ICYMI: CRFB Says Inflation Reduction Act Will Reduce Deficits by $2 Trillion Over Next Two Decades
A new analysis from the Committee for a Responsible Federal Budget finds that the Inflation Reduction Act will reduce the deficit by nearly $2 trillion over two decades. Scores from the official scorekeepers – the Congressional Budget Office and the Joint Committee on Taxation – show more than $300 billion in deficit reduction in the first decade.
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Committee for a Responsible Federal Budget: IRA Saves Almost $2 Trillion Over Two Decades
The Inflation Reduction Act (IRA) would reduce budget deficits by over $300 billion in its first nine years, but much of the savings would take time to materialize. We estimate the IRA would reduce deficits by $1.9 trillion over two decades, including interest savings.
Over two decades, we estimate the Inflation Reduction Act includes roughly $900 billion of spending and tax cuts, $2.4 trillion of offsets, and roughly $400 billion of net interest savings. About $1.3 trillion of those offsets comes from prescription drug spending - including drug negotiations, an inflation price cap, and the repeal of a costly rebate rule. The remaining $1.1 trillion comes from higher revenue, mainly from a 15 percent corporate minimum tax and from increased Internal Revenue Service (IRS) funding to improve tax compliance.
On an annual basis, we estimate net deficit reduction under the Inflation Reduction Act would rise to about $100 billion per year by 2033 and to $200 billion a year by the end of the second decade. Debt as a share of GDP would be four percentage points lower by 2042. With the extension of ACA subsidies, it would be two percentage points lower.
With debt headed to 140 percent of GDP in two decades, much more would need to be done to put it on a sustainable path. But the Inflation Reduction Act would be a step in the right direction.
Joseph R. Biden, ICYMI: CRFB Says Inflation Reduction Act Will Reduce Deficits by $2 Trillion Over Next Two Decades Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/357177