President Joe Biden signed the inflation Reduction Act of 2022 into law during a ceremony at the White House on Tuesday (August 16).
"The bill I'm about to sign is not just about today, it's about tomorrow," Biden said. "It's about delivering progress and prosperity to American families."
"It's about showing the American and the American people that democracy still works in America, notwithstanding all the talk of its demise, not just for the privileged few, but for all of us," he added.
The bill includes $369 billion in investments to help battle climate change and provide energy security, plus an additional $64 billion to expand expiring Affordable Care Act subsidies for two years. The legislation also provides $80 billion to the IRS.
To pay for the spending and reduce the deficit, the bill will create a 15% minimum tax on large corporations and a 1% tax on stock buybacks. It will also help reduce the deficit by allowing Medicare to negotiate the prices of certain prescription drugs. The increased taxes and reduced Medicare costs are expected to raise around $700 billion over ten years.
Despite its name, the bill is not expected to reduce inflation. An analysis by the Congressional Budget Office found that the legislation will have "a negligible effect" on inflation this year. In 2023, the legislation could result in a 0.1% reduction in inflation or cause inflation to rise by 0.1%.