Policy Backgrounders

Inflation Reduction Act of 2022 and Permitting Reform

August 17, 2022

President Biden signed the Inflation Reduction Act into law August 16th, a bill capping months of start and stop negotiations mainly with Senator Joe Manchin (D-WV) on what part of the President’s Build Back Better economic agenda should be included in budget legislation, if any. The final result, while far short of the original Build Back Better budget proposal, includes the largest investment through a combination of subsidies and tax incentives by the US government on climate initiatives, a three-year extension of the COVID legislation subsidies for health insurance under the Affordable Cares Act, authority for Medicare to negotiate prescription drug prices, and a 15% minimum tax on corporations to offset the costs of the bill, among other provisions. Overall, according to the Congressional Budget Office, the Act will reduce the federal budget by about $300 billion over 10 years.

The bill had passed the Senate and the House on a party-line vote; no Republicans in either chamber supported the bill. Majority Leader Charles Schumer (D-NY), was able to override the Senate’s usual rules on filibusters that require 60 votes to proceed with legislation because the legislation was a reconciliation bill, a process that makes enacting budget legislation easier.