Inflation Reduction Act

• 1. Introduction

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  The Inflation Reduction Act of 2022 arrived in Washington as what those watching called a "shocker." Negotiations had been declared dead just two weeks before its announcement. They were secretly revived. Within weeks, President Joe Biden signed the bill into law. It reshaped Medicare's relationship with pharmaceutical companies. It expanded the agency responsible for collecting federal taxes and set off a wave of clean energy investment across the country.

  Senator Joe Manchin of West Virginia, whose opposition had earlier appeared fatal to the bill, emerged as one of its two primary sponsors. The other was Senate Majority Leader Chuck Schumer of New York. How two men revived a bill that most of Washington had given up on is one question this documentary sets out to answer. What the law they produced actually did over the years that followed is another.

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• 2. From Collapse to Comeback

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  Joe Biden first outlined the Build Back Better Plan between 2020 and 2021. It sought the largest nationwide public investments since the New Deal programs of the 1930s. The framework was divided into three parts. One of them, the American Rescue Plan, was signed into law as a COVID-19 relief bill in March 2021. The other two parts faced a far more difficult path.

  The Build Back Better Act passed the House 220-213 on the 19th of November 2021. In December 2021, Senator Manchin publicly withdrew his support. He cited the bill's cost and what he described as a too-aggressive transition to clean energy. He then withdrew support even for his own compromise proposal. Because the bill needed all 50 Democratic senators to pass via reconciliation, and all 50 Republicans opposed it, Manchin's decision was final.

  In the summer of 2022, Manchin and Schumer opened new negotiations. They sought roughly $1 trillion in tax reform revenue, $500 billion in climate and health care spending, and $500 billion in deficit reduction. Then, on July 14, Manchin announced he would not support new climate spending or tax reform. He said he feared the measures would worsen inflation. Biden conceded defeat on a climate bill.

  Unknown to nearly everyone in Washington, Manchin and Schumer began secret negotiations four days later, on July 18. Schumer's lead staffer, Gerry Petrella, later recalled the surprise phone call from Manchin's office. It arrived just before the August recess. The breakthrough came on a final summer weekend. On July 27, hours after the Senate passed the CHIPS and Science Act, both men released a joint statement announcing the bill.

  On the 7th of August 2022, following a vote-a-rama, an unlimited marathon session on amendments lasting nearly 16 hours, the Senate passed the bill 51-50. Vice President Kamala Harris cast the tiebreaking vote. The House followed with a 220-207 vote on August 12. On August 16, Biden signed the bill into law.

  Shaping the bill's provisions were experts and organizers including Leah C. Stokes, Adrian Deveny, Katherine Hamilton, and Ari Appel. Senator Ron Wyden's technology-neutral approach helped define the energy tax credits. Representative Scott Peters worked to add pharmaceutical-friendly limits to the Medicare drug pricing provisions. Those limits became one of the act's most fiercely debated elements.

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• 3. The Financial Blueprint

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  The Congressional Budget Office and Joint Committee on Taxation estimated the law would raise $738 billion from tax and prescription drug reform. It authorized $891 billion in total spending. The largest revenue source was prescription drug reform, projected to yield $281 billion. This came from requiring rebates from drug makers who raise prices faster than inflation, alongside direct Medicare price negotiations.

  A selective 15% corporate minimum tax on companies with more than $1 billion in annual income was projected to raise $222 billion. Increased IRS tax enforcement would yield $181 billion. A new 1% excise tax on stock buybacks would contribute $74 billion. A two-year extension of limits on excess business losses would add $53 billion.

  On the spending side, $391 billion went to energy security and climate change. Three more years of Affordable Care Act subsidies cost $64 billion. Changes to Medicare Part D, insulin coverage, vaccines, and low-income subsidies cost $44 billion. Expanding and modernizing the Internal Revenue Service, including hiring up to 87,000 new employees, was budgeted at $80 billion. Those hires were intended to replace tens of thousands of employees who had departed in recent years.

  By July 2024, the enforcement investment had already collected more than $1 billion in past-due taxes from millionaires and other high-wealth individuals. Former Biden administration staffers Natasha Sarin and Mark Mazur estimated the IRS investment would increase revenues by $560 billion over ten years. That figure was well above the CBO's projections. After the Fiscal Responsibility Act altered the framework, their estimate was revised to $280 billion.

  The Congressional Budget Office estimated the act would have no statistically significant effect on inflation in 2022 and 2023. Some economists predicted its renewable energy investments would reduce inflation over the medium to long term. They argued the act would make the economy less exposed to volatile fossil fuel prices.

  $663 billion of the law's climate investments are embedded in the federal tax code. McKinsey & Company estimated roughly half those tax savings would go to corporations. That structure would have significant implications for who captured the benefits first.

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• 4. The Climate Wager

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  At $783 billion in climate and energy investment, the Inflation Reduction Act is the largest piece of federal legislation ever to address climate change. That total includes $27 billion for a Greenhouse Gas Reduction Fund, a new green bank established by amending the Clean Air Act.

  Credit Suisse projected total climate spending at $800 billion. Goldman Sachs predicted $1.2 trillion, the Penn Wharton Budget Model forecast $1.045 trillion, and the Brookings Institution found a central case of $902 billion. These variations stemmed from different assumptions about how aggressively businesses and households would claim the available tax credits.

  Among the largest spending categories, $128 billion went to renewable energy and grid energy storage. Nuclear power received $30 billion, including $700 million for research into high-assay low enrichment uranium fuel and $150 million for the Office of Nuclear Energy. Electric vehicle incentives received $12 billion, home energy supply improvements $22 billion, and advanced manufacturing $37 billion.

  The Rhodium Group estimated the act would reduce national greenhouse gas emissions 32-42% below 2005 levels by 2030. Without the law, that reduction would reach only 24-35%. The Princeton University REPEAT Project estimated a 42% reduction below 2005 levels. The Energy Innovation group estimated 37-41% below 2005 levels, compared to 24% without the act.

  Modeling from the nonpartisan Resources for the Future predicted retail electricity costs would decrease by 5.2-6.7% over a decade. Average annual savings for a U.S. household were estimated at $170-220. The trade group Solar Energy Industries Association projected the act would foster a tripling of the American solar power industry.

  Following the Supreme Court's West Virginia v. EPA ruling, the act's Title VI amended the Clean Air Act directly. That ruling had limited the EPA's authority over emissions regulation. Title VI explicitly designated carbon dioxide, hydrofluorocarbons, methane, nitrous oxide, perfluorocarbons, and sulfur hexafluoride as air pollutants. That change gave the EPA clear congressional authorization to regulate those gases.

  The Solar for All initiative, funded from the Greenhouse Gas Reduction Fund, was projected to add 2.9 gigawatts of generating capacity. The Clean Energy States Alliance released those projections. It was also projected to deliver $2 billion in savings to 711,068 low-income households across 35 states, the District of Columbia, and Puerto Rico.

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• 5. Drug Prices and Medicare

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  In September 2023, Medicare announced the first 10 drugs selected for price negotiation. Together, those treatments had accounted for more than $45 billion in Medicare Part D spending between June 2022 and May 2023. The Congressional Budget Office projects the negotiations will save the federal government $98.5 billion over the next decade.

  Diabetes treatments selected by Medicare included Farxiga, Januvia, Jardiance, and Fiasp/NovoLog. Blood disease drugs included Eliquis, Xarelto, and Imbruvica. Entresto addressed heart failure, Stelara was selected for Crohn's disease and psoriasis, and Enbrel targeted both rheumatoid arthritis and psoriasis. The negotiated prices for this first group are set to take effect in 2026.

  The law set a $35 monthly cap on insulin costs for Medicare recipients. It also set a $2,000 annual ceiling on out-of-pocket drug spending for Medicare beneficiaries. For those purchasing health insurance through the Affordable Care Act exchanges, subsidies were extended. That change prevented people earning above four times the poverty line from losing eligibility.

  Starting in 2026, the program will negotiate 10 new high-cost drugs each year. By 2029, that number is required to grow to more than 20 additional drugs annually. The savings those negotiations generate are directed toward expanding Medicare Part D benefits for enrollees.

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• 6. Jobs and the Manufacturing Surge

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  Climate analyst Jack Conness found that 181 climate-friendly tech manufacturing investments worth $116 billion had been announced in the United States since the act's passage. They carried projections of 99,500 jobs. When combined with CHIPS and Science Act investments, the total reached 218 projects worth $388 billion creating 135,800 jobs.

  Georgia hosted the most projects at 25, along with the most new jobs overall at 14,343, and the largest total investment at $16 billion. North Carolina received the single largest individual project, a $12.6 billion Toyota commitment to battery plants. South Carolina's largest project came from Scout Motors, which pledged 4,000 jobs. 68 percent of the act's investments were concentrated in batteries, 14 percent in electric vehicles, and 13 percent in solar.

  By August 2024, Environmental Entrepreneurs found 334 new projects and 109,278 jobs had been created. Total actual investment reached $125.9 billion. More than 80 percent of those jobs were in Republican-held congressional districts. In May 2025, journalist Michael Thomas reported that 78 percent of new solar, wind, and battery projects had been built in Republican districts. Roughly $100 billion in private investment had flowed to those areas. Of the top 30 House districts measured by new clean energy capacity, 25 were Republican-held.

  The Rhodium Group-MIT partnership Clean Investment Monitor tracked clean investment growing 42 percent between July 2022 and September 2023. From July 2022 to June 2024, that growth reached 72 percent. As a share of nationwide private investment, clean investment rose from 3.4 percent to 5.5 percent. Nevada, Wyoming, Arizona, Tennessee, and Montana benefited most over the second period. In Tennessee and Kentucky, clean investment exceeded 1 percent of each state's GDP.

  Treasury Department researchers confirmed in early 2024 that the act had spurred a monthly average of $4.5 billion in investments in fossil-fuel-dependent communities. That was $1 billion more per month than the national average outside those areas. The department also found that 75 percent of the act's investments went to communities with incomes below the national median.

  A January 2025 update from Climate Power recorded at least 406,007 new clean energy jobs across 751 projects. Total investments reached $422 billion, spanning 48 states and Puerto Rico. Michigan led all states in project count at 74, and New York received the most investment dollars, at $115.46 billion. Economists Noah Smith and Joseph Politano credited the act's incentives for spurring booms in factory construction and utility jobs. They also noted the investments had helped limit the geographic concentration of key industries.

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• 7. Labor, Equity, and Rollback

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  On the 16th of August 2024, the United Steelworkers announced an electoral neutrality agreement with solar panel manufacturer Convalt. The deal made union organizing easier at IRA-linked project sites in Pennsylvania and New York. This reflected a broader shift the law had created. Energy developers started negotiating with unions early in project planning rather than waiting until after construction began. The law also fostered the growth of a new tax credit compliance industry.

  Reporter Emily Pontecorvo found that the law increased construction union membership in areas dominated by non-union labor markets, particularly in solar power. The Department of Energy found clean energy job numbers grew 4.2 percent in 2023, twice the national rate for all employers. Unionized firms reported an easier time recruiting job applicants than their non-union counterparts.

  Pontecorvo also found wide disparities between union and non-union apprenticeships and wages. Non-union apprenticeships were still poorly regulated. The energy workforce continued to suffer from a lack of diversity, particularly in gender representation.

  In the 2023 tax year, 3.4 million households claimed more than $8 billion in federal income tax credits for home energy improvements. The average benefit was estimated at $880 per family. Households earning above $100,000 claimed the credits at higher rates than those earning below that threshold. Wealthier families received about 66 percent of the $5.5 billion in those credits, with households earning above $200,000 claiming $2 billion. The poorest 25 percent of all filers received only $32 million in credits.

  The electric vehicle tax credits were cancelled by the One Big Beautiful Bill Act after the 2024 election. On the 14th of March 2025, Congress overturned the methane fee for oil and gas companies. The fee had been set at $900 per metric ton in 2024, rising to $1,500 by 2026. By the 17th of January 2025, the Biden administration had finalized 84 percent of the act's energy grants. The remaining $11 billion was left for the incoming administration to distribute.

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