(The Center Square) – Democratic Sens. Cory Booker and Bob Menendez say their fellow New Jerseyans, particularly seniors, will benefit and be protected by the $740 billion Inflation Reduction Act, but nonpartisan analysts disagree.
The Senate, capping a marathon session, voted late Sunday evening to pass the measure. Senators voted on party lines, 50-50, and Vice President Kamala Harris broke the tie.
“With commonsense reforms that will allow Medicare to negotiate prescription drug prices and cap out-of-pocket costs,” Booker said in a release, “we will protect seniors from outrageous prices charged by pharmaceutical companies for lifesaving medications. This bill also provides an additional three years of Affordable Care Act subsidies which will lower health care premiums for millions of Americans.”
Menendez was equally exuberant.
“Despite the obstruction of the fossil fuel industry,” he said in a release, “passing this bill is also a historic victory in our fight against climate change, marking the most impactful legislation Congress has ever passed to reduce our greenhouse gas emissions and putting us on a path to reduce emissions by 40% by 2030. This legislation will also close tax loopholes abused by the largest corporations, create millions of good-paying jobs, and cut costs for American families.”
Nonpartisan analysts disagree with the Democrats and President Joe Biden, who has said he’ll sign the measure. A vote in the U.S. House of Representatives is expected on or before Friday.
James Morton Turner, of Wellesley College, cited the bill’s language for electric vehicles.
“The bill requires that new electric vehicles meet stringent sourcing requirements for critical materials, the components of the battery, and final assembly to qualify for the tax credits,” he wrote for several publications. “While some automakers, like Tesla and GM, have well-developed domestic supply chains, no electric vehicle manufacturer currently meets all the bill’s requirements.”
And that wasn’t all.
According to The Center Square reporting sourcing Utah Sen. Mike Lee, the nonpartisan Joint Committee on Taxation estimated the bill would raise taxes by $313 billion over the next 10 years. Further, Americans in every tax bracket would be hurt.
And, from the Penn Wharton report, "We estimate that the Inflation Reduction Act will produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024. We estimate a 0.25 percentage point fall in the PCE price index by the late 2020s. These point estimates, however, are not statistically different than zero, thereby indicating a very low level of confidence that the legislation will have any impact on inflation."
PCE is an acronym for personal consumption expenditures. Penn Wharton is a widely accepted economic forecasting model used by politically unaligned groups like the Tax Policy Center.