Commentary
This article is the second of a three-part series on the problems with the recently passed Inflation Reduction Act (IRA). The first in this series introduced the act and took up its focus on Washington’s preferred green initiatives. This second part will take up the revenue sources that the law dubiously claims will more than pay for all the legislation’s spending. These details will better explain why the Penn-Wharton Model and the Congressional Budget Office (CBO) independently concluded that the legislation would do little to narrow the federal government’s budget deficit.
To pay for all its lavish spending plans, this law includes five revenue provisions. The largest of these is a repeal of a Trump-era rule that would have rebate discounts offered by drugmakers. The legislation suggests that this repeal would net the government almost $230 billion in additional revenue over five years, almost one-third of the total revenue haul envisioned in the law. The problem is that these rebates never went into effect. They were postponed several times and even faced a court challenge. It is a bit of a stretch to claim additional revenue by repealing an expense that never was….