Democrats’ new spending bill, the “Inflation Reduction Act of 2022,” will have a statistically insignificant impact on inflation, according to an analysis released Friday.
The legislation, a budget reconciliation bill proposed by Democratic Sens. Chuck Schumer of New York and Joe Manchin of West Virginia, is intended to address skyrocketing inflation by subsidizing energy and health care costs for consumers and lowering the budget deficit. However, despite its numerous tax increases, the bill will only cut deficits by $248 billion and fail to have any measurable effect on rampant inflation, according to an analysis by the University of Pennsylvania’s Penn Wharton Budget Model.
“The Act would very slightly increase inflation until 2024 and decrease inflation thereafter,” the analysis found. “These point estimates are statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation.” (RELATED: Manchin Suggests He Won’t Back Infrastructure Bill Without Bipartisan Support From Republicans)
Our country must be energy independent to be the superpower of the world. The Inflation Reduction Act increases our energy security by ensuring fossil fuel resources are not arbitrarily eliminated over the next decade. It will also bring manufacturing & mining back to N. America. pic.twitter.com/L9dtTXTUln
— Senator Joe Manchin (@Sen_JoeManchin) July 29, 2022
The bill shells out $370 billion in subsidies and tax credits to promote green energy and appropriates roughly $80 billion to expand the size and enforcement capacity of the Internal Revenue Service. In addition, the legislation would cap prescription drug prices and mandate a 15% federal minimum tax rate for corporations with market caps over $1 billion.
Manchin has previously said he would not support large spending bills during periods of high inflation. The Consumer Price Index, one of the key gauges of inflation, increased 9.1% year-over-year in June, the highest level since 1981.
The Penn Wharton analysis also found that the bill would fail to substantially stimulate economic growth.
“We project no impact on GDP by 2031 and an increase in GDP of 0.2 percent by 2050,” the analysis found. “These estimates include the impact of debt and carbon reduction as well as capital and labor supply distortions from rising tax rates.”
The bill would also increase health care subsidies under the Affordable Care Act to sunset in 2025, which, if extended another seven years, would significantly mitigate the bill’s ability to reduce the federal deficit.
“Under an illustrative scenario where that provision was extended indefinitely, the 10-year deficit reduction estimate falls to $89 billion. The impact on GDP remains zero through 2040,” the analysis found.
As the legislation is a budget reconciliation bill, it needs only a simple majority to pass the Senate, after which it will head to the lower chamber. The bill was introduced Wednesday and has yet to see a floor vote.
The offices of Manchin and Schumer did not immediately respond to the Daily Caller News Foundation’s request for comment.
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