Senate Majority Leader Chuck Schumer finally reached an agreement with Sen. Joe Manchin. The “Inflation Reduction Act” is a $369 billion climate and deficit reduction package marketed as an inflation killer.
What’s in the bill?
- Green energy tax credits to provide incentives for manufacturers, factories, and consumers looking to make their homes more efficient.
- Electric vehicle tax credits to help consumers adopt electric vehicles built in North America.
- Taxes on fossil fuels like methane and making it more expensive for the oil industry to produce on public lands. On the flip side, the bill also requires the federal government to expand offshore oil offerings.
- Environmental “justice” to give billions to low-income and disadvantaged communities.
- Domestic manufacturing of clean energy to increase America’s production of solar panels, batteries, essential minerals, and wind turbines.
Higher taxes will pay for the bill. Manchin and Schumer agreed on changes to the tax law that would raise $739 billion over the next decade and add a 15 percent minimum corporate tax on billionaires. Sen Manchin wants a portion of these funds to cut down on the national deficit.
So how’s this going to reduce inflation? Arguments favoring the bill claim that cutting the deficit will improve long-term inflation. Arguments against the bill claim that the massive costs and influx of money into the alternative energy sector will only worsen our situation. What’s clear, though—is that the legislation is more focused on climate change than inflation.