Inflation Reduction Act

Inflation has been a big problem in the U.S for a long time now, but that will change soon. On Sunday, August 7th, the U.S Senate finally passed the Inflation Reduction Act. This act will have a big impact on the world. Since 1970 the Inflation rate has been going up every decade. Starting in 1970, the inflation rate was $0.25, now, in 2022, it’s $1.85. In 2010 the inflation rate was $1.25, it jumped $0.60 in one decade. With the act getting passed and the inflation rate going down, it comes with big provisions as well. One of things that comes with the act is lowering health care cost, and it is now more afforable and accessible for people. Starting in 2025, Medicare recipients will get $2000 on annual out of pocket drug. We will also get IRS tax enforcement and this bill invests $80 billion in the nation’s tax agency over the next 10 years.

 With all of these benefits happening, people don’t realize that the stock market is going down each and every day, but I have found some of the best stocks to invest in with the Inflation Act passing. The first ones are clean-energy companies because before, the U.S heavily used imports from solar equipment, but with the help of this law it will encourage more production at home with incentives for domestic solar. With the energy companies going up in stocks, this also helps the materials, industrials and utilities companies because energy is a key input in these companies. Some of the bad stocks to invest in are drug companies because with this act getting passed the health care cost is lowering and drug price reform where medicare recipients will get $2000 on annual out of pocket prescription drug cost. Amazon is also another stock that is going down because they do legal tax avoidance and this act makes companies with at least $1 billion profits will be required to pay a minimum tax rate of 15% of their own profits. 

Climate change and energy sources/security also play a big role in the Inflation Act passing. The act will include an investment into communities and environmental justice. They will fund $3 billion into neighborhood access and they also fund $60 billion in environmental justice priorities. It also provides lower consumer energy cost and this brings incentives to energy source products. In the article, the White House  said “America is on track to decrease greenhouse gas emissions by about 40 percent below 2005 in 2030 and will reach net zero in greenhouse gas emissions by 2050”. With this decreasing, it helps the social cost of the environment, and we get better ways of life and society. Law enforcement could possibly cut about $1.9 trillion dollars in the social cost of climate change. Adding these changes benefit our society and us human beings as a whole to make a better world for all of us.