General

After being passed by the U.S. Senate on August 7, local time, the U.S. House of Representatives also voted on a bill to cut inflation on the 12th. This week, the bill is expected to be signed into law by U.S. President Joe Biden.

Biden said that after the House passes the bill, American families will soon see lower prescription drug prices, health care costs and energy costs. However, the US Congressional Budget Office analysis believes that the impact of the bill on US inflation this year is "negligible", and the impact on inflation in 2023 will only be between plus or minus 0.1 percentage points.

This is a package of bills covering climate change, health care, tax reform, and more. According to the US Consumer News and Business Channel, the bill totals about 430 billion US dollars, of which 369 billion US dollars will be used to fight climate change, and the goal is to reduce carbon emissions by 40% by 2030; For some prescription drugs, Medicare It will gain bargaining power for the first time, saving $288 billion in expenses over the next ten years; a tax of at least 15% will be imposed on large companies with profits of more than $1 billion, which is expected to bring in $124 billion in revenue.

The bill attracts attention for funding to fight climate change. The funding will be used in five major areas, focusing on clean energy manufacturing, including solar panels, wind turbines, batteries, electric vehicles, hydrogen production and key minerals.

This bill is actually a "skinny" version of the "Rebuild a Better Future" bill originally proposed by Biden. The total size of the original version of the bill is as high as 3.5 trillion US dollars. It has been 18 months since its inception. At that time, the US inflation was not high, and in June this year, the US consumer price index (CPI) was as high as 9.1%, and the CPI in July was still as high as 8.5% year-on-year. "So it could be packaged as an anti-inflation bill to help Democrats win a legislative victory before the midterm elections," analysts said.

But it was a narrow victory. The Senate voted 51-50, while the House voted 220-207. The bill would cap the price of some drugs, increase voters' disposable income, reduce some deficits, and stimulate the renewable energy industry, which is also expected to save hundreds of billions of dollars over the next decade. Although the bill has been delayed and shrunk, it still faces challenges in actual implementation, whether it is climate, health care, or taxation.

According to the analysis, the passage of the bill means a historic expansion of the power of federal medical insurance. Reducing prescription drug costs through medical insurance and insurance companies depends on the actual results of the multi-party game. The bill reduces the government's fiscal deficit by increasing taxes, taxing big businesses and the wealthy, and involves a game of government and business.

In terms of climate and energy, there may be grassroots opposition to large-scale energy projects and a long approval process, resulting in project permitting and construction speed not keeping up with demand growth. Import policy issues and shortage of construction workers will also affect policy advancement.

In terms of slowing inflation, people from all walks of life are even more skeptical. There are concerns that the bill "does nothing" to actually cut inflation and that the tax hikes in the bill could instead push up prices, killing jobs, raising energy costs and hurting an inflation-laden economy.