Inflation Reduction Act likely won't have immediate impact on Wisconsinites' wallets

MILWAUKEE (CBS 58) -- The Senate narrowly passed the Inflation Reduction Act this weekend in a tie-breaking vote and is now headed to the House.

The Inflation Reduction Act comes at a time when prices seem to be going up everywhere. But this bill isn't exactly what it sounds like.

"As far as the middle-income, middle-aged Wisconsin family, I don't think they'll notice a thing," Scott Adams said.

Scott Adams is an economics professor at the University of Wisconsin - Milwaukee. He said this act won't do much to fight inflation in the short-term.

"This Inflation Reduction Act can't do it. Nice name. It's good packaging," he said. "We've had an economy after the pandemic that's been hot. A lot of demand. People getting out and buying more, making up for lost time. That's pushing prices up."

That's because Adams said the U.S. can only really fight inflation through the Fed by raising interest rates.

"Not a whole lot we can do as a Congress or a President," Adams said.

Instead, the Inflation Reduction Act will impact prescription drug prices, climate change and health insurance. Adams said Medicare can negotiate prescriptions to keep them affordable. It also extends health insurance subsidies under the Affordable Care Act that were set to expire at the end of this year.

"Those are allowed to continue in the future so they can keep their health care," Adams said.

It also boosts clean energy. Under this act, tax credits would be given for buying electric vehicles and investing in solar panels for your home. Adams said it's the biggest investment in climate initiatives we've had from Congress.

"This will slow the impacts of climate change. There's wide agreement among environmental economists, so that in the long run that will be a head win," he said.

The bill goes to the House this week where it is expected to pass. But fighting inflation goes way beyond this measure.

"Supply chain issues, wars, natural disasters, these are the sort of things that cause excessive prices. It's not just the U.S., it's across the world," Adams said. "In the longer term, three to four years down the road, to the extent this is successful at reducing drug prices and the health care component of it, to the extent it's successful at making us more energy efficient with the climate portion of the bill, to the extent that it has deficit reduction in it which it does, we could see modest effects on inflation three to seven years down the road."