In this video, I’m going to help you understand the Inflation Reduction Act, briefly explain what’s in it, and touch on the Penn Wharton Budget Model and the conclusions that came from that.
As always stay until the end of the video for my thoughts and how to benefit from this.
What is it?
The Inflation Reduction Act of 2022 is designed to reduce the deficit and lower inflation while investing in domestic energy production and lowering healthcare drug costs.
In essence, the legislation is a scaled-down version of the Build Back Better Act proposed by the Biden administration in 2021.
According to Senate Democrats, the proposed legislation would raise $737 billion, require total investments of $437 billion, and result in a deficit reduction of more than $300+ billion.
I will break these numbers down a little later in the video.
According to the White House, the Inflation Reduction Act would make ”the single largest investment in climate and energy in American history.”
Spending is designed to lower energy costs, increase cleaner energy production, and reduce carbon emissions by 40% by 2030
Some say this is essentially just a climate Bill under a different name.
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⏰ Timestamps ⏰:
0:00 – Intro
0:35 – What’s In The Inflation Reduction Act?
1:25 – Understanding The Inflation Reduction Act
2:49 – What’s In It?
4:39 – The Penn Wharton Budget Model
6:30 – My Thoughts
9:07 – WBF University
9:28 – LOL
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Hey everybody welcome back to whiteboard Finance my name is marco and i’m here to Help you master your money and build Your wealth normally i don’t dive into Politically charged topics such as the Inflation reduction act of 2022 which is What our video is about today but i Think it’s important because it’s Touching on a topic that we’ve been Discussing for a long time on this Channel which is obviously inflation so In this video i’m going to help you Understand the inflation reduction act Briefly explain what’s in it and touch On the pen wharton budget model and the Conclusions that came from that as Always stay until the end of the video For my thoughts and how to benefit from This stay tuned okay number one what is It so the inflation reduction act of 2022 is designed to reduce the deficit And lower inflation while investing in Domestic energy production and lowering Health care drug costs so in essence the Legislation is a scaled down version of The build back better act proposed by The biden administration in 2021. According to senate democrats the Proposed legislation would raise 737 billion dollars uh require total Investments of 437 billion dollars and Result in a deficit reduction of more Than 300 billion dollars i will break These numbers down a little later in the
Video the bill allows medicare to Negotiate lower prescription drug prices And extends the expanded affordable care Act program for three years through 2025. now let’s get into understanding This bill a little bit better okay so Let’s understand this bill a little bit Better so according to the white house The inflation reduction act would make The single largest investment in climate And energy in american history spending Is designed to lower energy costs Increase cleaner energy production and Reduce carbon emissions by 40 percent by 2030. so some people are saying that This is essentially just a climate bill Under a different name it’s almost as if They’re using a pressing issue like Inflation to stuff a bill full of things That they want to get past one of the Things that the bill will allow is Medicare to negotiate lower drug prices Although there are limits to both the Number of drugs affected and the time Frame involved a quick example is a two Thousand dollar annual cap on out of Pocket drug costs affordable care act Health care premiums expect to be Lowered for millions of americans under The legislation for three years once the Bill becomes law so here’s the almost One Trillion dollar question the 737 billion Dollar question
Where is this money coming from a Significant funding source for programs In the legislation will be a 15 Corporate minimum tax on companies Making more than one billion dollars per Year in the meantime the new bill Imposes no new taxes on families that Make four hundred thousand dollars or Less or on certain small businesses Since this bill is literally 755 pages Long let’s try and break down what’s in It using some images in the next slide Okay number three what’s in the Inflation reduction act so for Simplicity’s sake check out this graphic Here as mentioned earlier the total Revenue raised is expected to be 737 Billion dollars 222 billion of this is Coming from the 15 corporate minimum tax Which i just mentioned uh 265 billion is Supposedly coming from the prescription Drug pricing reform 124 billion is Coming from irs tax enforcement which we Will mention at the end of this video in Depth 74 billion is coming from a one percent Stock buyback fee and 52 billion is Coming from loss limitation extension The total investments from this bill Would be 437 billion dollars 369 billion of that would go to energy Security and climate change this is why People are essentially calling this a Climate change bill with little to do
With inflation itself 64 billion dollars Would be going into the affordable care Act extension and 4 billion would be Going into the western drought Resiliency this is for a total deficit Reduction of a proposed 300 plus billion Dollars as mentioned earlier The inflation reduction act supposedly Touches on these eight things and if you Want to look into these things more in Depth simply pause the video number one Is that it expands medicare benefits Number two is that it lowers energy Bills number three is that it makes Historic climate investment which we Mentioned earlier number four is that it Lowers health care costs number five is That it creates manufacturing jobs Number six is that it invests in Disadvantaged communities number seven Is that it closes tax loopholes used by The wealthy and number eight is that it Protects families and small businesses Making four hundred thousand dollars or Less i am simply reading off the Democrats.senate.gov one page summary of This act and i will give my opinions on This in the my thoughts portion of the Video okay so let’s talk about the pen Wharton budget model so one study often Cited by critics of the inflation Reduction act of 2022 was conducted by The penn wharton school at the University of pennsylvania here are some
Key takeaways from the actual penn Wharton budget model from Wharton.upenn.edu So i’m going to throw this up on the Screen so you can follow along here’s The quick summary the penn wharton Budget model estimates that the senate Passed version of the inflation Reduction act would reduce non-interest Cumulative deficits by 264 billion Dollars over the budget window the Impact on inflation is statistically Indistinguishable from zero aka it Doesn’t do anything for inflation uh gdp Falls slightly within the first decade While increasing slightly by 2050 most But not all the tax increases fall on Higher income households so the penn Wharton budget model estimates that the Senate passed inflation reduction act as Written would reduce this by 264 billion Over 10 years so the act would have no Meaningful effect on inflation which we Talked about it would actually reduce Inflation by around 0.1 percentage Points By the middle of the first decade These point estimates however are not Statistically different from zero aka It’s not going to do anything Indicating a low level of confidence That the legislation would have any Measurable impact on inflation relative To current law the act would slightly
Reduce gdp in the first decade while Slightly increasing gdp by 2050 so these Estimates include the impact of debt Reduction carbon reduction and tax Incentives on investments and working Hours most but not all the tax increases Fall on higher income households however Future generations including high income Households gain from the improved Economy including a reduction in carbon Emissions now let’s get into the fun Part of the video which are my thoughts And how to play this okay my thoughts so In reality there are several flies in The ointment the inflation reduction act Is a catch-all trojan horse that Contains several pieces of legislation Having nothing to do with cpi aka Consumer price inflation this is Essentially a climate bill under the Guise of being an inflation control bill Check out this screenshot from secretary Janet yellen 80 billion dollars is for Funding for the irs their current annual Budget is only 13.7 billion 87 000 new Auditors are being hired which would More than double the existing size of 74 454 this is for conducting audits and Uncovering instances of tax fraud this May actually affect the middle class Much more than larger corporations Because the irs knows that the average Middle-class person doesn’t have the Means to protect themselves
Or shield themselves from this level of Increased auditing and scrutiny wherever There is fiscal spending this is point Number two wherever there is fiscal Spending an increase in taxes will Follow this is common sense Funding to fight climate change is Fiscal spending uh prescription drug Price reform will include lobbying and Of course fiscal spending affordable Care act subsidy extension fiscal Spending irs tax enforcement 87 000 new Officers fiscal spending uh drought Funding for western states fiscal Spending and a corporate minimum tax Rate of 15 percent this has been played Out several times already throughout History it starts with 1 billion in Revenue as the threshold next year it’ll Be a hundred million tomorrow to be Businesses making 10 million or more in Revenue and they need to pay an Additional tax it never ends so in my Opinion there are always buzzwords and Talking points that are used to stuff Bills like this full of pork such as esg Climate change the war on terrorism war On drugs et cetera et cetera Knowing this how can you position Yourself so if you’ve already built up a Chunk of wealth i would look into Monetary debasement hedges such as Bitcoin and gold number two i would take A look at tips these are treasury
Inflated protected securities uh these Are bonds that are issued by the Treasury whose yields rise and fall with Cpi i’ve actually invested into i bonds Which are adjusted twice a year to keep Up with the stated cpi i-bonds aren’t Tips but they’re essentially where my Emergency fund lives so at least i’m not Being eaten alive by inflation and then Number three is short-dated u.s treasury Debt typically three months to a year They’re usually a safe bet and you’re Considered to be in cash however you Have at least better rates than a Savings account so hopefully you got Value out of this video what are your Thoughts on this inflation reduction act I want to know comment down below And then also remember to sign up for Whiteboard finance university it’ll be Live in about a month and a half from Now it’s going to be a university full Of professors with different subject Matter experts it’s going to be an Unbelievable value for the price that I’m charging It’s going to be a huge community of a Bunch of people i can’t wait to launch It so as always i hope you got value out Of this video and have a prosperous day So i’m taking my private jet to davos Which burns eight bajillion Gallons of jet fuel to transport maybe 10 to 15 people and a couple pilots
But uh we really gotta fight this Climate change you guys We really gotta fight it uh is the jet Ready