By Betsy Klein, CNN
Congressional Democrats’ climate and healthcare package is getting a boost from a group of top economists, who wrote in a new letter that the so-called Inflation Reduction Act will lower prices for US consumers in an environment of high inflation.
“This landmark legislation makes crucial investments in energy, health care and in strengthening the country’s tax system. These investments will fight inflation and reduce costs for American families while paving the way for strong, stable and broadly shared long-term economic growth,” 126 economists said in a letter sent to congressional leaders on Tuesday, which first obtained by CNN.
The letter was signed by key economists including former Clinton Treasury Secretary Robert Rubin and Obama Treasury Secretary Jack Lew, Obama Labor Department Chief Economist Betsey Stevenson , Moody’s Analytics Chief Economist Mark Zandi, former Congressional Budget Office Director Doug Elmendorf, and Nobel Prize-winning economist. Joseph Stiglitz, among others.
“It started meeting late last week, with some of the signatories connecting with each other to discuss how they could highlight the economic value of the bill and push back against some of the economic misinformation. surrounding it,” a source familiar with the letter said. .
Economists touted the bill’s historic $369 billion investment in addressing the climate crisis and, they wrote, it will “quickly and substantially reduce health care costs for families” by enabling Medicare to negotiate some prescription drug prices, as well as extensions to expand affordable care. Subsidies Act.
Those investments, the group wrote, “would be more than fully paid for,” pointing to its provision to impose a 15% minimum tax on certain corporations.
“This proposal addresses some of the country’s biggest challenges on a significant scale. And because it reduces the deficit, it does so while putting downward pressure on inflation,” the economists said.
The relief comes as prices continue to rise, with inflation hitting 40-year highs. The latest data from the Bureau of Labor Statistics shows that inflation hit a pandemic-era peak in June, with U.S. consumer prices jumping 9.1% year-over-year.
The bill, which was brokered by moderate Democratic Senator Joe Manchin of West Virginia and Senate Majority Leader Chuck Schumer of New York, is currently undergoing a technical process with the known Senate Congressman under the name “Byrd Bath”, a test designed to prevent foreign provisions of legislation using the reconciliation process. Once the legislation has gone through this process, Democrats should be able to pass the bill by a simple majority. It remains to be seen, however, whether Senator Kyrsten Sinema, a moderate Democrat from Arizona, will vote with her party on the legislation.
Schumer said Monday he expects the parliamentary process to be completed and the Senate to vote on the bill this week before the August recess.
“This week, the Senate will take action on a groundbreaking bill, a bill we haven’t seen in decades,” he told the Senate. “Over the coming days, both parties will continue conversations with the parliamentarian to advance the bipartisan ‘Bath Byrd’ process. Our schedule has not changed and I plan to bring this bill to the Senate to begin voting this week.
Some economists said the legislation would do little to curb rapidly rising prices, especially in the short term. Moody’s Analytics estimates the legislation would have a “small” impact on inflation, and Penn Wharton’s budget model also indicated it would have little impact on prices.
And Senate Republicans opposed to the legislation point to an analysis by the nonpartisan Joint Committee on Taxation, which said the bill would raise taxes on Americans.
Kimberly Clausing, one of the signatories of the letter and an economist at UCLA Law School, disputed the JCT’s analysis, suggesting in a Tweeter that it was incomplete.
“Many key factors are omitted from these tables, including the effects of deficit reduction, the positive effects of clean energy spending, and the benefits of lower drug prices,” Clausing wrote.
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CNN’s Tami Luhby, Matthew Egan and Ali Zaslav contributed to this report.