One Year Later: Assessing the Impact of Biden’s Inflation Reduction Act
This week marked the first anniversary of the Inflation Reduction Act (IRA), President Joe Biden’s signature piece of legislation. However, the celebration and promotion of the law’s accomplishments were overshadowed by the news cycle dominated by the latest Donald Trump indictment. Nevertheless, major changes in policy have the potential to shape the political conversation and impact the expectations of how laws should work.
The Affordable Care Act (ACA), former President Barack Obama’s landmark health care law, serves as an example of how legislation can create a new reality that is politically difficult to dislodge. Similarly, the IRA has the potential to become President Biden’s “big fucking deal” (BFD) if it succeeds in changing American life in deep and enduring ways.
One area where the IRA could have a significant impact is on climate change. The United States has historically been one of the top emitters of carbon, and the federal government’s approach to addressing the crisis has been inconsistent. The IRA, by codifying the requirement that the federal government regulate carbon under the Clean Air Act, represents a step towards more consistent climate regulation. The law’s extensive subsidies and tax credits for renewable energy and other climate-related initiatives are already resulting in increased investment and job creation in clean energy sectors.
However, the success of the IRA in bending the curve on U.S. emissions will depend on state and local policies, which currently show a bias against change. To fully realize the benefits of the IRA and achieve a carbon-free energy future, the U.S. will need to go even further in its commitment to change.
Another significant aspect of the IRA is its economic impact. The law challenges the conventional wisdom that government spending crowds out private investment by aiming to crowd in private investment through government-directed industrial policy. The results so far are promising, with private companies announcing over $200 billion in manufacturing commitments in clean energy, electric vehicles, and batteries since Biden took office. Job creation in clean energy fields has also been significant.
The Treasury Department reports that research and development investment following the COVID-19 recession is higher than previous economic recoveries, indicating the potential success of the IRA in reinvigorating domestic manufacturing and providing jobs in regions that have been left behind.
However, the full impact of the IRA on the economy is yet to be realized, as the Internal Revenue Service is still in the process of writing rules and guidance for the tax credits authorized by the law. Analysts predict that the IRA could crowd in over $3.3 trillion in private investment over its 10-year run.
Overall, the IRA has the potential to be a transformative piece of legislation that addresses both climate change and economic revitalization. However, its success will depend on the commitment of state and local governments to implement supportive policies and the ability to manage the significant investments effectively. With the IRA, President Biden has the opportunity to leave a lasting impact on the country’s future.
Original Story at www.huffpost.com – 2023-08-18 21:30:43