(MENAFN- Trend News Agency)
U.S. House Democrats on Friday passed the so-called Inflation
Reduction Act just a few days after the Senate's approval amid
harsh criticism from Republicans and other groups, Trend reports citing
Critics said the legislation does little to tamp down inflation,
which stands at a 40-year high.
The 730-page package contains an estimated 437 billion U.S.
dollars in new spending, with 369 billion dollars dedicated to
curbing climate change and promoting green technology.
Democrats argued that the massive spending will be offset by 737
billion dollars in new revenue that the bill will allegedly
The bill would empower Medicare to negotiate the prices on 100
drugs, among other reforms that Democrats said will bring in 265
billion dollars. Moreover, a sum of 222 billion dollars in revenue
will stem from a new, 15 percent minimum tax on corporations.
'With the passage of the Inflation Reduction Act in the House,
families will see lower prescription drug prices, lower health care
costs, and lower energy costs,' U.S. President Joe Biden tweeted on
Democrats claimed the bill will lower inflation, as they expect
the legislation to raise new revenue and reduce deficit.
However, Republicans blasted the bill, calling it a 'hoax on the
'To call it the Inflation Reduction Act is a lie,' Republican
Representative Nicole Malliotakis said Friday.
'You can't tax and spend your way out of an inflation crisis,'
House Minority Leader Kevin McCarthy said, blaming the Biden
administration's policies for the worst inflation in four
'By reducing long-run economic growth, this bill may actually
worsen inflation by constraining the productive capacity of the
economy,' the Tax Foundation, a nonprofit think tank, wrote on its
A letter to Congress signed by over 200 economists argued that
over 400 billion dollars in proposed government spending 'would
create immediate inflationary pressures by boosting demand, while
the supply-side tax hikes would constrain supply by discouraging
investment and draining the private sector of much-needed
resources,' Fox News reported earlier this month.
The letter's signers included Robert Heller, former president of
the Federal Reserve Board 1986-1989, Nobel laureate Vernon Smith,
former Chair of the Council of Economic Advisers Kevin Hassett, and
former Director of the Office of Management and Budget Jim Miller,
said the report.
Indeed, many economists said heavy government spending has been
a major cause of inflation, along with supply chain bottlenecks and
global energy shortages. The act would have no meaningful effect on
inflation in the near term.
The Penn Wharton Budget Model of the University of Pennsylvania
estimated that 'the Inflation Reduction Act will produce a very
small increase in inflation for the first few years, up to 0.05
percent points in 2024.'
'These point estimates, however, are not statistically different
than zero, thereby indicating a very low level of confidence that
the legislation will have any impact on inflation,' the report
Skyrocketing inflation has significantly hurt Biden's approval
rating, which stands at 40.3 percent, near his all-time low,
according to Real Clear Politics' average of polls.
Despite doubts and criticism, Democrats' ability to pass such
sweeping legislation could be seen by the party's base as evidence
of competence, and may benefit Democrats in November's midterm
elections, as they struggle to retain control of the House and
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