Washington, D.C. — The Inflation Reduction Act (IRA) created the largest investment in clean energy in U.S. history, lowering household energy costs, mitigating the harms of climate change, and making American manufacturing competitive in the global clean energy economy. However, these investments in our economic future show up as expenditures when counting up the federal budget. A new issue brief from the Center for American Progress features analysis showing the IRA will likely reduce the federal deficit over the decade by $176 billion and will certainly reduce the deficit even more over the long run.
Some key takeaways from this new analysis include:
- The IRA likely will reduce the deficit by $176 billion over the 2022 through 2031 window (the budget window when the bill was first enacted), and by $535 billion from 2025 through 2034 (the current budget window).
- The IRA will begin to produce budgetary savings starting in 2028.
- The combination of the IRA and the Biden administration’s emissions rule will save the average family more than $350 per year on gas by 2032.
“The IRA created the largest investment in clean energy in U.S. history and will reduce the federal deficit in the medium and long term. These are investments in the future, and our economy and federal budget will continue to reap those benefits in the years to come,” said Bobby Kogan, senior director for Federal Budget Policy at CAP and co-author of the brief.
“From historic investments in clean energy to decreasing health insurance and utility bills, to helping the IRS catch wealthy tax cheats, the IRA is an investment in America’s future. Despite the popularity of its clean energy incentives, the IRA will reduce federal deficits while strengthening our economy for decades to come,” said Brendan Duke, senior director for Economic Policy at CAP and co-author of the brief.
Read the issue brief: “The Inflation Reduction Act Still Reduces the Deficit” by Bobby Kogan and Brendan Duke
For more information or to speak with an expert, please contact Sarah Nadeau at [email protected].