INFLATION REDUCTION ACT
What is the inflation reduction act?
The primary objective of the Inflation Reduction Act is to invest in clean energy and sustainable infrastructure. Recognizing the need to transition to a low-carbon economy, the IRA includes substantial funding for renewable energy projects, energy efficiency upgrades, and modernizing the nation's transportation and grid infrastructure. These investments not only contribute to reducing greenhouse gas emissions and combatting climate change but also create new job opportunities and are projected to stimulate economic growth.
How will an average household benefit from the Inflation Reduction Act?
To address the increasing burden of energy costs on American households, the IRA includes measures to promote energy affordability. It aims to provide financial assistance to low-income families, seniors, and vulnerable communities struggling with rising energy bills. Additionally, the act emphasizes the importance of energy efficiency programs and incentivizes the adoption of energy-saving technologies, which can help reduce energy consumption and lower utility expenses for consumers.
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The Greenhouse Gas Reduction Fund, which is part of the IRA, offers over $27 Billion to fund projects that reduce emissions, reduce power costs, promote energy efficiency and help create local jobs in low-income communities. As the EPA rolls this program out, a coalition of credit unions with experience in these communities is working to make sure these funds support the families who live in these communities.
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The combination of rebates and tax credits included in the recently passed Inflation Reduction Act help you do exactly that. In fact, one analysis estimates that the law’s combination of rebates and residential tax credits alone could save more than 100 million households $37 billion a year on their energy bills.
What if my community is a coal or energy producing area? Will I be penalized?
The IRA not only recognizes and defines an “energy community”, it provides tax credit bonuses for projects, facilities, and technologies located in those communities.
The IRA includes historic investments in clean energy deployment through renewed and expanded Clean Energy Tax Credits. These tax credits support the development of various clean energy technologies, such as solar, wind, and battery storage. Notably, these credits not only facilitate the growth of clean energy but also contribute to the creation of well-paying jobs. Furthermore, the act prioritizes communities that have traditionally relied on fossil fuels by offering an additional 10% tax credit bonus for projects located in designated "energy communities."
How could the IRA impact jobs in the United States?
Recognizing the importance of maintaining a well-trained and skilled workforce, the Inflation Reduction Act includes provisions to support workers in the transition to clean energy sectors. It seeks to invest in workforce development programs, training initiatives, and apprenticeship opportunities that equip workers with the necessary skills to participate in the emerging green economy. By investing in human capital, the act aims to ensure that workers are not left behind during the transition and can access quality jobs with good wages.
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The act also highlights the significance of strengthening domestic manufacturing and promoting responsible supply chains. It proposes measures to incentivize the production of clean energy technologies and materials within the United States, fostering job creation and reducing reliance on foreign imports. By supporting domestic manufacturing, the act aims to enhance the nation's economic resilience and ensure a secure and sustainable supply of critical components for the clean energy sector.
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The Political Economy Research Institute at the University of Massachussetts in Amherst has estimated that the IRA could create almost 9 million clean energy jobs over the next 10 years.
Is the IRA only about climate protection?
No. The Inflation Reduction Act aims to address rising drug costs and reduce federal spending on prescription drugs. The act establishes a cap on out-of-pocket costs for Medicare Part D beneficiaries and requires price negotiation that had been prohibited between federal government and drug companies. Additionally, the act requires pharmaceutical manufacturers to provide rebates to Medicare if the price of their prescription drugs exceeds the rates of inflation as a further control against rising prices.
According to the Centers for Medicare and Medicaid Services, “more than 5 million people with Medicare struggle to afford their prescription drugs” and often people with “lower incomes and those over 65 are more likely to skip medicine they need because of high costs.”
Is the IRA political or partisan?
No. Although the law was passed without any Republican votes in 2022, “almost two-thirds of the projects announced since it became law are going to Republican-held congressional districts” according to one analysis. In fact, according to the US Department of Agriculture, the IRA provides $3.1 billion in relief for borrowers whose agricultural operations are at financial risk and clean energy projects in rural communities recently received $11 billion in funding from the administration and USDA.
Will this increase our federal debt?
NO. Despite Republican plans to tie a repeal of the Inflation Reduction Act to their debt ceiling negotiations because they claim we are spending too much, the Congressional Budget Office final scoring of the bill found that the investments in jobs and communities in the IRA will reduce the deficit by $238 Billion over the next decade.