Peach Tree Times

The Democrats' $750 billion climate and health care bill, called the Inflation Reduction Act of 2022, was signed into law by President Biden on Tuesday but some budget analysts and JPMorgan economists say the legislation will have little near-term effect on the nation's economic problems. 

The bill has support from every Senate Democrat, including Sen. Raphael Warnock of Georgia.

CNN reports that the $750 billion legislation, which some have coined a landmark tax, climate and health care bill, was signed into law by Biden at the White House on Tuesday.

The Inflation Reduction Act of 2022 passed in a 51-50 vote in the Senate this month. None of the 50 Republican senators voted for the bill, meaning a tie-breaker vote from Vice President Kamala Harris was needed to pass the legislation.

According to Bloomberg, economists from JPMorgan Chase & Co. say the Inflation Reduction Act will have “almost no effect” on price growth that’s currently running at the fastest pace in 40 years. Additionally, other analysts, including the nonpartisan Congressional Budget Office, the Committee for a Responsible Federal Budget and the Penn Wharton Budget Model, say the legislation will have a minimal influence on inflation, which climbed to an annual 8.5% in July.

"JPMorgan economists said the Inflation Reduction Act will have “almost no effect” on price growth that’s currently running at the fastest pace in four decades," Bloomberg wrote in an Aug. 9 Twitter post.

“The aggregate demand impulse is trivial,” Michael Feroli, JPMorgan’s chief US economist, wrote in a note Tuesday, according to Bloomberg. “Moreover, we believe the drug-pricing provisions will have little near-term impact on the CPI,” he said, referring to the Bureau of Labor Statistics' Consumer Price Index. 

“If there are longer-run beneficial effects for the supply side of the economy, as its backers claim, that’s a growth issue, not an inflation issue," Feroli said. "In the long run, inflation is determined by Fed policy. By itself, this very modest reduction in the fiscal impetus to aggregate demand implies almost no change to the near-term growth outlook.” 

The Inflation Act will support $430 billion in government spending on energy, electric vehicle credits and health insurance grants. Estimates also suggest that under the act, $739 billion of revenue would be raised over the next 10 years from tax increases, the National Law Review reports.