Reason Roundup

Senate Passes $740 Billion 'Inflation Reduction Act' That Will Probably Make Inflation Worse

Plus: Inside Trump's family separation policy, a Grammarly for government, and more...


The U.S. Senate passed the misleadingly named Inflation Reduction Act on Sunday before senators adjourned until September. The bill—which allocates around $740 billion—passed with a tie-breaking vote from Vice President Kamala Harris; it will now head to the House of Representatives, which is expected to vote on it Friday.

Democrats say the bill will curb inflation by lowering energy and health care costs for some Americans. But inflation—which is now impacting prices across the U.S. economy— isn't actually reduced just because the government artificially lowers the consumer cost of a few items. And whether it will even succeed in bringing down things like health care costs is questionable.

An analysis by the nonpartisan Congressional Budget Office says the law will have a "negligible" effect on inflation. And more government spending will only make inflation worse in the long run: 230 economists have signed an open letter saying the proposed law will "perpetuate the same fiscal policy errors that have helped precipitate the current troubling economic climate."

"If we want to stop inflation, then the federal government needs to stop excessive spending, and the Federal Reserve needs to stop excessive money creation," tweeted former Rep. Justin Amash (L–Mich.). "Price controls and subsidies cannot stop or reduce inflation, but they will further harm the economy and make people poorer."

The behemoth bill is full of questionable spending, including $80 billion in increased funding for the IRS. Democrats say more money will mean that the tax agency can focus more of its audits—which currently disproportionately burden low-income taxpayers—on very wealthy Americans. Republicans reply this is spin, and that giving the IRS more money will mean it spends more time snooping on and auditing everyone.

The IRS "is an agency that only succeeded in answering about one out of every 50 phone calls during the 2021 tax season," Sen. John Thune (R–S.D.) said last week on the Senate floor. "Yet 4 percent of the $80 billion is going to taxpayer services; 57 percent goes to enforcement, so that the IRS can spend more time harassing taxpayers around this country."

Thune and other Republicans—along with Arizona Democrat Kirsten Sinema—also objected to a 15 percent corporate minimum tax rate for businesses making more than $1 billion in income annually. (Democrats say this part of the bill will bring in more than $300 billion in revenue for the government.) The Republicans and Sinema succeeded in getting an exemption for some businesses owned by private equity.

The bill contains many components of this administration's previous spending plans. It includes $300 billion for energy- and climate-related programs, and it creates tax credits for individuals buying electric vehicles or making energy efficient home improvements. It extends Affordable Care Act subsidies and introduces a $35 per month price cap on insulin for Medicare recipients.

But it's also missing many items on Democrats' wish list, including funding for child care programs and paid family leave, an extension of the child tax credit, and a cap on insulin prices for private insurance plans.

The package "was far smaller than the party's original $3.5 trillion vision, but larger than the slim health care legislation that lawmakers were considering just two weeks ago," notes Politico. "It's probably the last big party-line bill Democrats will be able to deliver for years, with the House expected to flip to Republicans in the November elections."


A heartbreaking story in The Atlantic looks at forced migrant family separations. These were, it shows, an explicit strategy, no matter how much the Trump administration asserted otherwise. "Separating children was not just a side effect, but the intent," writes Caitlin Dickerson. "Instead of working to reunify families after parents were prosecuted, officials worked to keep them apart for longer."



• Indiana has passed an abortion ban that starts at conception.

• Madison County, North Carolina, is putting AR-15s in all of its schools.

• "Artificial eggs created using skin cells, sperm generated from implanted stem cells, and synthetic embryos are all recent breakthroughs made by different teams of researchers in the field of reproductive science," reports Reason's Ron Bailey. "All of these advances took place in mice, but the researchers believe that their findings can eventually be applied to human reproduction."