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  • Writer's pictureGood Stewards Network

Lawmakers Agree on Deficit-Reducing Budget Reconciliation Package to Lower Inflation

  • On Wednesday, after months of negotiations, Senate Majority Leader Chuck Schumer of New York and centrist Sen. Joe Manchin of West Virginia agreed to a deficit-reducing climate, health, and tax package deal.

  • This deal will be part of a budget reconciliation package, dubbed “the Inflation Reduction Act of 2022,” that will be brought to the Senate floor next week, likely to pass along party lines.

Senators Joe Manchin and Chuck Schumer

What Will the Deal Do?

If passed, the package will raise $739 billion in new revenue, according to estimates by the Congressional Budget Office and the Joint Committee on Taxation. $313 billion will be raised through a 15% corporate minimum tax, $288 billion from lowering drug prices under Medicare, $124 billion from funding increased IRS enforcement of tax law, and $14 from closing the carried interest loophole that allows investment managers to pay lower tax rates.


“The investments will be fully paid for by closing tax loopholes on wealthy individuals and corporations,” Schumer and Manchin announced in a joint statement.


Deal Will Fight Inflation, Lower Deficit

The deal focuses heavily on curbing inflation, and will invest $300 billion into reducing the federal deficit to do so.


Manchin, initially weary about spending due to rising inflation, said in a statement on Wednesday that this deal would fight inflation by reducing the federal deficit.


“It is past time for America to begin paying down our $30 trillion national debt and get serious about the record inflation that is crushing the wages of American workers,” the West Virginia Senator stated. “In practical terms, the Inflation Reduction Act of 2022 would dedicate hundreds of billions of dollars to deficit reduction by adopting a tax policy that protects small businesses and working-class Americans while ensuring large corporations and the ultra-wealthy pay their fair share in taxes.”


Manchin noted that the deal does not raise the cap on state and local tax deductions.


Regarding the bill’s change in tax rates, families making less than $400,000 per year will not be impacted, and no new taxes will be levied on small businesses.


Environmental Investments Will Reduce Emissions

The package will invest $369 billion in energy-focused climate programs over ten years, estimating that it will reduce emissions by 40 percent by 2030 to protect our planet.


The deal will also ensure the continuation of electric vehicle tax credits in an effort to further reduce emissions. Americans can receive up to $4,000 in credits for a used electric vehicle and $7,500 for a new one.


Sen. Brian Schatz called the deal “the biggest climate action in human history.”


Affordable Care Act Subsidies to Protect Health Care Access

The legislation extends Affordable Care Act subsidies through 2024, which Manchin said “helps people because you just can’t throw [increases] in them during inflammatory times like this.”


Additionally, the bill will allow Medicare to negotiate drug prices for the first time ever, and will cap out-of-pocket costs at $2,000.


By spending both $369 billion on energy security and climate change and $64 billion on extending health care subsidies under the Affordable Care Act, the deal will protect the health of Americans across the board.


"Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination," Manchin said in his statement.

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