Republican Treasury Sec., Leading Economists, & Non-Partisan Budget Scorekeeper All Provide Major Boost to Inflation Reduction Act
Inflation Reduction Act Will Help Lower Prices, Combat Climate Change, & Strengthen America’ Energy Independence
WASHINGTON, DC – Today, a bipartisan group of former U.S. Treasury Secretaries, along with economists from across the political spectrum, urged Congress to pass the Inflation Reduction Act of 2022. This legislation would help lower costs for prescription drugs, health care premiums, and energy; ensure big corporations and wealthy private equity managers pay a fair share of taxes; dampen inflation; cut the deficit; and make an historic investment in accelerating America’s transition to a cleaner energy future and dramatically reduce greenhouse gas emissions.
U.S. Senator Jack Reed, a supporter of the Inflation Reduction Act, welcomed the bipartisan endorsements and said the bill continues to pick up positive momentum.
The five former Treasury Secretaries, including one appointed by former President George W. Bush, agreed that the Inflation Reduction Act “will help increase American competitiveness, address our climate crisis, lower costs for families, and fight inflation — and should be passed immediately by Congress.”
Over 120 leading economists had a similar message in their letter to Congressional leaders yesterday: “This historic legislation makes crucial investments in energy, health care, and in shoring up the nation's tax system. These investments will fight inflation and lower costs for American families while setting the stage for strong, stable, and broadly-shared long-term economic growth.”
And today, the non-partisan Congressional Budget Office (CBO) forecasted that the Inflation Reduction Act would lead to a net deficit decrease of more than $102 billion over the next decade, and that estimate doesn’t include the additional $200 billion in revenue generated by enhancing the Internal Revenue Service’s (IRS) ability to crack down on tax avoidance, which budgets experts have widely agreed upon.
“In the wake of COVID-19, global supply chain strains and shipping disruptions, and Putin’s invasion of Ukraine, inflation is up in every single country in the world. The Inflation Reduction Act takes long overdue steps to help lower out of pocket costs for energy, prescription drugs, and health care. It’s an ambitious, long-term proposal that will strengthen America’s energy independence and enhance our national security by moving production lines and jobs from China back to the United States. And it includes commonsense reforms to ensure big corporations and private equity pay their fair share of taxes to both reduce the deficit and pay for essential clean energy investments,” said Senator Reed.
Highlights of the Inflation Reduction Act of 2022 include:
Lowering Prescription Drug Costs and Making Health Care More Affordable
The bill would allow Medicare to directly negotiate prescription drug prices with big pharmaceutical companies, saving the federal government an estimated $288 billion over the next decade. The bill also includes a $2,000 out-of-pocket cap for older adults buying prescriptions from pharmacies, would provide free vaccinations for seniors, and helps keep health insurance affordable for millions of Americans. Reed is also pushing to include a $35 monthly cap on insulin in the plan, which would benefit thousands of Rhode Islanders.
Investing in American Clean Energy Production & Tackling Climate Change
The bill would invest $369 billion over the next decade to help fight climate change by ramping up America's wind, solar, geothermal, battery storage, and other clean energy technologies. The package represents the single biggest climate investment in U.S. history and would bring down consumer energy costs while putting America on a path to cut greenhouse gas emissions 40 percent over 2005 levels by 2030. Among other provisions, the bill would extend clean energy tax credits, enhance incentives for electric vehicles, and create new rebates for low-income consumers to electrify home appliances and for energy efficient retrofits.
Fiscally Responsible Pay-Fors
The bill does not raise taxes on small businesses or families making less than $400,000 a year. It targets tax breaks and incentives to consumers, such as a $4,000 tax credit for purchase of used electric vehicles and $7,500 for new ones.
To prevent large corporations from using dodges and loopholes to avoid paying virtually any tax, the bill includes a new 15 percent minimum income tax for corporations that earn more than $1 billion in annual profits – a tax backstop that only impacts 150 of the world’s richest corporations. It also significantly boosts the IRS’s ability to go after wealthy tax cheats, which will help produce a net gain of $124 billion or more for taxpayers over the next decade. The bill also reduces the “carried interest loophole” that currently allows private equity managers to pay taxes on some compensation at lower capital gains rates.
Paying Down Deficits
The non-partisan CBO estimates the legislation would lead to a net deficit decrease of more than $102 billion over the next decade, and the bill also is projected to generate over $200 billion in additional revenue for deficit reduction by enhancing the Internal Revenue Service’s ability to crack down on tax avoidance. This will generate a total of over $300 billion in deficit reduction.
Floor debate on the bill could begin later this week as part of a budget reconciliation package. That would allow the measure to be passed with a simple majority that would not be subject to a Republican filibuster.