The Senate Democrats’ climate, tax, and spending bill will cut deficits years from now—after raising them in four out of the next five years, the Congressional Budget Office said in an estimate on Wednesday.
The Inflation Reduction Act, which nonpartisan analysts say would not reduce inflation, would shrink budget deficits by $101.5 billion between this year and 2031, the Congressional Budget Office said in an estimate on Wednesday.
Between this year and 2027, however, the budget deficit would grow by $24.6 billion. The nonpartisan budget analysis agency sees the deficit falling next year as new tax provisions kick in and then being higher in each year until 2028.
The shift is due to expectations in the timing of when changes in drug pricing would take effect. The 10-year cost is also reduced by the sunsetting of some of the spending provisions, something that has been attacked by Republican lawmakers as a gimmick that conceals the true cost of the bill.
The CBO also said that putting tax enforcement into overdrive would bring in an additional $204 billion in revenue. Critics have pointed out that most of that revenue would come from middle-class taxpayers as only a small percent of the increase could come from wealthier taxpayers.
The long delay in the deficit-reducing aspects of the bill, some of which may not survive future legislation, undermines the claim that the bill would fight inflation. By 2028, the Federal Reserve is expected to have brought inflation down without the help of legislation.