On Wednesday, seizing the opportunity of the one-year anniversary of the Inflation Reduction Act (IRA), President Joe Biden promoted this landmark piece of legislation to the public. However, surveys reveal that the general public is largely unaware of the act's contents.
The Biden administration's goal with the IRA is to encourage a shift towards renewable energy in relevant American industries. In addition, the act provides billions of dollars in tax credits to assist consumers in purchasing electric vehicles and to support businesses in producing renewable energy. It expands parts of the Obamacare initiative to help seniors pay for prescription drugs and increases taxes on the wealthy and large corporations in America.
During a ceremony at the White House, Biden stated that the act would not only move key component production from China to the United States but also create about 1.5 million jobs over the next decade and significantly reduce the country's carbon emissions.
Like most legislation in the United States, the IRA has received a mixed reception 12 months after its passage. However, Wall Street analysts say that the act is expected to ultimately bring in billions of dollars in new investment and thousands of new job opportunities.
A report from Bank of America indicates that since the passage of the IRA, the Biden administration has announced over 270 clean energy projects with a total investment of approximately $132 billion. About half of these investments are in electric vehicles and batteries, with the remaining going towards solar, wind, and nuclear energy among other renewable sources. These investments are expected to create over 86,000 jobs, including 50,000 related to electric vehicles.
Moody's reported on Tuesday that there are signs the act has been spurring growth in clean energy manufacturing and related industries like semiconductors over the past year, incorporating these sectors into the investment decisions of the automotive, utilities, and oil and gas industries. Moody's says the act could support growth in domestic gross domestic product, productivity, and innovation.
Biden and the Democrats have previously promised that the IRA would cut $300 billion from the U.S. budget deficit over ten years, including by imposing a 15% minimum corporate tax on large businesses, hiring more auditors to scrutinize the tax returns of the wealthy, and allowing the federal government to negotiate drug prices with pharmaceutical companies. This promise has overturned market participants' expectations for U.S. fiscal projections, with analysts expecting the U.S. budget deficit to increase by $700 to $1000 billion over the next decade.
Furthermore, the IRA has helped Biden and the Democrats address a political concern, namely the fear of losing support due to soaring prices. Although the rate of price increases has significantly cooled in the past year, dropping from 9% to 3.2%, most economists say that the decrease in inflation is almost unaffected by the IRA. Biden states that at its core, the IRA is about promoting economic growth and energy transition, not reducing inflation.
A Reuters/Ipsos poll released at the beginning of the month showed that many Americans who voted for Biden in 2020 believe the U.S. economy is performing poorly under his leadership. Some expressed they might not vote for him in the November 2024 elections. About half of the 2020 Biden voters surveyed said they rarely or never heard about Biden's significant policy initiatives on reducing inflation or increasing infrastructure spending.
A Washington Post-University of Maryland poll this Monday shows that only 27% of Americans are very or somewhat familiar with the IRA.
Jimmy Siegel, a former corporate advertising executive writing in cooperation with the Democrats, mentioned that although some provisions in the IRA are very good, the Biden administration chose the wrong name for the act since voters did not see a decrease in the cost of groceries and other living expenses after hearing about the IRA.
