U.S. House Democrats on Friday passed the so-called Inflation Reduction Act just a few days after the Senate's approval amid harsh criticism from Republicans and other groups, Trend reports citing Xinhua.
Critics said the legislation does little to tamp down inflation, which stands at a 40-year high.
The 730-page package contains an estimated 437 billion U.S. dollars in new spending, with 369 billion dollars dedicated to curbing climate change and promoting green technology.
Democrats argued that the massive spending will be offset by 737 billion dollars in new revenue that the bill will allegedly create.
The bill would empower Medicare to negotiate the prices on 100 drugs, among other reforms that Democrats said will bring in 265 billion dollars. Moreover, a sum of 222 billion dollars in revenue will stem from a new, 15 percent minimum tax on corporations.
"With the passage of the Inflation Reduction Act in the House, families will see lower prescription drug prices, lower health care costs, and lower energy costs," U.S. President Joe Biden tweeted on Friday.
Democrats claimed the bill will lower inflation, as they expect the legislation to raise new revenue and reduce deficit.
However, Republicans blasted the bill, calling it a "hoax on the American people."
"To call it the Inflation Reduction Act is a lie," Republican Representative Nicole Malliotakis said Friday.
"You can't tax and spend your way out of an inflation crisis," House Minority Leader Kevin McCarthy said, blaming the Biden administration's policies for the worst inflation in four decades.
"By reducing long-run economic growth, this bill may actually worsen inflation by constraining the productive capacity of the economy," the Tax Foundation, a nonprofit think tank, wrote on its website.
A letter to Congress signed by over 200 economists argued that over 400 billion dollars in proposed government spending "would create immediate inflationary pressures by boosting demand, while the supply-side tax hikes would constrain supply by discouraging investment and draining the private sector of much-needed resources," Fox News reported earlier this month.
The letter's signers included Robert Heller, former president of the Federal Reserve Board 1986-1989, Nobel laureate Vernon Smith, former Chair of the Council of Economic Advisers Kevin Hassett, and former Director of the Office of Management and Budget Jim Miller, said the report.
Indeed, many economists said heavy government spending has been a major cause of inflation, along with supply chain bottlenecks and global energy shortages. The act would have no meaningful effect on inflation in the near term.
The Penn Wharton Budget Model of the University of Pennsylvania estimated that "the Inflation Reduction Act will produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024."
"These point estimates, however, are not statistically different than zero, thereby indicating a very low level of confidence that the legislation will have any impact on inflation," the report said.
Skyrocketing inflation has significantly hurt Biden's approval rating, which stands at 40.3 percent, near his all-time low, according to Real Clear Politics' average of polls.
Despite doubts and criticism, Democrats' ability to pass such sweeping legislation could be seen by the party's base as evidence of competence, and may benefit Democrats in November's midterm elections, as they struggle to retain control of the House and Senate.