The Inflation Reduction Act
On Wednesday, July 27, 2022, Chuck Schumer and Joe Manchin issued a joint statement quoting that they are “pleased to announce an agreement to add the Inflation Reduction Act of 2022 to the FY2022 Budget Reconciliation bill.” It would address inflation, a pressing issue, as well as the long-standing challenges of health care expenses and climate change.
The new proposal for the FY2022 Budget Reconciliation bill will invest approximately $300 billion in Deficit Reduction and $369 billion in Energy Security and Climate Change programs over the next ten years. The bill will also finally allow Medicare to negotiate prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025. It will enact a historic deficit reduction to fight inflation. It will empower Medicare to bargain with pharmaceutical firms so that Americans, who today pay two to three times as much for the same medications as individuals in other developed nations, are no longer able to be exploited.
Most importantly, it plans on lowering energy costs, increasing cleaner production, and reducing carbon emissions by roughly 40 percent by 2030. The IRA allots $60 billion for the manufacture of clean energy products in the US, including $30 billion in production tax credits for solar panels, wind turbines, batteries, and the processing of essential minerals, as well as $10 billion in investment tax credits for the construction of factories producing electric vehicles and renewable energy products. It is composed of carbon and hydrogen. According to the US Environmental Protection Agency, it is also a potent greenhouse gas, meaning it affects climate change by contributing to increased warming. According to the New York Times, The Inflation Reduction Act will impose a penalty on excess methane emissions that will increase from $900 per ton in 2024 to $1500 per ton in 2026. Everything comes with a cost though. There are some downsides to this bill. The bill includes tax credits for carbon capture and sequestration. Many think carbon capture is a myth, to permit fossil fuel companies to continue with the thermal generation of electricity. “It’s a bait and switch proposition that says, Let us continue to burn coal and methane today to make electricity and we promise we will suck the carbon emissions we create back out of the atmosphere at some unspecified date in the future.” says a writer at cleantechnica.com. It could also increase the lifespan of unclean coal plants, making it more difficult to achieve important clean energy goals while putting locals at risk of deadly coal pollution. It requires the federal government to make certain areas of the Gulf of Mexico and Cook Inlet in Alaska available for the extraction of oil and gas. In order for new wind and solar projects to be permitted, more oil and gas leasing is necessary. The climate crisis is one of the greatest challenges humanity has faced, and now we have an opportunity to fight it. Each day you fail to pass strong climate legislation, the cost of inaction grows.
Despite Senator Joe Manchin backing the bill, there are still issues that may affect the chances of its passing. Sen. Kyrsten Sinema is a potential threat. She had previously opposed closing the carried interest tax loophole, which was a crucial part of the Inflation Reduction Act. It's probable that this will come up again. Last week, Hannah Hurley, a spokesperson for Sinema, told Bloomberg that the senator was still considering the proposal and would hold off until the results of the Senate parliamentarian's review. Meanwhile, Manchin has stated time and time again that he wants to maintain the carried interest clause in the measure.