After a year of infighting, Senate Democrats are now working to pass legislation that could reduce the cost of prescription drugs, health care premiums and energy for millions of Americans.
The $369 billion package, known as the Inflation Reduction Act, is essentially a pared-down version of President Joe Biden’s massive Build Back Better social-spending agenda. Except this iteration has a notable perk: the approval of Democratic holdout Sen. Joe Manchin III of West Virginia. That, plus the signoff of Senate Majority Leader Chuck Schumer, indicates the proposal could become law soon.
The proposed legislation does not include funding for many staples of Build Back Better, such as extended child tax credit payments, universal preschool or more affordable housing.
However, the Inflation Reduction Act could have a broad economic impact on the U.S., given that it’s aimed at addressing the climate crisis, bringing down drug prices, raising taxes for high-income earners and billion-dollar corporations, and extending health care subsidies — all while reducing the federal deficit.
Here’s what else you need to know.
Will the Inflation Reduction Act reduce inflation?
One of the reasons Manchin said he was opposed to a larger spending package was because he was worried it would worsen inflation, which is at a four-decade high (9.1%). “America cannot spend its way out of debt or out of inflation,” he said in a statement on his website.
For the IRA, Manchin reportedly sought assurance from Larry Summers, an economist and Obama-era Treasury secretary, that it would not add to the inflation rate. But will the Inflation Reduction Act actually…
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