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The Inflation Reduction Act, Explained

The Inflation Reduction Act (IRA) is the product of over a year of hard work and negotiations from Democrats in Congress. 

By passing this bill, Democrats are delivering on their promises to improve the lives of working families across the country. The Inflation Reduction Act lowers costs of necessities like energy bills and health care expenses, creates millions of good jobs, and takes significant climate action, while working to make the wealthy and big corporations pay their fair share in taxes.

We would not be here without activists across the country organizing for years to build pressure for Democrats to enact bold policy. The Congressional Progress Caucus answered the call from the grassroots and refused to give up the fight to move the President’s agenda from a promise to legislative text that passed the House nearly 9 months ago. The Inflation Reduction Act is based on key pieces of the Build Back Better Act, which were fought tooth and nail by progressives in the House. 

That being said, the bill does not include everything we were fighting for. After we secure the Inflation Reduction Act is signed into law,  we will continue the fight for universal childcare, pre-K, housing, immigration justice, and Medicare expansion, and the full agenda the American people voted for. But let’s be clear: This legislative victory would not have been possible without the tireless organizing going on across the country to push our MoCs to make use of this Democratic Trifecta and deliver on their promises. 

Read on to learn what is actually in the bill and what needs to be done now that it passed!

What is in The Inflation Reduction Act?

The Inflation Reduction Act is a package that will bring down costs for families by lowering prescription drug prices, lowering energy costs by investing in clean energy, and helping ensure the ultra-wealthy pay their fair share.

While a number of urgent priorities were not included (we’ll cover those below), there are a bunch of provisions that we should celebrate - and hold Republicans accountable for attempting to obstruct them. Here are some of the highlights: 

  • Reduces carbon pollution by 40 percent by 2030. This bill invests heavily in clean renewable energy that will reduce our dependence on fossil fuels and accelerates our transition to a green energy future. 
  • Over $350 billion in climate action, clean energy jobs, and environmental justice. With billions in clean energy tax credits, the IRA will help spur us towards a clean energy future. The average American family is estimated to see an annual $1,025 in energy savings, as the Inflation Reduction Act tackles one of the largest drivers of inflation—oil and gas prices—by lowering fuel and electricity costs and improving energy efficiency.
  • Tackles pollution and saves lives. The inclusion of key environmental justice priorities like resilient and energy-efficient housing, Environmental and Climate Justice Block grants, black lung disability trust funding, and community pollution cleanup are a good step towards investing in environmental and climate justice. Finally, the inclusion of a methane fee will help the US cut emissions as we work to meet President Biden’s commitment to cut climate pollution at least in half by 2030. Overall, this bill will prevent thousands of premature deaths by improving the air we breathe, with communities most burdened by pollution enjoying disproportionate health benefits.
  • Invests in clean transportation. The IRA invests over $95 billion for clean transportation, including $3 billion for the U.S. Postal Service to purchase zero-emission vehicles.
  • Creates 1 million green jobs every year over the next 10 years.  This includes jobs in clean energy, clean manufacturing, transportation, buildings, environmental justice, and natural infrastructure. 
  • $500 million for the Defense Production Act. Biden’s use of the DPA will accelerate domestic clean-energy manufacturing for technologies like solar panels, heat pumps, and critical minerals processing.
  • Lowers the cost of certain prescription drugs. The bill would lower drug prices for Medicare beneficiaries by allowing Medicare to negotiate the price of select drugs and requiring the Secretary of Health & Human Services to negotiate the maximum number of drugs allowed each year. 
  • Establishes out-of-pocket caps for Medicare beneficiaries. The bill establishes a monthly $35 out-of-pocket cap on insulin and $2,000 yearly cap on out-of-pocket Part D prescription drug costs for Medicare beneficiaries, with the option to break that amount into affordable monthly payments. The bill also provides seniors with free vaccines.
  • Extends enhanced Affordable Care Act premium subsidies for millions of Americans through the end of 2025. The bill would continue investments in the ACA, saving nearly 13 million Americans an average of $800 per year on their insurance premiums when buying from the marketplace.
  • Imposes a 1% excise tax on stock buybacks. This tax not only raises billions of dollars from big corporations, but also encourages them to invest in their workers or in expanding their productive capacity, rather than simply shoveling more money into the pockets of already wealthy shareholders. 
  • Creates a 15% Corporate Minimum Tax. This new tax will help set the floor so that big corporations can’t game the system, claiming enough deductions and loopholes to avoid paying any federal corporate taxes at all. 
  • Gives the IRS a badly needed funding boost. For too long, the ultra-wealthy and big corporations have been able to cheat on their taxes and hire some fancy accountants to make sure the IRS didn’t investigate them. This new funding gives the IRS the resources to go after wealthy tax cheats. It also will give them more staff and upgraded computer systems so that regular tax payers like you can get your questions answered and tax returns processed quickly come tax time. 

These are really good things! And we’re excited to see these provisions become law. 

This bill is transformative. Biden & Democrats can continue making progress.

This reconciliation process started with a sweeping proposal from President Biden - a more progressive plan than we would have gotten without years of work. While the final IRA doesn’t include everything we wanted, it’s still a historic achievement and a demonstration that Democrats are fighting to deliver for working families. Of course, there’s more work to be done. We need to use the good things in this bill to make the case that going big and bold is worthwhile. We can’t lose sight of the communities who still need investment, from working parents and childcare providers, to folks struggling to afford housing, to our immigrant neighbors seeking a pathway to citizenship, and more. And while this bill makes a critical down payment on our climate goals, this bill includes some harmful giveaways to the fossil fuel industry, including mandatory lease sales and investments in carbon capture. Let us be clear, these giveaways exist because Senator Manchin is beholden to fossil fuel companies and put the profits of these polluters over the needs of everyday people. With Congress passing the IRA, it is now up to the Biden Administration to step up and take strong administrative action to end our reliance on fossil fuels and transition the country towards truly clean, renewable energy. The fight continues for a society that supports all of us, and where we can all thrive.

What do we do now?

Now that the bill has passed, it’s time to celebrate our MoCs that fought for us and supported this bill, and hold obstructionist Republicans accountable for trying their hardest to block these necessary policies. 

Appreciation or Accountability for your Senator or Representative!

Democrats stuck together and passed the Inflation Reduction Act on a party line vote + the Vice President as tie breaker in the Senate. This means that every single Republicanvoted against lowering costs for families. 

Follow up with your Senator or Representative to tell them what you thought of how they chose to act. While it can be tempting to move on to the next thing after a bill has passed, it’s critical to finish the process by making sure to thank your Senator who did the right thing, and express frustration, disappointment, anger, even outrage, to the Republicans who failed to vote for the relief people desperately need. 

Thanking elected representatives helps create a virtuous cycle where they’re more likely to push for progressive amendments, or avoid defecting if they’re more moderate, in the future. And making sure that Republicans know that you’re watching, and that you aren’t giving them a shred of credit, for any of the good provisions in this package, is critical too! 

Thank your Democratic Senator or Representative who supported the Inflation Reduction Act!

Sample call or email script:

Hello, my name is [YOUR NAME] and I am from [CITY/STATE]. I’m calling [SENATOR OR REP. NAME] to thank them for their support of the Inflation Reduction Act. This bill is incredibly important to me because [Fill in your reason]. I’m grateful to see my [SENATOR OR REP.] advocating for their constituents by passing this bill. 

Express your frustration to your Republican Senator or Representative who voted against the Inflation Reduction Act!

Sample call or email script:

Hello, my name is [YOUR NAME] and I am from [CITY/STATE]. I’m calling [SENATOR OR REP. NAME] to share my outrage that they voted against the Inflation Reduction Act.  This is a badly needed legislative package that will lower costs for families, and I’m outraged [SENATOR OR REP. NAME] used their vote to oppose this urgent legislation. I am glad the Inflation Reduction Act passed, despite their “no” vote. I urge [SENATOR OR REP. NAME] stop playing politics with people’s lives and livelihoods, and finally put your constituents first.