Lauded as one of the biggest pieces of legislation Washington lawmakers have taken on in decades, the so-called Inflation Reduction Act is aimed at improving the nation’s economy, particularly through reducing health care costs and addressing environmental concerns.
Colorado’s Democratic lawmakers are celebrating the new law, while Republicans are skeptical at best. Lauren Boebert, the Congressional representative for southern and western Colorado, lambasted the bill for its focus on beefing up IRS enforcement. And Senate candidate Joe O’Dea’s campaign told the Sentinel the measure “goes after American manufacturing, and it gives the IRS new funding to go after low-and middle-income Coloradans and small businesses.”
Contrary to O’Dea is some excitement among Aurora’s manufacturing community, which local economic officials say will have added resources to make eco-conscious upgrades.
O’Dea’s campaign said inflation is the biggest issue the business owner hears from voters.
“He would work specifically on legislation to fight inflationary pressures by providing incentives to help working families save more, increase domestic energy production and natural gas exports, and eliminate red tape that’s constraining trade and affecting our supply chain,” O’Dea’s campaign said when asked about specific measures that he’d offer instead.
The bill was met with excitement in the governor’s mansion, with officials in the Polis administration saying that many of its components dovetail with work the administration is already doing, particularly in regards to healthcare and climate.
“This really continues to build on the governor’s agenda,” said spokesperson Elizabeth Kosar. “We’re saving people money on healthcare, we’re addressing climate change and we’re continuing to build an economy that works for all.”
However, officials said that it’s too soon to say exactly how the IRA will impact the state, as the legislation is in its very first days of being implemented.
Pat Meyers, executive director and chief economic recovery officer in the Office of Economic Development and International Trade, said that it’s currently unclear how much of the money in the IRA will go directly to state governments and how much will be parceled out to local governments, private industry and grant programs.
At first glance, Meyers said that the bill’s healthcare and environmental provisions stood out to him.
“It’s pretty obvious it’s going to build on a lot of the initiatives the governor has had the last four years around healthcare, clean energy and basic improvements to our economic lives,” he said.
The bill will cap the price of co-payments for insulin medication at $35, a boon for diabetics as the cost of the life-sustaining medicine has soared. That will create increased protections for Colorado patients, as the state legislature passed a bill last year capping insulin prices at $100 for a month’s supply.
It will also cap out-of-pocket expenses for prescription drugs for Medicare patients at $2,000 a year beginning in 2025 and give Medicare the ability to negotiate directly on drug prices for the first time ever.
“It’s going to have a fairly significant impact in Colorado on drug pricing,” he said.
It also extends Affordable Care Act subsidies that were passed in the American Rescue Plan Act for three more years, which Meyers said is expected to affect 155,000 Coloradans enrolled in the ACA, who will save on average $900 a year.
In terms of clean energy, Meyers said that the rebates for installing efficient appliances will capitalize on similar programs that the state has been promoting, including a bill passed in the most recent legislative session that gives a 10% income tax credit to anyone who purchases a heat pump.
Funds are also dedicated in the IRA to fire recovery, drought mitigation, reducing air pollution and promotion the usage of electric vehicles, all policies that are highly relevant to Colorado as the state becomes increasingly vulnerable to the ramifications of climate change.
So, how much will the IRA actually combat inflation? Meyers said it won’t immediately be clear, though he noted that economists expect it to reduce the deficit, which should help to reduce inflation. The provisions that lower healthcare costs will be a plus as well, he said.
“I think it’ll take a little bit of time to tell, it’ll take time to start implementing all of this,” Meyers said. “Bills don’t get implemented on day one. But we are hopeful that it’ll have a beneficial impact on inflation.”
A breath of fresh(er) air
Sponsors of the Act say its incentives for green energy and other provisions to reduce pollution will cut greenhouse gas emissions nationwide by 40% compared to 2005 levels by the end of the decade, countering the effects of man-made climate change.
The Marshall Fire in Boulder County last winter proved that climate change is affecting suburban communities, and not just their rural, forested neighbors, said Congressman Jason Crow, who represents Aurora, Centennial and other parts of the southern Denver metroplex.
“(Climate change) is a risk to all of us and our health,” he said. “In the summers (we’re not) able to see the mountains. Our children are breathing this air.”
Crow’s also adamant that climate change is the top threat to national security. “It’s both a threat magnifier in that it makes every threat worse and it’s multiplying threats,” he said.
The act includes a spectrum of tax incentives and discounts that support clean power generation, electric vehicles, manufacturing and building efficiency, along with grants and loans that support energy efficiency in the power, industrial, construction and transportation sectors.
Senators Michael Bennet and John Hickenlooper both touted the act’s climate provisions as unprecedented in scope.
“I think that this is the most significant climate bill (of) its size that’s been passed by any country in the world. I don’t want to understate how important that is,” said Bennet. “The idea that we’ve got a bill that will cut carbon pollution 40% from 2005 levels to 2030 is extraordinary, especially given the fact that, a month ago, it didn’t look like we were going to pass anything at all.”
On the topic of the Paris Agreement and the United States’ obligation to reduce its carbon emissions, Hickenlooper acknowledged that the act doesn’t get the country “all of the way there,” but that incentivizing large companies to invest in renewable energy would lay the groundwork for lower-cost wind power and other-generation resources.
“Instead of a $300 million wind farm, all of the sudden, you’re looking at a $3 million wind farm, and you’re seeing these all over the country,” he said. “This is the beginning, not the end.”
Incentives for home energy efficiency mean it may also be cheaper for households to install heat pump systems rather than furnaces fed by natural gas, further reducing the country’s dependence on fossil fuels, said Hickenlooper.
The senators said they weren’t aware of any estimates of how many tons of emissions would be cut in Colorado specifically following the implementation of the act.
“We will make progress as a state, but I have not seen that data yet,” Bennet said.
Hickenlooper said the act would go a long way toward reducing the “brown cloud” of smog over the metro area specifically.
“It’s always been a battle about air quality,” he said. “You’re not going to have this battle 10 years from now. I think you’re going to have a different level of comfort.”
While most agree that there will be a substantial impact to the environment, analysts have also concluded that oil and gas companies benefiting from the new law will offset those achievements.
The act buoys oil and gas interests by mandating leasing of vast areas of public lands and off the nation’s coasts. And it locks renewables and fossil fuels together: If the Biden administration wants solar and wind on public lands, it must offer new oil and gas leases first.
As a result, U.S. oil and gas production and emissions from burning fuels could keep growing, according to some industry analysts and climate experts. With domestic demand sliding, that means more fossil fuels exported to growing foreign markets, including from the Gulf where pollution from oil and gas activity plagues many poor and minority communities.
On the assembly line
The several manufacturing plants humming on the eastern edge of Aurora are counted among the winners in the Act.
“We’re generally excited about this,” said Yuriy Gorlov, vice president at the Aurora Economic Development Council, which works with and lures businesses to the city.
The legislation’s emphasis on growing manufacturing jobs and investing in clean energy could mean that Aurora-based assembly facilities, fulfillment centers and other manufacturing hubs could better utilize cleaner energy in their production.
Targeted incentives in the bill make it attractive for companies to upgrade equipment and new companies to invest in cleaner technology. In Aurora, AEDC Director of Public Affairs Jillian Coffey said it’s especially helpful that the bill looks a few years down the road, so that companies can plan to make upgrades.
“This bill…puts money in the hands of these companies that have been pushed to become more environmentally friendly without there (previously) being any funding for it,” she said.
Incentives in the Act include new tax credits for commercial buildings, new homes, and electric vehicle charging stations that are energy efficient and bonus credits for businesses that pay “prevailing wages” as defined by the legislation.
Provisions of the Act also call for American-made equipment for clean energy production — which can be further incentivized if a company pays workers a prevailing wage.
Gorlov, like those watching national trends, also expects more companies operating abroad to return to U.S. soil. That could mean he and the team will be busy coaxing them to Aurora.
“We’ve been seeing companies bringing supply closer to where their customers are,” he said. “They might still keep things overseas, but economics gives them an opportunity to explore how to do more manufacturing here.”
Making health care more affordable
The act also caps the out-of-pocket cost of prescription drugs for Medicare recipients, extends federal health care subsidies, allows the government to negotiate the price of drugs for seniors and limits the price of a month’s supply of insulin for diabetics on Medicare to no more than $35.
While Bennet said he believed the caps on drug prices should be extended to other Americans as well, he called the victories over the pharma industry included the act “huge steps” toward making health care affordable.
“It’s critically important for the American people to have a public option, so if they decide they’d like something other than their private insurance, they can opt into a plan administered by Medicare,” he said.
Hickenlooper said he believed the move by the federal government to negotiate drug prices with pharmaceutical companies would lead to private insurance companies negotiating the cost of drugs down for their customers as well.
“I guarantee you: they will begin to negotiate as well,” he said. “Over time, that will be a significant savings.”
Costs around the home
Buying a new refrigerator, oven or even car can be difficult to swing for families that are already pinching pennies at the grocery store and gas station, but when it’s time to do so, choosing the eco-friendly option will be made easier with the Inflation Reduction Act.
Colorado’s congressional delegation says millions of low and moderate income households will be able to access rebates for new appliances, such as water heaters, heat pumps, dryers and kitchen appliances. The legislation says that to qualify for full rebates and discounts built into the bill, about $14,000 a year, household income must be below $176,700 for the Aurora area. That number is based on the requirement of 150% of median household income, determined by the federal government.
“This legislation makes these improvements as cheap or cheaper than their equivalents,” Congressman Jason Crow said.
Drought-affected basins
In a state built on the rush to find gold, water has emerged as the most precious resource these days. That goes for most southwestern states, whose lawmakers helped secure $4 billion for the Bureau of Reclamation in an effort to combat severe drought, especially along the Colorado River Basin.
Aurora and other cities have expressed concern about the increasing demand and dwindling supply on the river, with Aurora’s mayor describing the situation as one of the factors behind a sweeping water conservation measure that passed earlier this week.
“That’s going to be really important to Colorado farmers, and ranchers, and communities all across the state,” Bennet said of the $4 billion. He said billions more have also been set aside for wildfire mitigation and improving forest health.
Both have become important in the search for water sources for cities such as Aurora, which is expected to add tens of thousands of new residents in the coming years as more development pops up on large swaths of land to the east.
The bill’s namesake
And on the topic of inflation, Bennet and Hickenlooper said they thought the bill would help, or at least not hurt, the nation’s economy.
The country’s Consumer Price Index, which measures how the prices of common consumer goods and services change over time, was up 9.1% at the end of June compared to one year earlier, representing the largest jump in prices since 1981.
An estimate by the Congressional Budget Office indicates the act will reduce the deficit by $102 billion by 2031 but would have a “negligible” effect on inflation in 2022 and an uncertain but likely marginal effect on inflation in 2023.
Bennet was hopeful that reducing the national deficit would also flatten inflation.
“That right there takes money out of the economy and helps fight inflation by modestly increasing demand,” he said. He also called the country’s existing energy policy “inflationary,” adding that moving away from fossil fuels would enhance national security and help the country meet emission goals.
Hickenlooper said he believed investing in renewable energy and offering discounts on electric vehicles for working-class households would ultimately reduce the cost of living for Coloradans.
He also said the Wharton School of the University of Pennsylvania projected that the act would “slightly” reduce inflation over 10 years, although he didn’t know if they factored in all of the details of the act’s impact on renewable power.
“Worst-case scenario, it keeps inflation flat,” he said. “Best-case scenario, it reduces it by a point or two.”
— THE ASSOCIATED PRESS CONTRIBUTED TO THIS REPORT
Seems like it will be beneficial, but people will take sides politically. The republicans hope and pray that the claimed benefits for the people are not realized, so that they can continue blaming the problems on the President, whereas, in actuality, by pushing for this bill, he is trying to do something to solve the problem. But when the country fails, they seem to be able to claim some moral high ground.
We all need to wait and see how this plays out. If the plan works, great! And if not, we try something else. But one thing’s for sure: Doing nothing is not an option. If the republicans have a better idea, other than obstructing, let’s hear it!
Surprise, surprise, Lauren Bobert is against the legislation. I don’t care! Tell me what any members of the MAGA GOP are for. All I see and hear from the GOP is that everything is a disaster or they want to roll women and minorities right back to the fifties. This legislation is not perfect for everyone. People like different parts of the bill, BUT it’s a start in the right direction on several fronts – drug prices, climate change, clean, renewable energy production, and tax equity to name a few. AND it’s paid for! The GOP is legislating through Supreme court rulings increasing gun rights (like we don’t have enough) while taking away women’s right to choose. VOTE STRAIGHT BLUE THI FALL!