What is the Inflation Reduction Act and what will it change?
This week the US Senate approved a $420bn package supposed to deal with climate change, lower drug prices for the elderly, and impose higher taxes on the richest.
Out of the $420 billion, $369 billion will be allocated to funding for climate and clean energy provisions, which focus on clean energy technologies, ‘large-scale investments in domestic clean technology manufacturing, and environmental justice measures,’ according to Energy Innovation.
Other aspects of the funds include ‘closing tax loopholes and holding down the rate of increase in the cost of prescription medication,’ wrote Yahoo news.
The bill is known as the Inflation Reduction Act and its passing was enthusiastically welcomed by Democrats. Republicans, on the other hand, are opposing the deal as the legislation is a big win for Democrats and can help them score majorities in the House of Representatives and Senate in elections taking place in November.
Republicans also say that the act will not effectively tackle inflation. Hoping to prevent its implementation, they submitted more than twenty amendments.
Changes under the Inflation Reduction Act
Under the Inflation Reduction Act, the US is expected to make significant improvements when it comes to sustainability. For example, the country plans to cut its emissions by about 40% compared to 2005 levels by the end of the decade.
Joe Biden’s initial plan was to cut emissions by half by 2030 so this goal is not far off.
The act also aims to reduce the US’ reliance on fossil fuels, making renewable energies such as wind or solar not only more accessible but also cheaper.
‘This bill will really turbocharge that transition to clean energy – it will transform markets where already solar PV, wind and batteries are in many cases cheaper than incumbent fossil fuels,’ said Anand Gopal, a representative of Energy Innovation.
The Inflation Reduction Act will also make large industrial companies greener as a system of fees will be introduced to reduce leaks of methane, oil spills, or heavy pollution from drilling operations. Also, US Postal Services are expected to start commonly using electric trucks, which would make deliveries environmentally friendly.
As for other changes, the legislation will also deliver health care subsidies for millions, and enact a 15% minimum tax on corporations that make more than $1 billion in profits,’ wrote Time.
Criticism of the bill
The main concern that Republicans have expressed is that the bill will not reduce inflation, which has been reaching record highs in recent months. But Republicans are not the only ones criticising the bill.
Even Bernie Sanders, a socialist, has been vocal about him not supporting the deal. He argued that the bill will not have a positive impact on inflation. ‘According to the CBO and other economic organisations that study this bill, it will, in fact, have a minimal impact on inflation,’ he said and added that ‘clearly, the inflation of today is pushing the average person even further behind.’
Sanders and many others believe that the bill does not address the rising costs of living that affect the living conditions of families across the US. As many can no longer afford basic necessities, possibly focusing on solving these issues should be a priority for Biden’s administration.
As Time reported, he tried to ‘pass numerous amendments, including one that would provide dental, vision, and hearing benefits to Medicare beneficiaries.’ But, unfortunately, his suggestions received very little support.
Some environmental activist organisations, such as Greenpeace, also expressed their opposition to the plan to impose fees on oil and gas drilling operations that leak methane, known to be a potent greenhouse gas. According to them, this measure encourages development of fossil fuels.
The richest corporations that will now have to pay higher taxes are also opposing the legislation as it means them making a smaller profit.
What does the bill mean for you
At the moment, the US is the world’s largest greenhouse gas emitter. One obvious benefit of the new bill is that you will live in a cleaner, healthier environment. According to a study from Energy Innovation, the legislation could prevent up to 3,900 premature deaths caused by air pollution per year.
‘We find that avoided air pollution in the modeled scenarios could lead to between 3,700 to 3,900 avoided deaths in 2030, in addition to 99,000 to 100,000 avoided asthma attacks, and 405,000 to 417,000 avoided lost workdays,’ the think tank explains.
Thanks to the package, you will also be able to get funds to make your way of living greener and contribute to reducing the harmful emissions.
‘Consumers will be able to access a rebate of up to $7,500 for a new electric vehicle, or up to $4,000 for a used car, along with up to $8,000 to install a modern electric heat pump that can both heat and cool buildings. Further rebates are also on offer, such as $1,600 to insulate and seal a house to make it more energy efficient,’ reported the Guardian.
As sustainable technologies such as heat pumps, solar panels, or electric cars will be cheaper and easier to get, you might be able to save money on your energy bills. By generating your energy from renewable sources, you will also reduce your vulnerability to what is happening to global energy prices.
Besides, the bill aims to reduce healthcare costs. It plans to achieve that ‘by allowing Medicare to directly negotiate the price of medicine with drugmakers, and ensuring that recipients pay a maximum of $2,000 in out-of-pocket costs for prescriptions annually. Congress was also seeking to cap the amount uninsured people pay for insulin at $35. But this provision was removed by Senate Republicans on Sunday during the amendment process, though the same cap for insulin users on Medicare remains in the bill,’ explains Time.
Finally, more than one million jobs will be created in clean energy roles. You might, therefore, be able to use your qualifications to find employment in a new role.