Talking Straight About The IRA

 Americans generally understand that federally funded programs which boost economic activity have some potential to raise the rate of inflation, but recent claims that the recently-passed Inflation Reduction Act (IRA) is a major contributor to our present rate of inflation are simply not accurate. 

Aside from erratic supply chains and Russia’s invasion of Ukraine, The Economist attributes federal government outlays during the COVID pandemic as the primary and continuing factor driving inflation in the US. Our government “was a lot more aggressive than others in stimulating the economy during the covid-19 pandemic” according to that analysis which has created a gap between government spending and revenues “more than triple its level before the pandemic and higher than all other big rich countries”. So, it’s fair and accurate to point to COVID-era policies as drivers of inflation.

But not the Inflation Reduction Act.

In fact, the IRA will over the next decade be a huge brake on Inflation pressure. The Inflation Reduction Act will lower the nation’s debt by $300 billion in the first 9 years and $1.9 trillion over two decades. 

The IRA fights inflation with prescription drug pricing reforms, increased taxes on the wealthy (and related taxes), and funding the IRS for tax enforcement.  The IRA also helps consumers and businesses to change over to a clean economy.

The IRA has already slashed the cost of insulin, caps Medicare out-of-pocket costs for prescribed drugs at $2,000 a year and, for the first time, gives the government authority to negotiate the price of all drugs with Big Pharma. 

After you pick up your insulin, you may need to top off your tank. Or charge your electric vehicle (EV). The IRA provides a $4,000 tax credit for purchase of any used EV, and if you buy new, that cost gets defrayed by $7,000. Businesses and commuters taking advantage of these incentives will save money every mile they drive. 

So you’ve got your insulin, charged up your EV, and you pull into a driveway sheathed in ice. Shudder at the winter’s heating bill ? This legislation aims to wean the nation off natural gas with a modernized grid of cleanly produced electricity expected to lower pollution even as it saves the average American household $220 a year. In a similar vein, the IRA provides rebates for electric stoves and heat-pumps for heating and cooling homes that are much more efficient than outdated technologies. Did you know you can also buy heat-pumps that dry clothes? Takes more time than a typical dryer, but uses less than half the electricity required per load. And you get up to $840 dollars in rebate for the purchase.  And, yes, modern heat pumps work very well temperatures as low as -13 to -20 ℉.

Although IRA energy related tax credits are an initial cost (worsen the deficit) they will eventually lower home energy costs and help control inflation.

So when someone derides the Inflation Reduction Act as a branding exercise, consider the ways that this legislation reduces the cost of health care and transportation. Consider the ways you can save money in the laundry room and kitchen and stay warm in the winter without changing your thermostat. Folks on both sides of the political aisle agree that the only way to tackle inflation over the long haul is to lower the nation’s debt along with the debts that plague her citizens day to day, and that is exactly the prescription embodied in the Inflation Reduction Act. 

Also remember that Ben Cline and ALL other republicans voted AGAINST the IRA !

Darryl Wimberley
Staunton, Va