Today is the one-year Inflation Reduction Act anniversary, a dubious anniversary for a bill that has undermined families’ ability to pay their bills. Also, the U.S. had to borrow to pay for this IRA bill, which means it hurts future generations’ ability to pay our national debt.
David Winston notes that Congressional Budget Office projections show “Biden is going to match Trump’s addition to the national debt in just three years, reaching a total of $7.1 trillion over his four years. That would be $1.5 trillion more than Trump contributed during his term, which included the 2020 one-time COVID emergency spending. If Biden’s 2024 proposed budget actually passed, he would add as much to the national debt as Trump and Bush 43 combined.”
The Wall Street Journal’s Spencer Jakab gives more context about why this is so troubling:
The Congressional Budget Office regularly updates its long-term budget forecasts and says that U.S. debt held by the public will surpass gross domestic product this fiscal year and that interest on that debt will equal about three-quarters of discretionary, nondefense spending. By 2031, it will be as large.
Medicare, Social Security and, of course, interest are legally nonnegotiable. Military spending isn’t really optional either. No wonder the federal government is described as ‘an insurance company with an army.’
Yet the CBO’s forecast actually looks too optimistic. It envisions the net interest rate paid on that debt barely topping 3% in coming years even though short-term bills and notes yield more than 5% today. The swelling pile of debt means minor changes in assumptions now have major consequences.
The IRA, along with other massive, trillion-dollar packages passed during the COVID-era, contributed to America’s recent crippling inflation. In response, the Federal Reserve raised interest rates, which made America’s borrowing costs that much higher. The more the Fed raises rates, the more we saddle future generations with our poor choices.
The increased government spending under the IRA has triggered more inflation—eroding wages and buying power for households. For our country, we are burying ourselves in our own debt and interest payments created from sky-high interest rates spurred, in part, by the IRA. This is unsustainable.
And one year in, IRA has apparently caused a rift in the relationship between Sen. Joe Manchin (D-W.Va.) and President Biden. Manchin reportedly feels slighted and lied to, that his provisions in exchange for his pivotal vote have not been enacted. That’s allegedly partially why he’s toying with leaving the Democrat Party, and could run as a 3rd party candidate for No Labels (which, data show, would more likely hurt a Democrat more than a Republican hypothetically).
What’s sad is that Manchin should have been more concerned about our country’s future than his own pet projects and voted against the IRA entirely. It will take years to undo this damage.