“Getting new forms of energy, feeding the grid, will ultimately reduce the price of electricity.” Sen. Mark Kelly of Arizona told Newsweek.
Democrats secured the support of Arizona Senator Kyrsten Sinema last night, meaning they now appear to have the 50 votes required to move forward with their Inflation Reduction Act.
Formed out of a deal struck last week between Senate Majority Leader Charles Schumer and Democratic Senator Joe Manchin of West Virginia, the bill is expected to raise over $700 billion through tax and prescription drug pricing reforms. It will also spend over $360 billion on “energy security and climate change” investments.
If passed, this act would be the largest climate change package to ever make it through Congress. In it are provisions aimed to bolster domestic manufacturing of solar panels, wind turbines, batteries, and critical minerals processing. Other funds are allocated toward tax credits and loans that aim to reduce carbon emissions within “every sector of the economy.”
At the consumer level is $9 billion in home energy rebate programs and a provision for 10 years of tax credits to help homes become more energy efficient. These are programs that Democrats say will relieve consumers of high energy costs, decreasing their overall utility bills.
For a party that has faced severe political backlash for historically high gas prices, these provisions could spark a much-needed political turnaround as Democrats head into the 2022 midterm elections holding slim majorities in the House and Senate.
Republicans have taken a hard stance against the bill, arguing that it will damage the energy sector and drive-up prices for oil and gas. All 50 Republican senators are expected to vote against it.
“It discourages people from doing advancement in that area, which may affect the production,” he added. “About 25% of the production traditionally that we get for oil and gas is from those federal lands. If you discourage more production on federal lands by raising the cost to actually produce there, then you discourage more production, and that’ll have an effect on prices.”
Although gas prices have fallen somewhat in recent weeks, the average cost per gallon across the nation remains above $4.00 — and is a top concern for voters. Inflation continues to batter consumer wallets, and most people believe the country is in the midst of a recession.
Democrats believe the Inflation Reduction Act, if passed, will help bring inflation under control. Early reviews of the bill’s potential effectiveness in that regard are mixed.
Preliminary estimates from University of Pennsylvania’s Penn Wharton Business Model (PWBM) project that the bill “would reduce non-interest cumulative deficits by $248 billion over the budget window with no impact on GDP in 2031.” The report states that “the Act would very slightly increase inflation until 2024 and decrease inflation thereafter,” but argues that the effect would be negligible.
