Washington Update - August 15, 2022

Billy Moore    Dc2

The House passed the Inflation Reduction Act on Friday, clearing the legislation for President Joe Biden’s signature. The bill, passed by party-line votes in the House and Senate, is a partisan exclamation point on a mostly bipartisan summer of accomplishments, including veterans health, China competition, and gun safety legislation. The accomplishments, unlikely only weeks ago, put some wind in the sails of Democrats going into the November elections.

The Inflation Reduction Act includes popular provisions to address climate change and energy supply, increase taxes on large corporations, allow Medicare to negotiate lower prescription drug prices and extend Obamacare insurance subsidies. Funding to modernize and increase Internal Revenue Service staffing draws the most vocal Republican opposition.

The legislative action was overshadowed by the FBI’s execution of a search warrant on former President Donald Trump’s residence at Mar-a-Lago. The warrant reveals an investigation of the former President for possible violations of the Espionage Act, statutes regarding the handling of top-secret government information and obstruction of justice. 

The reaction was predictably partisan: most Democrats described the search as involving accountability; Trump and most Republicans alleged the search was an assault on the rule of law by politicized law enforcement. As more details were revealed by week’s end, some cooled their rhetoric as others moved to impeach Attorney General Merrick Garland, who said the Department of Justice would next speak on the matter in court.

The week brought good news on inflation as composite consumer prices did not increase from June to July, producer prices declined, import prices fell, and surveys by the Federal Reserve and the University of Michigan showed brightening consumer sentiment. While the news is welcome, one month is hardly a trend and seems unlikely to reverse the Federal Reserve’s drive toward higher interest rates at its next meeting in September.