It is the one-year anniversary of Joe Biden's Inflation Reduction Act, the signature legislation behind Bidenomics. The White House has been celebrating the contentious bill's first birthday by delivering speeches and running the cable news circuit to tout gains made. But one year after its passage, has the updated version of Build Back Better spurred any results for the US economy and the American people?
The Inflation Reduction Act Tour
President Biden made a stop in Milwaukee, WI, on the eve of the Inflation Reduction Act's anniversary. He highlighted his administration's gains and made the case for how Bidenomics is investing in America to grow the economy from the middle out and the bottom up, not the top down. At the same time as Biden was offering his tribute to the act that "has nothing to do with inflation," Vice President Kamala Harris was in Seattle, WA. Her office noted that she was there to "highlight the monumental impact that this historic legislation is having on communities throughout America and discuss the Biden-Harris administration’s continued commitment to addressing the climate crisis with the urgency it demands while building a clean energy economy that creates good-paying jobs."
Treasury Secretary Janet Yellen’s speech in Nevada touted Bidenomics' various legislative successes – Inflation Reduction Act, CHIPS and Science Act, and the Bipartisan Infrastructure Law – and how the president’s vision has facilitated a “transition” from “rapid recovery to stable growth.” She reported at a union hall close to the famous Las Vegas strip the slowdown in the inflation growth rate, job creation, wages, and the manufacturing and clean energy boom.
The Reality
(Photo by Chip Somodevilla/Getty Images)
Liberty Nation, X’s Community Notes, and economic analyses have fact-checked many of the econ-related statements coming out of 1600 Pennsylvania Avenue. Suffice it to say, the remarks are mendacious, misleading, or mistaken.
For example, Secretary Yellen, who should know better, claimed again that President Biden created 13 million new jobs. The problem with this figure is that between nine and ten million of these positions were returned from the coronavirus pandemic, meaning that the White House may have overseen at most three or four million new roles.
Another instance of an incorrect assertion is wages. According to the Bureau of Labor Statistics (BLS), average wage growth is down 2.7% from when Biden took office. Even when assessing real (inflation-adjusted) wage growth, the numbers are abysmal, as they turned positive by a small amount in July for the first time in 26 months. "The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 0.2-percent increase in real average weekly earnings over this period," the BLS wrote on Aug. 10.
The White House is taking all the credit for the annual consumer price index slowing from the peak of 9.1% in June 2022 to 3.2% in July 2023 while refusing to accept blame for its dramatic increase. But, as the president says, here’s the deal: consumer prices have soared 16% since Biden took office. And, contrary to what Yellen noted and what Biden and Harris will inevitably espouse, the Inflation Reduction Act hardly contributed to the easing.
When Joe Biden regrets the law's name because "it has nothing to do with inflation," it is understandable that the public is not fully sold on the Bidenomics marketing campaign. “I wish I hadn't called it that because it has less to do with reducing inflation than it has to do with providing alternatives that generate economic growth," the president told a Utah fundraiser on Aug. 9. Economists have shared such skepticism over links between the legislation and inflation: "I can't think of any mechanism by which it would have brought down inflation to date," said former Obama-era White House economist Jason Furman in an interview with the Associated Press. "We can say with pretty strong confidence that it was mostly other factors that have brought inflation down. The IRA has just not been a significant factor," Alex Arnon, an economic and budget analyst for the University of Pennsylvania's Penn Wharton Budget Model, told the newswire.
This is what the Congressional Budget Office warned in its analysis following the release of the Inflation Reduction Act last year: "In calendar year 2022, enacting the bill would have a negligible effect on inflation, in CBO’s assessment. In calendar year 2023, inflation would probably be between 0.1 percentage point lower and 0.1 percentage point higher under the bill than it would be under current law."
Oh, and that manufacturing and clean energy boom? The manufacturing sector is in a recession, semiconductor producers have yet to receive a single penny from the Biden White House, and clean energy has yet to result in savings on household utility bills (20 million households are behind on their utility bills as they owe $19.5 billion, up from 17.6 million households and $15.7 billion in March 2022).
Happy Birthday
Was the Inflation Reduction Act a giant grift? Politicians regularly argue that governments should never let a crisis go to waste. One year ago, the US economy was indeed experiencing an inflationary calamity as prices were at their highest levels in 40 years. Build Back Better, Biden’s climate-focused legislative crusade, had failed in Congress. So, what better way to cram the green energy ambitions into a bill that is marketed as a way to fight price inflation? The big banks, large corporations, and Chinese firms benefit most from the Inflation Reduction Act. The American people shall wait to see if they, too, will receive any advantages as they blow out the birthday candle.
