The Senate has passed the so-called Inflation Reduction Act, a measure involving an additional $740 billion in spending. Despite the name and the huge expenditure it envisions, the Congressional Budget Office (CBO), an independent institution, believes it will have no appreciable effect.
The newspaper Newsmax, which has accessed the CBO report, quotes the opinion of its director Phillip Swagel. If the measure is approved, "in calendar year 2023, inflation would probably be between 0.1 percentage point lower and 0.1 percentage point higher under the bill than it would be under current law, CBO estimates." Under current law, the inflation rate is 9.1%.
The Tax Foundation's report, this one conducted by the Tax Foundation, believes that the law not only won't reduce inflation, but that it will aggravate it. Increases in spending and taxes will result in a long-term GDP loss of 0.1%, which, among other things, will mean the destruction of 30,000 jobs and will further reduce the U.S. economy's capacity to produce goods. In other words, instead of helping to reduce price increases, it will contribute to their increase. Real wages (down 0.1%) and the capital stock (down 0.3%) will also decline.
A "massive power grab"
The cost of the measure is not minor: $570 billion in taxes ($4,500 per household) over the next decade. In reality, despite the name, it is an omnibus law that serves different purposes.
On one hand, It is an expansion of Barack Obama's healthcare reform. That spending increase, according to a report conducted by CBO and the Joint Committee on Taxation (JCT), will actually be much larger and will be a relief especially for wealthier families.
On the other hand, the law will double the size of the Internal Revenue Service, thanks to the creation of 87,000 new officials dedicated to collecting taxes from Americans.
Sen. Ted Cruz (R-Texas) has been particularly critical of this aspect: "Those IRS agents are designed to come after you. They’re not designed to come after the billionaires and the big corporations. They’re designed to come after small businesses and working families across this country. The Democrats are making the IRS bigger than the Pentagon, plus the Department of State, plus the FBI, plus the Border Patrol combined. The IRS is going to be bigger. This is a massive power grab".
House of Representatives
Democrats see Senate passage as a major political success. But the measure will still have to pass through the House of Representatives, where there is a razor-thin Democratic majority: 220 to the GOP's 210. 5 seats remain vacant.