By Trevor Hunnicutt and Jarrett Renshaw
WASHINGTON (Reuters) – U.S President Joe Biden on Wednesday used the first anniversary of his signature Inflation Reduction Act to pitch the landmark clean-energy law as an economic powerhouse to a public that remains largely unaware of its contents.
The wide-ranging law provides billions of dollars in tax credits to help consumers buy electric vehicles and companies produce renewable energy, as Biden aims to decarbonize the mighty U.S. power sector. It also helps seniors pay for prescription drugs, expands some elements of Obamacare and raises taxes on wealthy Americans and corporations.
Biden, speaking at a White House ceremony, said the legislation already created 170,000 clean energy jobs and will create some 1.5 million jobs over the next decade, while significantly cutting the nation’s carbon emissions.
The legislation, Biden said, has shifted production of critical components away from China and into the United States.
“We are building here and sending over there,” Biden said.
Twelve months after it passed, the law commonly referred to as the IRA, like most major U.S. legislation, has mixed reviews. Meanwhile, many Americans, even those who support Biden, don’t know much about it, according to Reuters opinion polls.
INVESTORS, US COMPANIES LOVE IT
Wall Street analysts say the legislation has shown early signs of its economic power and predicted it will eventually lead to billions of dollars in new investments and thousands of new jobs.
While the biggest impacts will begin in 2024 and 2025, there have been more than 270 new clean energy projects announced since its passage, with investments totaling some $132 billion, according to a Bank of America analyst report.
Roughly half of those investment dollars are going to electric vehicles and batteries, while the rest are going to renewable energy like solar, wind and nuclear. These investments are expected to be accompanied by over 86,000 jobs, including 50,000 jobs related to EVs.
In a report on Tuesday, Moody’s said the legislation is likely supporting growth in gross domestic product, productivity and innovation.
“Over the past year, there have been signs that the legislation is contributing to a surge in clean energy manufacturing and related industries such as semiconductors, and factoring into companies’ investment decisions, including in the auto, utilities and oil and gas sectors,” Moody’s said.
Countries in Asia and Europe, on the other hand, are still trying to respond to protectionist economic policies embedded into the law.
DEFICIT REDUCTION MISSES MARK
Biden and Democrats promised the IRA bill would cut the U.S. budget deficit by $300 billion over 10 years by enforcing a 15% minimum corporate tax on wealthy companies, hiring more auditors to scrutinize the tax returns of rich Americans and allowing the federal government to negotiate drug prices with pharmaceutical companies.
But the tax credits have been massively popular with companies, boosting job growth, environmental benefits and the price tag. Meanwhile, Republicans used this year’s budget standoff to peel back some of Biden’s efforts to boost tax collections from wealthy Americans. And pharmaceutical companies have sued the administration over its drug negotiating plans.
That has upended financial projections, with analysts predicting budget deficits in the range of $700 billion to $1.1 trillion over 10 years.
WAIT, WHAT’S THE IRA?
The bill’s name, the Inflation Reduction Act, helped solve a political problem for Democrats who were concerned that voters would punish them for soaring prices in the 2022 congressional elections.
But Biden said last week he regrets the name, “because it has less to do with reducing inflation than it has to do with providing alternatives that generate economic growth.”
While price increases have cooled significantly over the past year — the inflation rate has dropped to 3.2% from 9% — most economists said little to none of the drop came from the law.
Biden and top administration officials have fanned out across the country in recent weeks to educate a cynical American public on the strengths of the economy and how his legislative agenda is changing their lives.
Many Americans who voted for Biden in 2020 said they believe the economy has fared poorly under his stewardship, and some say they might not vote for him in the November 2024 election, according to a Reuters/Ipsos poll released on Aug. 4.
About half of the respondents who voted for Biden in 2020 said they have heard little or nothing of his major policy initiatives to reduce inflation or boost spending on infrastructure.
Only 27 percent of Americans said they know a great deal or a good amount about the marquee legislation, according to a Washington Post-University of Maryland poll released on Monday.
The White House missed an opportunity in naming the legislation, said Jimmy Siegel, a former corporate advertising executive who now works with Democrats.
“Voters hear the Inflation Reduction Act, but they do not see their grocery bills coming down. They don’t really see gas prices coming down much. I think the provisions in the act are quite good, but the problem with this Democratic administration is, people aren’t giving them credit for the things they actually have done,” he said.
(This story has been refiled to update the headline after Biden’s speech)
(Reporting By Jarrett Renshaw; additional reporting by Nichola Groom and Moira Warburton; Editing by Heather Timmons, Grant McCool, Jonathan Oatis and Andy Sullivan)