President Joe Biden’s new Inflation Reduction Act has just been passed by the Senate, and it is a big win for the Democrats. The bill is said to make healthcare more affordable, aid in the fight against global warming, and reduce the U.S’s budget deficit, all while not raising taxes on households earning less than $400,000 per year. These were all big parts of President Biden’s agenda, but how much of this is actually possible, and at what cost?
The first part of this bill involves President Obama’s Affordable Care Act. He plans to lower the cost of all those covered by the act, saving about 13 million people covered by the act, around $800 a year. The bill also outlines a maximum price that seniors can pay for prescription medicine in a year, as $2,000. The estimated cost for these parts of his bill is about $70 billion.
The bill also is said to attack the climate crisis. The goal is to bring down how much an average family spends on energy, by about $500 a year, by using tax credits. Tax credits are like a point system, and it reduces the amount of taxes you owe, for example, if you owe $50 in taxes, but you have a $30 tax credit, you only owe $20. Essentially, it’s like a money-back system that will encourage homeowners to buy more economy-friendly appliances, by providing tax credits for those items.
Biden also plans to implement manufacturing tax credits encouraging companies to build clean energy devices. The list includes solar panels and wind turbines. He also hopes that this will create new job opportunities in America.
Biden’s bill is also projected to lower the U.S budget deficit by $300 million. A budget deficit means that the U.S is spending more money than it is earning, so the lower the deficit the better. The U.S has been in a deficit since 2001, which was the last year we were in a surplus, meaning we earn more money than we spend. Due to the pandemic, the U.S budget deficit skyrocketed, so any decrease in the deficit is good news for the country.
Here is a chart of America’s budget deficit over the last two decades: