Inflation Reduction Act: How It Could Impact Your Wallet
The Congressional Budget Office says the bill is likely to reduce the deficit by up to $102 billion over 10 years.
As its name suggests, the Democrats' new budget reconciliation bill claims it will help bring down inflation. But for the most part, that can't happen overnight.
Instead, experts say those are the impacts you'd likely see next year and into the future, as people across the country grapple with the highest inflation in more than 40 years.
"It really hits the pockets. I spend about $250 a week on just gas," said Charles Anderson of Phoenix.
Senate Democrats say the landmark Inflation Reduction Act would not only make massive investments in climate, tax and health care policy, but it also contains several provisions that would help tackle inflation.
"This is going to make our economy better while at the same time contributing — albeit in a small way — to a reduction in inflation," said Larry Summers, former U.S. Treasury secretary.
The Congressional Budget Office says the bill is likely to reduce the deficit by up to $102 billion over 10 years. Experts say deficit reduction — along with other policies — could curb demand in the economy.
Before the bill passed Sunday on party lines, Senator Lindsey Graham gave a warning.
"This thing is going to make everything worse and not one Republican will vote for it," he said.
And while instant relief isn't promised, some economists say the bill could have a modest, downward effect on inflation as a whole.
In the meantime, as backlogs in supply catch up, the expectation is that inflation will settle back down to near the Fed's 2% annual target. Economist Paul Traub predicts lower-wage earners will feel this the most.
"You may have gotten a 10% raise if you were working at a Starbucks, but now you're just barely keeping up with prices," said Traub.
On health reforms, GOP Senators moved to strip a $35 a month price cap on insulin under private insurance from the Inflation Reduction Act. Earlier this week, Sen. Bernie Sanders said drug pricing provisions in the package don't go far enough to help the American people.
"This is legislation which, at a time of massive profits for the pharmaceutical industry, and when we pay by far the highest prices in the world for prescription drugs, takes some very modest steps to control the price of medicine."
Other provisions in the bill would increase the supply of resources, like energy, with nearly $370 billion in energy and climate change initiatives, including tax credits for people driving electric cars.
"They're going to see energy costs cut because they're going to be receiving credits and rebates for energy saving and cost-cutting measures," said Sen. Richard Blumenthal.
Other direct impacts include home energy rebates, funds for constructing factories, building clean energy technology, and money toward the reduction of pollution in minority communities.
Democrats overwhelmingly voted against Sanders' attempt to revive the child tax credit. He was the only one to vote in favor of an amendment to include the tax credit; the rest of his party feared that adding it would derail the entire bill.
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