PRETENDING MARGINALIA IS EXISTENTIAL:

Here's why I'm being a bit fuzzy on the numbers: Various last-minute tweaks mean the exact legislation has yet to be officially scored by the Congressional Budget Office. That said, concludes a Goldman Sachs analysis yesterday, "The net fiscal impact of these policies continues to look very modest, likely less than 0.1% of GDP for the next several years."

Indeed, one political criticism is that passage of the bill is unlikely to "help Democrats much in November because it will provide little in tangible benefits for voters in the near term and does little to address their leading concerns (inflation, crime, border security, etc.)," argues the policy analysis team at Piper Sandler in a morning note. [...]

🔃 Inflation Reduction Act. Rising prices may slow in the coming weeks and months. But that is likely more due to falling gas prices than anything in this bill. "The Inflation Reduction Act passed by the Senate over the weekend will, despite its name, do little to rein in inflation," concludes Capital Economics in a research note today. The drug pricing provisions, for instance, don't start until 2026. Likewise, reducing the cumulative deficit over the next decade by $300 billion is hardly a game-changer when the cumulative deficit over the 2023-2032 period is projected to be $15.7 trillion, according to the Congressional Budget Office. And I'm not thrilled about the corporate tax hikes or the excise tax on stock buybacks, although last-minute changes may have made them less onerous. Then there's all manner of tax credits, to the tune of some $400 billion, meant to accelerate the deployment of clean energy technologies (including nuclear production tax credit). The modeling does suggest a significant impact. For example: A Moody's Analytics analysis finds "that by 2050, we estimate emissions will be reduced by nearly 30% compared with a scenario in which there is no additional policy changes to address climate change." Likewise, modeling by the Rhodium Group finds that the US is currently on track to reduce greenhouse gas emissions by between 24 percent to 35 percent percent by 2030 compared to 2005 levels. IRA would increase that to between 31 percent to 44 percent by 2030. (Again, my ideal approach would be more R&D plus a carbon tax rather than all these credits.)

⤴ Energy Permitting Reform. As summarized by The Washington Post:

The side deal would set new two-year limits, or maximum timelines, for environmental reviews for "major" projects, the summary says. It would also aim to streamline the government processes for deciding approvals for energy projects by centralizing decision-making with one lead agency, the summary adds. Other provisions would limit legal challenges to energy projects and give the Energy Department more authority to approve electric transmission lines that are deemed to be "in the national interest," according to the document. One provision in the agreement could make it harder for government agencies to deny new approvals based on certain environmental impacts that are not directly caused by the project itself.

Look: How much of this newsletter has been devoted to criticizing the impact of decades-old environmental laws on our ability to build infrastructure and clean energy projects? So while these changes fall short of the sort of sweeping reforms I would prefer, especially to the National Environmental Policy Act, it's a step. "They're in the right direction but it still feels too small ball and piecemeal," Eli Dourado, a senior research fellow at the Center for Growth and Opportunity, told the WaPo.

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