Think Tank: Inflation Reduction Act to Cost Trillions by 2050

TL/DR –

The Inflation Reduction Act, a 2022 law addressing deficits, renewable energy, and healthcare, is projected to cost trillions by 2050. The Cato Institute think tank estimates that the Act’s subsidies for low-carbon emission products will cost between $2.04 and $4.67 trillion over the next 25 years. The Institute argues that the U.S. government underestimated costs and exposed taxpayers to unchecked liability, recommending a repeal of the subsidies or a limit on taxpayer liability through capped subsidies or expiration dates.

Cost Implications of The Inflation Reduction Act

The Inflation Reduction Act, a 2022 law addressing deficit reduction, renewable energy, and healthcare, is projected to cost trillions by 2050, as stated in a recent report.

Understanding the Costs

The libertarian think tank, the Cato Institute, in its March 11 report, estimates that the law’s subsidies for renewable energy and low-carbon product consumers will amount to between $2.04 and $4.67 trillion over the next 25 years. They predict that the next decade’s subsidies could range from $936 billion to $1.97 trillion, describing these amounts as “substantial.”

Senate Democrats’ View Vs. Cato Institute

Before the act’s approval, Senate Democrats estimated a $433 billion investment towards “energy security and climate change” and an “extension” for the Affordable Care Act. However, the Cato Institute’s report suggests that these costs have been “vastly underestimated.”

Capping the Subsidies

The think tank recommends fully repealing the Act’s energy subsidies. If not possible, they suggest setting a cap on taxpayer liability by limiting the subsidies’ dollar value, or setting an expiration date.

The Former President’s Stand

Former President Joe Biden, in an August statement, labeled the Act as “fiscally responsible.” He claimed it reduces deficit through eliminating wasteful expenditure and ensuring that corporations and the wealthy contribute more.

Biden also stated that the law is reducing healthcare costs and creating over 330,000 clean energy jobs. Moreover, he mentioned the $265 billion unleashed in clean energy and manufacturing investments by the private sector over two years.

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