The Inflation Reduction Act of 2022, a compromise bill by the US Senate Democrats, addresses not just inflation, but several key, long-standing problems facing the United States economy and society.

There is a simmering debate about the causes of today’s inflation; but regardless of what side one takes, this bill represents a step forward.

For those worried about excessive demand, there is more than US$300 billion in deficit reduction. And on the supply side, the bill would mobilise US$369 billion of investments in energy security and decarbonisation. That will help bring down the cost of energy – one of the main drivers of current price growth – and put America back on track to reduce its carbon dioxide emissions by some 40 per cent from 2005 levels by 2030.

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