Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

This Tuesday, the US president signed into law a sweeping tax, health care and climate bill called the Inflation Reduction Act,

a significantly paired back version of

the Build Back Better Plan, which he was pushing for last year.

The bill was held up at the last moment over a provision that would have increased taxes

on the private equity industry.

In his remarks before signing the bill, Joe Biden said,

Today the American people won and the special interest lost.

Other than the private equity industry, of course.

Fans of the new law claim that it will improve citizens' finances while reducing the

federal deficit.

And critics say that it will lead to higher taxes for individuals and corporations

and that it will be ineffective at dampening inflation. Let's look at the new legislation

and try and work out to what extent it might reduce inflation, which has been at its highest

rate in around 40 years, and see who the winners and losers are.

The Act provides for new spending and tax incentives related to the adoption of clean energy

technology, both at the industrial and the consumer level.

It extends a temporary expansion of Affordable Care Act health insurance subsidies for an additional two years.

Then to offset these deficit increasing initiatives, the bill implements a new minimum tax on large corporations' book income,

reduces government outlays on prescription drugs through pricing reforms and provides

for additional IRS funding which is supposed to increase revenue collections in excess of

the cost of implementation.

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