The Inflation Reduction Act of 2022 (H.R. 5376) would cut federal spending by $14.5 billion and raise $87 billion in revenue, reducing government deficits by nearly $102 billion over 10 years, the Congressional Budget Office estimated after reviewing the pending legislation.
The figures are a yearly average based on the legislation’s projected impact from 2022 through 2031, the CBO said August 3 in its cost analysis of the tax, health care, and climate bill, which is moving toward a Senate debate. The official release came one week after the estimate was posted on the official website of Senate Majority Leader Chuck Schumer, a New York Democrat, who has said a vote was likely this weekend or later next week.
The calculations by the CBO, Congress’ scorekeeper for the broad budgetary impact of pending legislation, are similar to those of the Joint Committee on Taxation, the nonpartisan congressional body that evaluates the legislation’s tax-related effects. The JCT estimated in an analysis released July 29 that the Inflation Reduction Act would raise about $313 billion over its 10-year span. The bill contains $739 billion in revenue offsets, mainly through a new 15% minimum tax on large U.S. corporations, the revised tax treatment of carried interest, and savings from a pharmaceutical-pricing proposal, the JCT concluded.
According to the CBO, the bill’s 10-year, $124 billion increase in the IRS budget would generate $204 billion in new revenue by cracking down on tax avoidance, a projection that wasn’t part of the JCT’s scoring. When this is factored in, the CBO’s assessment aligns with the $300 billion in deficit reductions claimed by Schumer and Sen. Joe Manchin, the West Virginia Democrat who in late July announced support for the bill after having opposed its larger, more detailed predecessor, the Build Back Better (BBB) plan.
The new bill includes some, but far from all, of the spending goals that President Joe Biden had laid out in the BBB. Key elements that remain are $31 billion to provide premium subsidies through the Affordable Care Act for three years and various tax incentives for clean-energy production.
With Manchin on board, attention has turned to another centrist Democratic senator, Kyrsten Sinema of Arizona. The party needs all 50 of its members in the upper chamber to approve the bill, but Sinema has yet to publicly state whether she would support or oppose it.
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