Biden touts inflation reduction law despite sobering report

Sep 13, 2022, 12:31 AM | Updated: Sep 14, 2022, 9:20 am

President Joe Biden speaks about the Inflation Reduction Act of 2022 during a ceremony on the South...

President Joe Biden speaks about the Inflation Reduction Act of 2022 during a ceremony on the South Lawn of the White House in Washington, Tuesday, Sept. 13, 2022. (AP Photo/Andrew Harnik)

(AP Photo/Andrew Harnik)

WASHINGTON (AP) — President Joe Biden gathered a crowd of thousands at the White House Tuesday to celebrate last month’s passage of the Inflation Reduction Act, even as a new government report showed how hard it could be to bring surging prices down near prepandemic levels.

Despite its name, the law’s impact on inflation is expected to be modest at best.

Tuesday’s economic report — inflation at 8.3% year-to-year, though just 0.1%. from July to August — was a harsh reminder of how difficult it might be to hit the Federal Reserve’s inflation target of 2% a year. Even as gasoline prices have declined since June, the costs of housing and food remain especially high in a way that suggests further Fed rate hikes and more economic pain to bring down prices.

U.S. stock indices fell sharply on the inflation report, with the benchmark S&P 500 down more than 4.3% on Tuesday.

Still, Biden and congressional Democratic leaders hailed the new law, with the president raising his voice and taking off his jacket in campaign style at the event on the White House South Lawn.

“With this law the American people won and special interests lost,” Biden said, taking a victory lap for legislation that rounded out the last piece of his domestic agenda for his first two years in office.

The legislation, which passed with only Democratic votes in Congress, also included the most substantial federal investment in history to fight climate change — some $375 billion over a decade — and will cap prescription drug costs at $2,000 out-of-pocket annually for Medicare recipients. It also would help an estimated 13 million Americans pay for health care insurance by extending subsidies provided during the coronavirus pandemic. The measure is paid for by new taxes on large companies and stepped-up IRS enforcement on wealthy individuals and entities.

Biden in his remarks criticized Republicans for voting against the measure, contending they opposed a bill that would lower prices.

“I believe Republicans could have and should have joined us on this bill as well,” Biden said. “After all, this bill cut costs for families to help reduce inflation at the kitchen table.”

The law may help lower prescription drug prices, but outside analyses suggest it will do little to immediately bring down overall inflation. Last month, the nonpartisan Congressional Budget Office judged it would have a “negligible” effect on prices through 2023. The University of Pennsylvania’s Penn Wharton Budget Model went even further to say “the impact on inflation is statistically indistinguishable from zero” over the next decade.

In theory, the law could reduce inflationary pressures because it would lower annual budget deficits by $300 billion over 10 years.

But by partially forgiving student debt and changing the repayment structure in an August executive order, Biden likely has wiped out those deficit savings, according to the Committee for a Responsible Federal Budget. An analysis by the fiscal watchdog estimates that the president’s executive order on student debt would cost roughly $500 billion over 10 years, “completely eliminating any disinflationary benefit.”

Still, voters are especially sensitive to gasoline, which declined 10.6% in August. The Biden administration has repeatedly cited relief at the pump as gas costs have fallen since June –when average U.S. prices crested above $5 a gallon. AAA estimates that gas prices nationwide averaged $3.71 a gallon on Tuesday.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


FILE - The draft of a bill that President Joe Biden and House Speaker Kevin McCarthy of Calif., neg...

Associated Press

Debt deal imposes new work requirements for food aid and that frustrates many Democrats

Democrats are deeply conflicted about the debt ceiling deal, fearing damage has been done to safety net programs

21 hours ago

Seattle lawyer...

Associated Press

Lawsuit alleging ex-deputy falsified arrest report settled for $250K

A lawsuit filed by a Washington oyster farmer accusing a former county deputy of falsifying an arrest report

21 hours ago

biden crisis averted...

Zeke Miller and Chris Megerian

Biden celebrates a ‘crisis averted’ in Oval Office address on bipartisan debt ceiling deal

President Joe Biden celebrated a “crisis averted” in his first speech to the nation from the Oval Office Friday evening.

3 days ago

Margrethe Vestager, Executive Vice-President for A Europe Fit for the Digital Age and Competition, ...

Associated Press

US, Europe working on voluntary AI code of conduct as calls grow for regulation

The United States and Europe are drawing up a voluntary code of conduct for artificial intelligence as the developing technology triggers warnings

3 days ago

FILE - Idaho Attorney General candidate Rep. Raul Labrador speaks during the Idaho Republican Party...

Associated Press

Families sue to block Idaho law barring gender-affirming care for minors

The families of two transgender teenagers filed a lawsuit Thursday to block enforcement of Idaho's ban on gender-affirming medical care for minors.

4 days ago

Amazon agreed Wednesday to pay a $25 million civil penalty to settle Federal Trade Commission alleg...

Associated Press

Amazon fined $25M for violating child privacy with Alexa

Amazon agreed Wednesday to pay a $25 million civil penalty to settle Federal Trade Commission allegations it violated a child privacy law

4 days ago

Sponsored Articles

Men's Health Month...

Men’s Health Month: Why It’s Important to Speak About Your Health

June is Men’s Health Month, with the goal to raise awareness about men’s health and to encourage men to speak about their health.

Internet Washington...

Major Internet Upgrade and Expansion Planned This Year in Washington State

Comcast is investing $280 million this year to offer multi-gigabit Internet speeds to more than four million locations.

Compassion International...

Brock Huard and Friends Rally Around The Fight for First Campaign

Professional athletes are teaming up to prevent infant mortality and empower women at risk in communities facing severe poverty.

Emergency Preparedness...

Prepare for the next disaster at the Emergency Preparedness Conference

Being prepared before the next emergency arrives is key to preserving businesses and organizations of many kinds.

SHIBA volunteer...

Volunteer to help people understand their Medicare options!

If you’re retired or getting ready to retire and looking for new ways to stay active, becoming a SHIBA volunteer could be for you!

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.

Biden touts inflation reduction law despite sobering report