More than two years after signing his landmark Inflation Reduction Act (IRA) into law, President Joe Biden admitted that the bill was less about reducing inflation and more about promoting climate change measures, adding that he should have named the bill more carefully.
During his speech in Wisconsin, Biden noted that the IRA was the “most significant climate change law ever,” as it contained nearly $369 billion in green energy projects. The president also regretted not naming the bill based on its true content.
Alongside the bipartisan infrastructure bill, the IRA became Biden’s signature legislation during his presidential tenure. Biden and other Democrats, including Vice President Kamala Harris, tried to capitalize on the IRA to build a narrative that this law brought inflation down even when the prices of daily household items were rising at an unprecedented rate.
After signing the IRA, Biden called it the most important legislation to “combat inflation,” while many other notable Democrats, like Senate Majority Leader Chuck Schumer, also praised the bill for its ability to reduce inflation. In September 2022, then-House Speaker Nancy Pelosi noted that the IRA would reduce drug prices and general healthcare costs for American families.
However, Americans continued to grapple with record-breaking inflation after the passing of the bill, and the Federal Reserve had to increase the interest rates over and over again to curb inflation. From August 2022, when the bill was passed, until July 2023, the Fed increased policy rates seven times, including a 0.75 percentage point rise on two occasions.
This is not the first time Biden has questioned his own decision of wrongly naming the IRA. Last year, he claimed that the IRA was less about reducing inflation and more about creating “alternatives that generate economic growth.” At the time, Biden said that the bill focused more on climate change and job creation.
When the bill was passed, the Congressional Budget Office (CBO) estimated that it would have a “negligible” impact on controlling inflation.
Economic experts explained how inflation kept on rising across the country to put an unnecessary burden on the pockets of average Americans, even in the presence of the so-called IRA. According to BlackRock CEO Larry Fink, despite adopting several legislative measures, including the IRA, the Infrastructure law, and the CHIPS Act, the administration could not bring the inflation down to 2% annually. The latest inflation report shows that the Consumer Price Index stood at 3% in June 2024 compared to a year earlier.
The day the IRA was signed into law, Trump’s former economic advisor, Larry Kudlow, suggested that there is “not one single iota” of hope that the bill could drive economic growth. Only 12% of Americans believed at the time that the IRA would do anything to reduce inflation, according to Economist polls.
