U.S. Spending Bill to Cut inflation, Deficit Over Time - Moody's
- A sweeping bill passed by the U.S. Senate on Sunday, August 7th,2022, is intended to fight climate change, lower drug prices, raise some corporate taxes, bring down inflation over the medium to long term, and cut the deficit, rating agency Moody's Investors Service told Reuters on Monday, August 8th, 2022.
- The Senate on Sunday, August 7th,2022, passed the $430 billion bill, a major victory for President Joe Biden, sending the measure to the House of Representatives for a vote, likely Friday. They are expected to pass it and send it to the White House for Biden's signature.
- The legislation, known as the Inflation Reduction Act, however, will not bring down inflation "this coming year or next year," said Madhavi Bokil, senior vice president at Moody's Investors Service. "We do think that this act will have an impact (of cutting inflation) as it increases productivity," she said, adding her horizon was two to three years.
- However, it was argued by the Republicans, that the bill will not address inflation, and have denounced it as a job-killing, left-wing spending wish list that could undermine growth when the economy is in danger of falling into recession.
- Nonetheless, Bokil mentioned that the spending bill was complementary to another bill recently passed by Congress, which aimed to subsidize the U.S. semiconductor industry and boost efforts to make the United States more competitive with China.