The Inflation Reduction Act will be fully approved without large changes to the energy provisions
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The Inflation Reduction Act will be fully approved without large changes to the energy provisions

Due: Aug 20, 2022     Created: Jul 29, 2022 - 08:58     Tags: macro $uge us
Forecasts
Jul 29, 2022 - 10:03
65%
Yes
35%
No
Reasoning

“Senate Majority Leader Chuck Schumer and Sen. Joe Manchin on Wednesday announced a deal on an energy and health care bill, representing a breakthrough after more than a year of negotiations that have collapsed time and again.”

“The White House has signed off on this deal, Biden said in a statement. The deal still faces multiple hurdles before it can make it to Biden’s desk, including the parliamentarian and having to pass both chambers of Congress, where practically any Democrat could sideline or delay passage.”

It seems like this time it has higher chances of passing but I have no insight into US politics.

Base rate (from 7y ago): a bill has a 3.3% chance of being approved [1]. But this bill isn’t like the others:

  • (No) It was part of Biden’s domestic agenda so the opposition is incentivized to not let it pass.

  • (No) It’s being introduced hours after a separate bill to invest $52B in US semiconductors manufactured (current environment is inflationary and more spending is the opposite of trying to cool down the economy.)

  • (No) Very few days to approve it, and this isn’t 2020 (spending bills).

  • (Yes) This deal was concocted by two people, one of them Senate Majority Leader who had opposed various predecessors of this bill (Build Back Better).

  • (Yes) It allocates a lot of money to clean energy, which doesn’t seem to be a conflictive point right now (gas prices everywhere are really high, more clean energy means less demand for gas and therefore lower prices.) This bill proposes popular actions like “Provide tax rebates for energy-efficient vehicles or solar panels” which was supported by 77% of the US in 2021 [2].

Biases:

  • I want “Yes” to happen because I’m invested in some companies that would benefit from it and also because I believe it’s necessary for the survival of humanity.

https://edition.cnn.com/2022/07/27/politics/schumer-manchin-deal-build-back-better/index.htm

[1] https://www.quora.com/How-long-does-it-take-to-pass-a-bill-in-the-US/answer/Carter-Moorel [2] https://climatecommunication.yale.edu/visualizations-data/ycom-us/