBO estimates.”
The Tax Foundation stated: “The bill worsens inflation, especially in the first two years, as revenue raisers take time to ramp up and the deficit increases. We find that budget deficits would increase from 2023 to 2025, potentially worsening inflation … On balance, the long-run impact on inflation is particularly uncertain but likely close to zero.”
But according to The Associated Press, the IRA, which passed the Senate on Sunday in a 51-50 vote, is being praised as an achievement of President Joe Biden’s vision to control global warming, reduce costs of pharmaceutical drugs and tax large corporations. The bill now heads to the House.
After the bill’s passage, Senate Majority Leader Chuck Schumer, D-N.Y., noted the “elation” his Democratic colleagues felt.
“As you know,” Schumer stated in a Sunday press conference after the final vote, “it’s been a long, tough and winding road. At last, we’ve arrived; and we are elated. Every member of my caucus is elated about what happened, because we really would change the world in a way that you rarely get an opportunity to do that.”
Still speaking about the inflation bill, Schumer added, “The Senate has now passed the most significant bill to fight the climate crisis ever, and it’s going to make a difference to my grandkids. The world will be a better place for my grandchildren because of what we did today. And that makes me feel very, very good.”
Sen. Bernie Sanders, I-Vt., decried major parts of the legislation, while pointing to its “minimal impact on inflation.”
“According to the [CBO],” Sanders said, “and other economic organizations that have studied this bill, it will have a minimal impact on inflation.”
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