As the price of eggs, dairy, and gas shot up in 2022, Congress passed the Inflation Reduction Act in August 2022. With the backdrop of the highest inflation levels in four decades, the bill’s name appeared to describe pretty succinctly what it set out to do.
But it’s widely accepted that the IRA was first and foremost a climate resiliency package, comprising initiatives for clean energy, clean transport, and tax credits for consumers and businesses to invest in items like EVs, energy-efficient stoves, and sustainable aviation fuel.
Still, a year after its passage, inflation has dropped considerably—from its peak of 9.1% in June 2022, to 3.2% in July 2023. Some economists believe that while the IRA may have long-term deflationary results, the current decline is rooted in other causes. But others say the bill has already impacted the decline, illustrating a new model to tackle inflation that’s contrary to the conventional wisdom.
The government was upfront about the bill’s goals; the White House’s IRA guidebook touted it as “the most significant action Congress has taken on clean energy and climate change in the nation’s history,” only later noting it would “help . . . tackle inflation by reducing the deficit.” No Republicans voted for it, lamenting that it focused on the wrong issue. “Rather than listening to the American people who are suffering from inflation, Democrats have voted for a liberal wish list,” Senator Mitt Romney said.
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