Inflation Reduction Act signed

On August 16, 2022, President Joe Biden signed the Inflation Reduction Act at the White House after the Senate passed the bill on August 7, 2022 and the House approved it on August 12, 2022. The law used budget reconciliation to create large clean-energy tax credits, authorize Medicare prescription drug price negotiation, extend Affordable Care Act premium subsidies, and impose a 15 percent corporate minimum tax. Biden and Senate Democrats such as Chuck Schumer and Joe Manchin presented the statute as a narrower successor to the failed Build Back Better plan.

The act addressed three separate tensions that had defined Biden's domestic agenda in 2021 and 2022: rising consumer prices, stalled climate legislation, and Democratic disagreement over deficit spending. Supporters argued that the law paired deficit reduction with industrial and energy policy by using tax credits to shift investment toward domestic clean-energy manufacturing and by reducing federal drug spending through Medicare. Republican opponents answered that the legislation would expand the Internal Revenue Service, distort energy markets, and do little to reduce short-term inflation.

The Department of Health and Human Services began implementing the law's Medicare drug negotiation program in 2023, creating a new federal role in setting prescription prices. The statute also triggered a wave of battery, electric vehicle, and semiconductor investment announcements after 2022, making the Inflation Reduction Act a foundation of later federal climate and industrial policy.