How will the Inflation Reduction Act help Black communities?

In an interview with theGrio, Cecilia Rouse, chair of the White House Council of Economic Advisors, called the IRA a “historic piece of legislation” and emphasized the economic benefits for Black households. 

President Joe Biden on Tuesday signed the Inflation Reduction Act (IRA) into law, providing billions of dollars to reduce medical and energy costs for millions of Americans.

“In this historic moment, Democrats sided with the American people and every single Republican in the Congress sided with the special interests in this vote,” said President Biden in his remarks at the IRA signing ceremony. “We can protect the already powerful or show the courage to build a future where everybody has an even shot. That’s the America I believe in.”

Inflation Reduction Act
U.S. President Joe Biden (C) signs The Inflation Reduction Act with (L-R) Sen. Joe Manchin (D-WV), Senate Majority Leader Charles Schumer (D-NY), House Majority Whip James Clyburn (D-SC), Rep. Frank Pallone (D-NJ) and Rep. Kathy Catsor (D-FL) in the State Dining Room of the White House August 16, 2022 in Washington, DC. (Photo by Drew Angerer/Getty Images)

As theGrio reported last week, the White House has vowed to ensure that Black communities are not left behind in the landmark federal investments.

In an interview with theGrio, Cecilia Rouse, chair of the White House Council of Economic Advisors, called the Inflation Reduction Act a “historic piece of legislation” and emphasized the economic benefits for Black households. 

Health insurance subsidies, lower drug costs and expanded coverage

Rouse highlighted the law’s health care subsidies to lower prescription drugs for Medicare recipients, expand health care coverage and make premiums more affordable for millions of Black Americans. 

“Black Americans are about one and a half times more likely than whites to report having not been able to afford their medications,” Rouse told theGrio. She noted that the Inflation Reduction Act would cap prescription drugs for Medicare recipients at $2,000 a year and cap insulin for Medicare recipients at $35 a month. Democrats also pushed to cap the out-of-pocket cost of insulin for those with private insurance, however, that provision was ultimately blocked by Republican Senators.

Rouse also said the IRA “provides and expands the number of free vaccines that recipients can receive including shingles” and allows Medicare to “negotiate prices with drug companies for some of the most expensive drugs.”

A White House fact sheet provided to theGrio on how the IRA will help Black communities cited a study published in the National Library of Medicine that found that shingles vaccination rates among older Americans showed white Americans were over two times as likely to have received the shingles vaccine than Black Americans, largely due to affordability.

“All of those new provisions will directly lower the cost of prescription drugs for many Americans,” Rouse told theGrio. 

The inflation law also extends premium tax credits for Americans insured under the Affordable Care Act for three more years. As the White House highlighted, “more than three-quarters of uninsured Black Americans had access to a plan with a monthly premium of $50 or less and about two-thirds could find a plan for $0-premium plan in 2021,” thanks to the initial tax credits funded by the American Rescue Plan signed into law in March 2021.

“By continuing the improvements made through ARP, the Inflation Reduction Act will help keep free or low-cost health insurance available,” said the White House. “Over half a million more Black Americans will have health insurance coverage next year, compared to without the IRA.”

Tax credits and subsidies to combat climate change, improve the environment

Employees of NY State Solar, a residential and commercial photovoltaic systems company, install an array of solar panels on a roof Thursday in the Long Island hamlet of Massapequa, N.Y. (Photo: John Minchillo/AP, File)

The IRA also provides a historic level of investment—nearly $400 billion—for combating the effects of climate change and helping Americans transition away from fossil fuels and toward cleaner energy. 

Most of these investments are in the form of tax credits to make energy-efficient home improvements more affordable. These improvements include replacing heating and cooling equipment, upgrading electrical appliances and installing weatherization projects to prevent energy from escaping homes and enduring the impacts of climate change. 

The White House projects that households can save up to 30 percent with tax credits for home construction projects and could see their future utility bills lowered by at least $350 per year. In all, families taking advantage of the clean energy tax credits could save more than $1,000 per year, according to the Biden-Harris administration.

When questioned by theGrio about the issue of Black homeownership and the reality that many Black Americans are renters who will not personally see direct benefits of the energy-efficient home improvements, Chair Rouse said, “depending on how the contract is structured, obviously, who’s paying for the heating and cooling—but landlords have an incentive to maintain the value of their property.” 

She continued, “it does rely on the landlords taking advantage of that tax credit, but we believe that they’re generous, and we all understand that we need to be making these kinds of investments to ensure that we’re properly prepared to address the increasing challenges of climate change.”

The Inflation Reduction Act also includes several provisions in the form of tax credits that are intended to save small business owners money as they switch over to low-cost solar power and make high-energy efficiency upgrades.

The new law will also expand a community forestry program at the United States Department of Agriculture (USDA) to fund tree-planting projects to help cool neighborhoods. The administration said that a priority is making sure that these projects will directly benefit underserved communities. 

Consumers will also be able to take advantage of tax credits for as much as $7,500 on the purchase of electrical vehicles (EVs), which are seen as essential to curbing gas emissions. However, a Pew Research poll shows that most Americans remain skeptical of going electric and expressed knowing little about EVs. Rouse said the administration will continue to be “aggressive about spreading the word.”

Inflation Reduction Act EV
Electric vehicles are displayed before a news conference with White House Climate Adviser Gina McCarthy and U.S. Secretary of Transportation Pete Buttigieg. (Photo by Drew Angerer/Getty Images)

“Cabinet members are spreading the word because we do want people to be aware that these credits are available,” she told theGrio. Rouse also noted that the bipartisan infrastructure law signed by President Biden last fall provided needed funding to build more electric charging stations. The bill also provided over $3 billion to build more electric vehicle batteries in the U.S.

“We have to also have the vehicles for them to purchase,” said Rouse. “This is something that will have to develop over time. And we look forward to those markets developing and maturing so that many more Americans can take advantage of those tax credits and move into more energy efficient vehicles.”

Debt relief for Black farmers

One point of contention for the administration is a provision that provides debt relief for American farmers. As theGrio recently reported, the law features $3.1 billion to be allocated to “distressed borrowers” and another $2.2 billion to farmers who have “experienced discrimination,” yet removes race as a criterion for eligibility.

Many Black farmers said they believe the lack of a provision based on race reneges on last year’s Emergency Relief for Farmers of Color Act, which was set to spend $4 billion on loan forgiveness. The funding was seen as a first step to correct longtime discrimination against Black farmers by the USDA. The removal of the “farmers of color” language, they assert, will hurt them as loan forgiveness is opened to white farmers who outnumber them nationwide. 

The Emergency Relief for Farmers of Color legislation faced no fewer than six federal lawsuits by white farmers, who decried it as unfair to keep them from the funds due to their race. The lawsuits prompted a federal injunction that kept the funds from being disbursed.

Inflation Reduction Act farmers
A former worker at the U.S. Department of Agriculture is doing what she can to help the families of Black farmers who die without a will. (Photo: Eric Shelton/Clarion Ledger via Imagn Content Services, LLC)

When asked to respond to the frustration of Black farmers, Chair Rouse told theGrio, “the administration very much understands that this was not the deal, and it’s not what was negotiated under the American Rescue Plan. But we were unable to fulfill that.” Noting the court battle that stopped the debt relief program for Black farmers, Rouse said despite the setback, the administration sees the provisions in the IRA as “a step forward.” 

“It’s not as far as we want it to go, but it does bring some resources that we believe will survive and provide some resources to Black farmers,” she added. “The administration very much understands the plight of Black farmers and very much wants to be able to fulfill the requirements for addressing years of discrimination, but we face challenges in doing so. We view this as an accomplishment. It’s a positive step forward, recognizing that it doesn’t hold all the way.”

Taxing large corporations and funding the IRS to go after tax cheats

The Inflation Reduction Act will also impose a corporate minimum tax on corporations making $1 billion or more and increase the budget for the Internal Revenue Service (IRS) by $80 billion to crack down on wealthy Americans who are dodging their taxes. As Jessica Fulton, vice president of policy at the Black think tank, the Joint Center for Political and Economic Studies, previously told theGrio, the new tax policies could help close the racial wealth gap.

“The increased capacity of the IRS and the corporate minimum tax could help ensure that those who are most able to contribute are held accountable for paying their fair share and make small steps towards narrowing racial wealth gaps,” said Fulton.

Chair Rouse told theGrio that making the U.S. tax code “fairer” and reducing the gap in funding for the IRS will provide funding to invest back in Black communities. As an example, Rouse noted that there are environmental justice grants that will provide credits for solar projects in affordable housing projects. 

“It is also reducing pollution in urban places such as near ports, where we know that there’s a lot of congestion and therefore a lot of air pollution. And so we need to be able to fund those kinds of investments,” said Rouse. “This bill allows the federal government to do that while also lowering the deficit, which not only frees up resources for further investment in our economy but also has the benefit of helping to address inflation.”

Gerren Keith Gaynor

Gerren Keith Gaynor is the Managing Editor of Politics and Washington Correspondent at theGrio. He is based in Washington, D.C.

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