Senate Reconciliation Package is a Positive Step, But Bill Sidelines Too Many Priorities

Washington, D.C., July 28, 2022—The proposed Inflation Reduction Act of 2022 is a significant step forward for restoring fairness to our tax system, reducing health care coverage costs, and addressing the climate crisis—which disproportionately harms communities of color and those with low incomes—even as it falls far short of what is needed to address longstanding national challenges. Congress should pass the Inflation Reduction Act and immediately turn back to additional unfinished business that sets our country on a more prosperous and equitable path.

“The bill is historic in its investments, but it left out many provisions that address urgent needs of children, families, workers, and young adults,” said Indivar Dutta-Gupta, president and executive director of the Center for Law and Social Policy (CLASP). “Despite the cost of care—including unpaid care—frequently dominating family budgets, there is no funding for child care, paid family and medical leave, or home- and community-based services. Though programs employing more of our youth and young adults in addressing the climate crisis would raise their future prospects and reduce the cost the crisis imposes on all of us, these provisions are nowhere to be found. The cost of health care is frequently prohibitive for the 2.2 million people with low incomes in states that have refused to expand Medicaid, but the bill doesn’t close the Medicaid gap. Highly effective tax credits for families that led to declining poverty despite the deepest recession in generations are being allowed to expire. And a pathway to citizenship allowing many people who call this country home to contribute more to this country was omitted. This is a disappointing outcome for tens of millions of individuals and families who urgently need relief now.”

The Inflation Reduction Act includes some critical provisions supporting families and our economy by:

  • Providing support to families by lowering drug costs and reducing the burden of health premiums through the Affordable Care Act exchanges.
  • Making a significant investment in addressing the urgent need to combat the climate crisis and promoting environmental justice, helping address the racially and economically disproportionate impacts of extreme environmental change.
  • Advancing fairer taxation of many with the very highest incomes and highly profitable corporations to help rebalance our economy.

This is a start. We cannot lose sight of what should have been included, building on the significant progress made last year. This Congress was responsible for what may have been the most effective single piece of emergency economic recovery legislation in U.S. history. Passed without a single Republican vote, the American Rescue Plan Act (ARP) provided substantial and sustained support to families, communities, and the overall economy. Even after modest recent declines in Gross Domestic Product—alongside persistent jobs growth—virtually no peer nation’s economy has recovered as well as ours. The alternative to the ARP was a jobless recovery that would have left many millions unemployed, underemployed, and more unable to afford their cost of living.

The next step for our social protection system was for Congress to make structural changes addressing the prohibitive cost of living, especially for tens of millions of Americans who are underemployed, underpaid, or providing care or in need of caregiving. With the announced reconciliation package, this Congress has punted those reforms to the 118th Congress in 2023, with real consequences for people with low incomes.

The Inflation Reduction Act fails to take bold action to address issues of racial, gender, and economic inequality that hinder our economy.

  • The current package leaves out urgently needed investments in the care infrastructure, which means women, especially women of color and immigrant women, will continue to be left behind as the economy continues to recover from the pandemic. Historic ARP child care funding dwarfed any prior single child care investment but will be exhausted in two years.
  • The ARP’s powerful enhancement of the Child Tax Credit and Earned Income Tax Credit combined with tax rebates produced what may have been the lowest child poverty rates on record. The reconciliation bill marks a shameful reversal and an extraordinary self-inflected wound in our fight against harmful child poverty by its omission of an expanded Child Tax Credit that would help the children who need it most.
  • The bill’s lack of investments in quality jobs, worker rights, workforce development, and pathways to employment for youth and individuals impacted by the criminal legal system leaves unchecked the extreme economic inequality that continues to hold back our economy and harm our most vulnerable workers.
  • The failure to close the Medicaid gap in the 12 states refusing to take advantage of federal support to extend health coverage to millions of people and families with low incomes will be particularly harmful to those living in Southern states, which are notably home to a disproportionate share of America’s Black population. Rejecting a policy that would have provided vital maternal health care will amplify the harms of the Supreme Court’s Dobbs v. Jackson Women’s Health decision overturning the constitutional right to abortion care.
  • And the continued failure to provide a pathway to citizenship for immigrant populations left in limbo means millions of people will continue to experience needless anxiety and suffering, harming local communities throughout the United States.

“These changes—some of which would entirely pay for themselves over time—could be fully paid for upfront with higher tax revenues from those who have most benefited from the American economy and its workers. There was and remains no risk of a larger package increasing the cost of living faced by families, and, if anything, these provisions would have reduced the costs families face for caregiving, health care, and more,” said Dutta-Gupta.

The next Congress has its work cut out for itself, but the ARP provides a blueprint for prioritizing the urgent needs of families and communities, especially those with low incomes and communities of color. Following passage of this bill, CLASP urges Congress to move forward with further legislation—through simple majority legislative requirements—to build a more sustainable, equitable, and prosperous economy for every family and community.