On the first anniversary of President Biden’s signature Inflation Reduction Act (IRA), two facts are true about this law: it was never intended to bring down inflation, and it has not brought inflation down. Through the deceptively marketed plan, the president exposed that his only priority has ever been enacting a radical and elitist green agenda. Meanwhile, hardworking poor and middle-class Americans are left to tread water as inflation sinks households deeper into financial trouble.
Last week, President Biden admitted that the misleadingly-labeled IRA was only ever a climate change spending bill—saying the quiet part out loud. “I wish I hadn’t called it that. It has less to do with reducing inflation than it does providing for alternatives that generate economic growth.”
The president sang a different tune in 2022 as he peddled a scaled-back and repackaged Build Back Better Plan. He boasted then that “The Inflation Reduction Act is the strongest bill you can pass. It will lower inflation, cut the deficit, reduce healthcare costs, tackle the climate crisis, and promote energy security, all the time while reducing the burdens facing working-class and middle-class families.”
Seeking to advance all of those priorities was a tall order. Lowering inflation alone was never going to be achieved with this bill for a key reason: massive federal spending begot the current inflation; more of the same spending would not correct it. The nearly $2 trillion American Rescue Plan, which injected the economy with massive cash transfers to boost spending despite restricted supply, touched off 40-year-high inflation. At the same time that inflation in the U.S. accelerated, inflation in other countries remained low. How would more of the same strategy lead to different results?
The nonpartisan Congressional Budget Office predicted that the IRA’s impact on inflation would be negligible. So far, the biggest dampening factors on inflation are the Federal Reserve’s aggressive interest rate hikes and foreign factors such as falling oil and gas prices. In 2022, gas prices spiked over 60% in June and crossed $5 a gallon for the first time ever. They fell steadily until earlier this year and are rising once again.
Cable news hosts and political analysts are flummoxed by the American people’s cold shoulder to Bidenomics. However, the president made lofty promises, and his policies haven’t delivered. The sins of missed expectations could be forgiven if Americans felt their lives were getting measurably better. They are not, as polling and surveys indicate.
A whopping 70% of Americans are stressed about their personal finances. When Gallup asked adults to reflect on their personal financial situations earlier this year, just 35% of Americans said they were better off now than they were a year ago, while 50% were worse off. A significant majority of lower-income Americans say their financial situation has deteriorated over the past year, and even middle- and upper-income Americans are more likely to say they are worse off than better off. We find similar results in poll after poll. Only 30% of adults believe the economy has been recovering better than other countries. At the root of citizens’ angst is inflation.
Americans are pinning the gloomy outlook on the president. According to CNN Polling last week, President Biden’s 41% overall approval rating “drops to 37% when Americans assess his handling of the economy and further still to 30% for his handling of inflation.” Ipsos/Reuters polls find that 60% of Americans, including one in three Democrats, disapprove of President Biden’s handling of inflation.
Headline inflation year-over-year is running at 3.2%, a slight uptick from the previous month and the first time in a year that inflation had not fallen. While this is far less than the 9.1% inflation rate that households battled in June 2022, many are under financial strain as financial situations grow worse. Consumer credit card debt just surpassed $1 trillion, a new record high. Hardship withdrawals from retirement accounts surged by an alarming 36% from the first three months of the year.
The IRA’s green subsidies are more costly to taxpayers than Biden claimed. Elites who cheer this green agenda can afford the mandates, but most Americans aren’t lining up to buy electric vehicles or electric stoves despite the tax subsidies. The top concern is inflation for most households, including those living paycheck-to-paycheck or making their retirement and Social Security benefits stretch.
President Biden shouldn’t lament the name of the IRA, but an economic agenda that is woefully out of touch with the needs of most Americans.
Patrice Onwuka is the director of IWF’s Center for Economic Opportunity (iwf.org/CEO).
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.