ZWF: One year later, what has the Inflation Reduction Act done?
Zander's Weekend Facts #80: Sunday, August 20, 2023
Inside this week’s edition of Zander’s Weekend Facts, detailing the investments made possible by the Inflation Reduction Act, and a look at what Zander’s been reading this past week. Plus, a compilation of the top headlines you need to know about from the last seven days.
Also, go listen to the latest episode of the Zander’s Facts podcast! Episode 115 details the fourth indictment of former President Donald Trump in Georgia, including who was charged, what the charges are, and what is likely to come next. Download the Zander’s Facts podcast wherever you get your podcasts!
Here are Zander’s Weekend Facts for Sunday, August 20, 2023:
What has the Inflation Reduction Act done?
One year ago last month, one of President Joe Biden’s hallmark pieces of legislation finally passed Congress by the slimmest of margins, the Inflation Reduction Act.
It almost didn’t come to be, with infighting in the Democratic party (particularly with West Virginia Senator Joe Manchin) causing the $3.5 trillion bill to collapse back in December 2021. Then last summer, closed-door negotiations between Manchin, Biden, Senate Majority Leader Chuck Schumer (D-NY), and other top Democrats led to a breakthrough, at half the price ($1.75 trillion).
It will be an achievement Biden sure hopes he can convince supporters is a big deal as he fights to win reelection next year.
But now that the law has been in place for 365+ days, what kinds of investments has it brought to America? Has it actually reduced inflation? Here are the Facts:
Yes, inflation is down, but…
It is true, the consumer price index was standing at a whopping 8.2% back in August of last year. Now? 3.2%, lower than peer countries France (4.3%), Mexico (4.8%), Australia (6.0%), and the U.K. (6.8%).
But was it because of the Inflation Reduction Act? Experts say… probably not. Economist Alex Arnon from the University of Penn told the AP, “We can say with pretty strong confidence that it was mostly other factors that have brought inflation down. The IRA has just not been a significant factor.”
That makes sense though, considering the bill wasn’t really an effort to reduce inflation (as noted by the Congressional Budget Office at the time) but actually an investment in fighting climate change, creating jobs, and reducing health care bills.
Of course, it doesn’t hurt that the Inflation Reduction Act was passed right at the time when inflation began to take its year-long downturn.
The IRA was a massive investment in clean energy
As detailed in last year’s edition of Zander’s Weekend Facts when we marked the bill’s rejuvenation (linked below for your reading pleasure), the bill included at least $369 billion on climate initiatives.
An unlikely win for the planet
Weeks ago, after many months of negotiations, Sen. Joe Manchin (D-WV) announced that he would not support any climate initiative bill. At the time, many fellow Democrats felt betrayed and all hopes of any major government effort to fight climate change seemed dead. Fast forward to this Thursday, a complete 180°.
What’s that led to? The American Clean Power Association says that 83 manufacturing plants, over 50 of which will produce solar-power equipment, have been announced since last year. The rest are expected to churn out parts for wind turbines and batteries. Another $53 billion has already been announced as investments into factories making components for electric vehicles.
Bank of America estimates that the investments by major automakers have led to over 86,000 reshoring and foreign direct investment manufacturing jobs, with jobs related to electric vehicles growing by 27%.
As The Economist notes, the 2015 Paris climate agreement, which the U.S. rejoined on Biden’s first day in office, pledges to reduce greenhouse-gas emissions by 50-52% from 2005 levels. Research published in Science back in June estimates that by 2035, the bill will be responsible for reducing emissions by 43-48% from 2005 levels.
And consumers can still benefit from an up to $7,500 electric vehicle tax credit for select EVs, now available until 2032. And other tax credits can reduce the cost of installing solar panels by nearly 30%.
The IRA was meant to speed up the transition to electric vehicles while promoting green energy sources like solar and wind. And making sure the parts they need to work get made in the U.S.
And one year in, that appears to be exactly the case.
Other parts of the bill will take longer to be felt
Another key piece in the IRA, allowing Medicare to negotiate drug prices, isn’t allowed until 2026.
Beginning in 2025, those on Medicare will have a $2,000 limit on out-of-pocket prescription drugs, which is expected to save the nearly 19 million people on Medicare about $400 per year.
But for now, the bill capped the price of insulin for those on Medicare to just $35 per month out-of-pocket. While that doesn’t apply to those on private insurance, the bill played a part in pharmaceutical companies Eli Lilly, Novo Nordisk, and Sanofi announcing they are voluntarily cutting the price themselves.
The bill also included a much-needed funding boost for the Internal Revenue Service. As noted on Episode 106 of the Zander’s Facts podcast, the bill gave the IRS $80 billion over 10 years to increase enforcement over high-income earners, modernize technology, and potentially create its own direct filing program. (Goodbye TurboTax 👋) That money appears to be getting put to good use.
Democrats are still the only ones supporting the bill
The bill passed last year solely with Democratic support. Republicans in Congress unified against the bill at the time, and haven’t changed their tune since.
Chairman of the House Ways and Means Committee, Rep. Jason Smith from Missouri, told CNBC the IRA is a “massive transfer of tax dollars from the working class to the wealthy, big banks and large corporations.” He also said the bill could benefit the Chinese Communist Party.
House Speaker Kevin McCarthy told Fox News, “They’ll raise inflation higher. They’ll spend more money, which brought us into this problem.”
Of course, the downturn in inflation while over $500 billion in investments have been made would say otherwise. You can track the investments being made by this website from the Biden administration, which also finds that 90% of the investments in clean technology that have been announced are in counties with below-average weekly wages.
And you would think some Republicans would like to change their tune, considering lots of the investments into electric vehicles are being placed in Republican House districts. As The Economist notes, “$47.5 billion of ev investments are heading to Republican districts, compared with $6.7 billion destined for Democratic ones.”
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One year later, the Inflation Reduction Act is making good on the promises that the actual meat of the bill made, and then some. From Mark Zandi, chief economist at Moody’s Analytics, “The IRA will be a big plus for the economy in the long run as it reduces the economy’s reliance on fossil fuels. It will make the economy less vulnerable to spiking oil prices, which have contributed to nearly every recession since World War II.”
For more information on this week’s top story, here’s an article from MIT Technology Review - What’s changed in the US since the breakthrough climate bill passed a year ago?
What Zander’s been reading
Michael Oher, the Super Bowl champion offensive lineman and the subject of the movie ‘The Blind Side’, made headlines last week when he filed a lawsuit claiming Leigh Ann and Sean Tuohy never adopted him and forced him to sign a conservatorship that allowed the Tuohy’s, and not Oher, to profit from the movie. Get all the details on this week’s featured article:
Check out this week’s featured article at Vanity Fair - The Blind Side Was Built on a Big Lie, Alleges Film Subject Michael Oher - (Apple News link)
Zander’s Facts Sporting Club
Here are the top headlines from the sports world in the Sporting Club:
Women’s World Cup: Spain won the nation’s first ever Women’s World Cup with a 1-0 victory over England in Sunday morning’s final. Olga Carmona’s strike in the 29th minute was able to put Spain ahead and hold off England, who were also searching for their first Women’s World Cup title. This was just the third edition of the tournament that Spain had qualified for, only advancing as far as the Round of 16 previously. The 4-0 loss to Japan in the group stage is also the largest loss ever for a team that went on to win the Women’s World Cup later in the same tournament. The next edition of the tournament is set to take place in 2027, with the host nation currently undecided and set to be decided in May 2024.
Leagues Cup: Inter Miami won Saturday night’s Leagues Cup final in dramatic fashion, going 11 rounds into penalty kicks with Nashville SC. In regular time, Lionel Messi scored his 10th goal in seven games with Miami in the 23rd minute, while Fabrice Picault answered for Nashville in the 57th minute. In the final minute of stoppage time, Leonardo Campana just missed off the left post with a shot that would have given Miami the win before penalties. Ultimately, it was Miami goalkeeper Drake Callendar stopping Nashville goalkeeper Elliot Panicco’s penalty kick that gave Miami the club’s first trophy. Earlier on Saturday, Philadelphia Union took down Monterrey 3-0 in the third-place game, clinching the third spot from the competition for next year’s Concacaf Champions Cup.
Vlatko Andonovski: U.S. Women’s National Team head coach Vlatko Andonovski resigned from his position on Thursday after the U.S. achieved their worst finish ever at the Women’s World Cup. The U.S. failed to make it to the Semifinals for the first time after falling to Sweden in penalties during the Round of 16. Before this year’s tournament, the U.S. had won the previous two editions of the Women’s World Cup. U.S. Soccer announced assistant coach Twila Kilgore as the team’s interim manager. A decision on a new manager will need to be made quickly, as the team is set to take part in next summer’s Tokyo Olympics, which begin in less than one year.
James Harden: Philadelphia 76ers guard James Harden is being investigated by the NBA for comments he made regarding team president Daryl Morey while in China. Harden, who has requested a trade from the 76ers, called Morey a “liar” and said he would “never be a part of an organization that he's a part of.” Morey ended trade talks for Harden earlier this month, and Harden has privately said that he would report to training camp if he isn’t dealt, per reports.
NBA Schedule Release: The NBA released its schedule for the upcoming 2023-2024 season on Thursday. The season is set to begin on Tuesday, October 24, with the defending champion Denver Nuggets hosting the Los Angeles Lakers, and the Phoenix Suns taking on the Golden State Warriors. The league also announced select Tuesdays and Fridays in November where regular season games will also count as group play games for the inaugural In-Season Tournament. Among the notable matchups highlighting the league’s five-game slate on Christmas Day include the Warriors taking on the Nuggets, the Lakers hosting the Boston Celtics, and the Philadelphia 76ers facing the Miami Heat.
Rapid-fire Facts
These are top news headlines from the past week in rapid-fire fashion:
Trump Indictment: Former President Donald Trump was indicted by a grand jury in Georgia on Monday, marking the fourth indictment of the former president this year. Trump and 18 others, including his former personal lawyer Rudy Giuliani and former White House Chief of Staff Mark Meadows, were accused of operating a criminal enterprise attempting to overturn the results of the 2020 presidential election. Trump is expected to be arraigned in Atlanta by the end of next week, while the prosecution has asked for a trial to begin on March 4. The first Republican presidential primary debate is set to take place on Wednesday night on Fox News, but Trump, the current frontrunner in the Republican primary is expected to skip the debate for an interview with Tucker Carlson.
Hurricane Hilary: Hurricane Hilary is set to become the first tropical storm to hit southern California in 84 years. The storm, which was once rated as a Category 4 hurricane, is expected to make landfall on the Baja California peninsula in Mexico later today. Once the storm makes landfall, it will head up the coast into California and eventually Nevada by Monday. The National Hurricane Center says the storm is expected to bring “catastrophic and life-threatening flooding” to southern California and southern Nevada, which are under Flood Watches along with Tropical Storm Warnings in California. Forecasters say 3-6 inches of rain could fall, with some areas receiving up to 10 inches of rainfall.
Kansas Newspaper Raid: Marion County, Kansas officials ordered that all property seized from a raid at the Marion County Record, a local newspaper, must be returned. Marion County Attorney Joel Ensey found insufficient evidence for the raid to be conducted back on August 11. Marion County Police say they believe that an employee of the Record may have committed a computer-based crime, but Ensey did not find enough evidence linking the alleged crime with the raid’s location and items seized. As experts are now saying that Marion Police Chief Gideon Cody’s decision may have violated civil rights, it has come out that the magistrate judge who signed the search warrant has two previous DUI arrests.
Camp David Summit: President Joe Biden was joined by Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol at Camp David last week for an international summit. The three countries agreed to deepen economic and military ties by condemning recent “dangerous and aggressive behavior” by China in the South China Sea. The countries also committed to holding annual military exercises along with trilateral summits, as well as providing real-time information on North Korean missiles. The results of the summit are likely to provoke a response from China, a key trading partner for all three nations.
Montana Climate Change Trial: A District Court judge in Montana ruled on Monday that state agencies were violating the constitutional rights of young environmental activists by allowing fossil fuel development without considering environmental impacts. Judge Kathy Seeley found that the policy Montana uses to evaluate fossil fuel permit requests was unconstitutional by not requiring the effects of greenhouse gas emissions to be evaluated. The policy must be changed by the state legislature, which is currently controlled by Republicans. The Montana Attorney General’s office said that it plans to appeal the ruling.
Wrapping up the Facts
Before this edition of Zander’s Weekend Facts wraps up, here’s another reminder to check out the latest episodes of the Zander’s Facts podcast. Download and listen to the latest episode of the podcast, along with every episode of Zander’s Facts, wherever you get your podcasts.
You can also listen to every episode of the podcast on this very website. All Zander’s Facts podcast episodes are now available on zandersfacts.com under the “Zander’s Facts” tab for your enjoyment! That includes the next episode of the Zander’s Facts Podcast, which comes out this Wednesday!
That’s a wrap on this week’s edition of Zander’s Weekend Facts. The facts in print return next Sunday, August 27, 2023.
