Senate Democrats have finally reached an agreement on a big health care and energy measure after more than a year of heated discussions.
Health care and prescription pharmaceuticals will be more inexpensive according to the Inflation Reduction Act of 2022, which will also help battle climate change and raise revenue for the government from the wealthiest firms. However, would it genuinely help to drive costs down, as Democrats claim it will in the face of skyrocketing inflation (now at a wallet-busting 9.1 percent),
What’s in the Inflation Reduction Act
One of the main goals of the Inflation Reduction Act is to cut back on spending on social safety net programmes like the Build Back Better bill. The following are the main points:
Creation of a 15% corporate minimum tax rate: The new tax rate for corporations with more over $1 billion in annual revenue is 15%. Individual and family taxes will not be raised.
Prescription drug price reform: By allowing Medicare to negotiate the price for certain prescription prescriptions, the Inflation Reduction Act could potentially lower the cost of medication for beneficiaries. Drug companies would also be required to issue rebates to customers if their prices rise faster than the rate of inflation.
IRS tax enforcement: An understaffed and underpaid Internal Revenue Service (IRS) has been raising the alarm for some time now. Over the next decade, the tax agency would receive an investment of $80 billion under the proposed legislation.
Closure of the carried interest loophole: Investment and private equity fund managers benefit from a well-known loophole in the tax code that allows them to pay a lower tax rate. Beginning with the 2023 tax year, the proposed law will close this loophole.
Affordable Care Act (ACA) subsidy extension: The federal government now subsidises medical insurance rates under the ACA in order to keep them affordable. After this year’s expiration of these subsidies, they will be extended till 2025. According to the US Department of Health and Human Services, approximately 3 million Americans might be left without health insurance if these subsidies aren’t extended.
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Energy security and climate change investments: Tax rebates and credits for households to offset energy costs, investments in clean energy production, and tax credits aimed at lowering carbon emissions are among the investments in climate protection included in the bill
Sen. Joe Manchin (D-W.Va.), who defeated the Build Back Better Bill and lately opposes enacting any substantial legislation due to the current condition of inflation, has already endorsed the proposal, making it one step closer to becoming law. The Inflation Reduction Act, according to Senator Joe Manchin in a CNN interview, has paid down debt and increased energy production.
The bill will now go through a lengthy administrative process to confirm that it can be passed through reconciliation. Reconciliation allows the bill to pass the Senate with a simple majority vote, which means that even if it does not require Republican support, it still requires the support of all 48 Democrats to pass.
However, securing the support of all Senate Democrats is a difficult task, given that Sen. Kyrsten Sinema (D-AZ) has previously opposed closing the carried interest loophole. Her response to the bill thus far has been non-committal.
According to PunchBowl News, the Inflation Reduction Act may be submitted to the Senate floor this week or the following.
Study Shows Bill Will Likely Have No Impact On Inflation
Speaking to reporters following the announcement of the agreement, Vice President Joe Biden claimed that the law will provide relief from inflation for American taxpayers. The Inflation Reduction Act, on the other hand, appears to have no effect on inflation at all, according to an early research.
It’s doubtful that the measure will have any effect on inflation, according to the Penn Wharton Budget Model. PWBM is a nonpartisan, research-based institution at the University of Pennsylvania that conducts economic analysis of public policy’s budgetary impact. ‘
On CNN, Manchin stated that he “respectfully disagrees” with the study’s conclusions and findings.
A federal organisation that provides statistics to Congress, the Congressional Budget Office (CBO), says that the plan would have little impact on inflation in the short term and could even increase it.
“Negligible effect on inflation” would be the CBO’s projection for 2022, and in 2023 it would shift the rate of inflation by 0.1 percentage points lower or higher than it already is.
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The CBO anticipates that over the next decade, the plan will reduce the deficit by more than $100 billion. According to the Bipartisan Policy Center, the federal government had a deficit of $2.8 trillion in 2021; the bill’s predicted deficit reduction would eliminate around 4% of that.
Even if the law doesn’t provide immediate price relief, it’s still a huge step forward in other areas. Founded in 1935, The Wilderness Society describes the Inflation Reduction Act as a “breakthrough” in climate policy, according to the organization’s website.
Climate legislation, if passed, would be the most significant policy in history by a wide margin, a blog post on the nonprofit’s site states.
It’s time to wrap things up… To stay on top of the latest news, visit digitalnewsexpert.com.
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