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Roundtable: What's in the Inflation Reduction Act for California

 August 19, 2022 at 12:00 PM PDT

S1: From health care to climate change. The goal of the Inflation Reduction Act is to make solutions for some of our biggest problems a little bit more affordable. But does it do enough and will it help with the everyday costs that have spiked this year ? I'm Matt Hoffman , and that's our focus This Week on KPBS Roundtable. Hello and welcome to KPBS Roundtable. I'm your host , Matt Hoffman. And our guests this week are San Diego Union-Tribune columnist Michael Smolens , KPBS reporter Kitty Alvarado and the co-host of KQED. Political Breakdown. Marisa Lagos is here. I want to thank you all so much for joining us. We're talking about what's inside of the Inflation Reduction Act , what's not in it , and how this all might be remembered in the upcoming midterm elections. This all coincides with actions by Governor Gavin Newsom to deal with challenges to the state's water supply that have been caused by drought. Let's start with Marisa Lagos from KQED here. You know , there's a lot in here , Marissa. Historic climate investments , lowering health care and energy costs , even closing some tax loopholes.

S2: We're going to see subsidies extended. Those would have expired. That would have been a big hike for a lot of people who are already , by definition , on the lower end of the income scale. Folks on Medicare are going to have out of out-of-pocket costs caps , including insulin , things like that. But more broadly , there's a longer runway for a lot of the climate stuff. We're talking about investment in drought resiliency and wildfire prevention. Certainly about $4 billion for drought is going to be big. And then I think down the road we'll see , you know , more sort of depending on your personal life and economics status , whether you can , you know , cash in on those rebates for electric vehicles , whether you are going to be maybe working for or running a business that can get some of these tax credits. And then there is a lot around reducing pollution at ports. We have two of the busiest ports in the world , in California and several others that are also pretty busy in our urban centers. And so I do think that that kind of thing is going to have impacts again , maybe not something you'll see tomorrow , but something that will actually impact people over the coming years.

S1: Let's bring Michael into this conversation now. Any surprises that you saw ? It looks like we know that a corporate tax increase is helping pay for some of this.

S3: Remember , to build back better we thought was dead. And it's sort of remarkable. Now , this isn't that it's a lot less. But as we know that the negotiations that senator mentioned , he insisted on a lower price tag and some deficit reduction. I don't know that it's a surprise , but you know , you mentioned the greenhouse gas reductions. We'll see how this all plays out in the long run. But I think what it does , in addition to whatever impact this bill has , you know , in the United States , I think it puts the United States back in a leadership position globally for four years under Donald Trump. We were off the playing field in the whole global warming front , and that was really last time. So I think those are the kinds of things that that really striking about the bill. And , you know , Marissa went down a pretty good list. I wouldn't undersell the or underplay the drug pricing at all. Some people argue that that may be the most popular aspect of it. It's one of the more immediate things. But it's something Democrats have been talking about for a long time. And they do have it.

S1: Electric cars , solar panels and even energy efficient appliances. They all have special incentives inside of the IRA. KPBS reporter Kitty Alvarado is here with us and she got some local reactions when this bill was signed on Tuesday. Here's a point made by San Diego resident Jeremy Dukes.

S3: Who couldn't afford an electric car. And even if you can't afford it , why would you buy another car ? You have one that's already working just fine.


S3: You may be able to afford them , but do you own the house ? You can't put them on your house if you don't own the house.

S4: Most people rent. So it's not it's.

S3: Not going to help the.

S1: Everyday American.

S5: I mean , when I went out there , I was expecting most people to be honest , I was expecting a lot of people to say , I don't really know what is in that , because even I'm a reporter and I had to look up a lot of the stuff that was in that and a lot of the details. He did express what the average worker out there is expressing that , hey , you know what , I can't afford an electric car. They're so outrageously overpriced that how could I even afford an electric car ? Even if I do qualify for a rebate , I'm still stuck with a payment. And hey , I'm a renter. So where would I even put those solar panels and and those appliances ? You know , so it's kind of it's a little laughable for those people who are working class folks who don't own a home and who can't afford those those other things in that bill , it made me a little sad to speak to to folks who are obviously hurting and can't even imagine themselves owning a home. To be honest , it. It was a little sad.

S2: Can I just will say , I mean , I have the same thought on some of this. And then I started reading into it. And actually one of the things the bill specifies is that this will also relate to used electric vehicles. And so I do think there are places here appliances. I mean , when I was a renter , we actually did have to buy our own washer dryer. Right. And so I think that there might be places around the margins that are more helpful than they seem on its face , certainly. You're talking about a brand new Tesla that is going to be a specific type of person , but they may not even qualify for it because this does have income caps on it. So I think the way that this is actually rolled out and whether , you know , the government works with nonprofits and other people , service providers who actually can help people navigate these types of things is going to be really important. And so that's something I'll be watching. Like , is that something that somebody like this listener can go and actually figure out ? Like , Oh no , there is something in here for me. It's just , you know , is it like filing your taxes or is it. Oh.

S5: I do notice that those things like that , it's always like it takes a bunch of homework and outreach. And I think it's really tough for people who are working every day and commuting and get home really tired. And now I'm going to have to do all this homework to figure out how am I going to get all of these , like , benefits from from this act. Right.

S1: Right. Well , it is called the Inflation Reduction Act. And I know , Marissa , you said that you're going to be paying attention for more updates. And I'm sure a lot of people listening to this are going to be doing the same. Let's bring back in Union-Tribune columnist Michael Smolens here. Michael , your latest for the U-T is about California's handling of the drought. And we know that there's some money set aside in this package to help address that.

S3: What is interesting is that that and not really that well known is that the infrastructure bill includes like over $8 billion for drought relief. Now , federal legislation cannot make it rain , which is really what we need. But a lot of the management concern about water has been have come up a lot. And experts don't think that's been handled too well or that the infrastructure is not as good as it should be. So those are areas and it's going to take a while. Obviously , we're talking about spending billions of dollars on big projects , but that that will help. And so , you know , in addition to finding more sources of water and hoping for rain , having the facilities and the infrastructure to help manage it better should be a real benefit as we go into a very , very difficult and scary future in terms of drought.

S1: And Michael , something that we hear from activists and argument from them is if we don't make big investments now , this is going to cost us even more later. There's a recent UCLA study on mega floods that sort of paints a scenario for $1,000,000,000,000 disaster.

S3: I mean , that UCLA study talked about a biblical flood. Let's face it. I mean , they've talked about , you know , Los Angeles being inundated and the governor's plan to help , you know , with the drought had a lot to do with water storage and redirecting water to certain areas that also can be used to help flood control. So it could help , you know , certainly around the margins in that regard. But I think that there's going to be a different attitude about trying to capture stormwater that , as we know , just washes down sometimes torrential rains down the L.A. River or the San Diego River and rivers throughout California. When we do get those deluges and we will continue to get those deluges.

S1: And Kitty , we know that you've been busy this week getting reaction from our local congressional delegation on all this. We know that health care is a big component of the spending plan. Democratic Congressman Scott Peters , he represents the 52nd District in California and it includes a big chunk of San Diego's biotech community. Here's some of his thoughts.

S4: It's going to cap the amount that seniors on Medicare have to spend at the pharmacy counter at $2,000 a year. And it's can provide a $35 a month cap for those people for insulin. That's something we wanted for a long time. And we were able to do it in a way that preserves the incentives for companies. A lot of them are at San Diego to continue to innovate in the drug space in the private sector.

S1: Again , that was Congressman Scott Peters there. And Kitty , this was one of those bills that Democrats had to push through with a party line vote. We know that local Republican Darrell Issa voted against this.

S5: I did speak with Scott Peters. And he was very adamant that the bill include that portion that you heard there , that it did include some of the the incentives there for pharmaceutical companies so they they wouldn't be left. It was very interesting because I did also interview Representative Juan Vargas. And although they may seem like they're from there , they represent very different constituents. They were very much in agreement on on so many things. You know , they both really wanted those pharmaceutical aspects of it , as well as the the prescription drug reduction , because they were saying that so many of the seniors are really struggling with with the cost of prescription drugs. And it's something that no matter what side of the aisle on , they have been fighting this for so long. And that's something that that everyone is going to see immediately.

S3: Well , there's an interesting back story about Scott Peters. The drug pricing plan really came from the framework of something he had proposed. But back in September , he was reviled about by a lot of people because he opposed a broader drug pricing plan , one that the leadership wanted to include and build back better. Nancy Pelosi , the House speaker , asked him , you know , directly asked him for his vote on this , that she needed that vote and he wouldn't do it. He took a lot of heat , of course. He gets a lot of financial support from the pharmaceutical and biotech industry. You know , he's been supportive of them. They've been supportive of him. And some people talked about what he was proposing as potentially being a fig leaf just to scuttle the whole thing. So it's sort of interesting that the , you know , sort of pared down plan , which is still being widely lauded , is sort of what ended up in the Inflation Reduction Act now is different. You know , a lot of the details , but that just was kind of an interesting role that he played , that some groups that were really critical of him and other Democrats who stood in the way before are lauding this new plan.

S1: You're listening to KPBS roundtable. I'm Matt Hoffman. And our guests this week are Katy Alvarado from KPBS News , Michael Smolens from the San Diego Union-Tribune , and Marisa Lagos from KQED. Let's check back in with Marissa. We know that California , they stand to get the most money from this package being the biggest state and a huge market for EVs and solar proponents are also pointing to all the new jobs that will be created in these spaces. But there were some compromises that needed to be made.

S2: This is not the ambitious sort of broader agenda , domestic agenda that the president and many , particularly on the left wing of the Democratic Party , wanted to see. And so I think that , you know , sort of writ large. I mean , there are a lot of details , including , you know , the deal they had to make with Arizona Senator Christian Cinema to remove this carried interest loophole or not not close it all the way. The idea that , you know , this only caps insulin at $35 for Medicare recipients , not everybody but child care. You know , the bigger sort of push for really shoring up the care economy and giving people free preschool more help taking care of sick or young family members. None of that is in here. And so I do think that , you know , there's some disappointment on the left from that. Although to Michael's point right before the break , I mean , this is the definition of a compromise , right ? Not everybody is getting what they want. And a lot of this especially going back to this idea of allowing Medicare to negotiate prices for the top ten drugs , giving these subsidy expansions for the Affordable Care market , those are huge wins for Democrats in themselves as this were standalone legislation that would be big. And so I think that , you know , there's you always have to kind of look at the broader thing. I've been covering legislation and legislative bodies for a while. It is very rare that anybody gets everything they want.

S1: And Michael , we know that the health aspect of the IRA , it's largely focused on seniors who are covered under Medicare. But there's also a lot of money to extend covered California subsidies. That was a big deal , signing more people up. But one big sticking point , as Marisa mentioned , was the return of the child tax credits that parents were. See that for a while during the pandemic.

S3: You know , I think some of the key people , Senator Manchin , I think , didn't want that and his vote was key and his negotiating role. But there were a bunch of other things. You know , she mentioned pre-K. And I think , you know , it was money that people wanted for elder care. That's not in there. A big one in California and everywhere. You know , people wanted housing money in there. And the , I think , build back better had a lot of money in there for that. There was virtually nothing in there this this time around. There was relief on community college tuition. So , you know , it's hard to say whether the child tax credit is the biggest impact. I mean , it is in a sense that people did have it for a while. It did expire , but it was a huge relief and frankly pulled a lot of people above the poverty line.

S2: I will say that , you know , Democrats , while those tax credits were hugely important , especially for people on the lower end of the income scale , the Democrats didn't seem to get the political sort of win from that that I think they expected. We often hear about this that sending checks out to people right before an election is a good idea. Not that there was an election last year , but the polling really didn't show that people were looking at that money , at least not on a broader scale , enough to help Democrats. And I know this isn't just about politics , but it is what I look for. So I think it's worth mentioning that some of this stuff , I think might be actually easier to campaign on , like the prescription drug pricing than what we saw was not as potent as I think a lot of Democrats had hoped during the pandemic.

S3: Well , the prescription drug pricing is , you know , targeted towards seniors. You know , older people tend to vote in more numbers. So that's like you say , I think that's going to be a big selling point.

S1: Well , let's talk about young people. They've been some of the most vocal when it comes to climate activism. KPBS Midday Dish and recently talked with Chiara Miniato. She's a 16 year old San Diego student at Canyon Crest Academy. She's also a member of Youth for Climate. Here's some of what she had to say about all this.

S2: There's a lot of deficits of this bill has. This is hundreds of billions of dollars less than the initial ask in what we were initially promised , along with having a lot of handouts , the fossil fuel industry. And while this may be a great step forward in helping the climate crisis , I really fear for the future of my generation. And personally , I don't want to grow up in a world where climate action is too little and too late.

S1: And this one goes to Michael or Marissa. You know , while this is the nation's biggest investment yet in climate change , it's not quite the Green New Deal , as we heard her just mention there.

S3: They realize they couldn't. I mean , there's that , you know , 50 votes that they needed in the Senate under certain circumstances and the Green New Deal was never going to make it. The biggest thing is that I don't know that they're going to say , oh , we've done great and rest on our laurels. That's really it for this year. What happens in November is. Really going to dictate whether there's going to be more climate change legislation. And if the Republicans , as I think we expect , still expect , take over the House , if not the Senate. That's going to be , if not impossible , exceedingly difficult. Yeah , it's frustrating. One of the things just , you know , carry on for a second that , you know , climate change is so important , but in the pure political aspect , it just does not move the needle that much. That's why we're talking about the Inflation Reduction Act on a legislation that really doesn't do much to reduce inflation. Certainly not. Certainly not anytime too soon. It's a climate change and investment bill. And , you know , that was by design , I think , to help sell that , you know , with things like the drug prescriptions. That's not to say they put in stuff just , you know , for electoral purposes , but they needed to do more than just sell it on climate change , which is unfortunate because we know , you know , we're really headed for a disaster if things don't turn around in the not too distant future.

S2: And I think we should , you know , not underestimate the how important this bill is , how much further it goes than anything our government has ever done. We're talking about getting 40% reduction in emissions , hitting those goals that President Obama set out at the Paris Accord that President Trump pulled us out of. And so it is not everything that folks who supported the Green New Deal won by any means , but it is a huge deal in itself. And I think it might , you know , instead of allowing folks to throw up their hands and say , this is enough , it could give Democrats some edge in some of those tight House races. And it could , I think , sort of energize the Democratic Party if whether it's this year or in the future , they do get back or keep control of Congress to actually go further. I mean , the bottom line here is , yeah , if there was a couple more Democrats in the Senate , this would have been a different bill. But they're stuck with mansion and cinema. So this is where the end of that.

S1: That's a perfect segue way as we wrap up here in our remaining minutes. Let's look ahead to the future , specifically to November. We know that inflation is at the top of the list for people of issues they say are important to them. Here's Democratic Congressman One Vargas talking about the affordability crisis.

S4: They're right. They can't afford electric vehicles right now. The wealthy people can't because the price is too damn high. But with this investment of the federal government , those prices will come down and fairly quickly. And you'll see that Ford and Chevy and American manufacturers will build inexpensive electric vehicles.

S1: Kitty , that was part of some of your reporting this week. And we know that you've done plenty of stories on inflations , especially with gas prices spiking recently.

S5: You know , at the grocery store , at the gas station , it's it's you know , there are electric bills everywhere they go. And I think that is just part of the of the larger picture. That's why they're just so they're just so done with everything. So when they hear part of the the sound bite , the the interview that I did with Jeremy Dukes , where he just said , you know , this bill has a pretty name , but it's not going to do anything it says. And so I think it's just that part of the sentiment that they're just so fed up with , with the rising cost of everything , that they're just like , you know , we'll see both representatives kind of say , you know , wait and see. It is going to do this. And and it's , you know , it's a really great bill. And you'll see. And then , you know , Jeremy says , well , you know , that's just the whole point. I don't have time to wait. I'm desperate now. I , I really can't afford really even to feed my family half the time. So it's , you know , that's that's just the point. People can't wait. And if it's going to take a long time to see a lot of the progress in this bill , I think that's that's part of the frustration. But at the same time , Vargus , you know , made it really clear that , you know , just because some of these things are going to take a little time and just because we didn't get everything we wanted doesn't mean we can't do something. And he thinks it's a really great bill , but he himself was really frustrated with some of the things they had to take out. To Maurice's point , you know , especially that that carried interest , he was he called Christensen out by name. I've never seen him that upset as to when he talked about that , using the word , you know , hell and everything else. And he was mad. So but at the same time , he went back to saying , it's a great bill and great things are going to come out of it.

S1: So Morrissette we're only about two and a half months out from the November election , and the I.R.A. is likely , as Michael said , the last big piece of legislation between now and then. Your show , Political Breakdown , is doing a lot of coverage on the races and the candidates statewide. Are you guys hearing that inflation is one of the biggest issues right now ? Absolutely.

S2: I mean , the latest statewide polling is a few months old , but it was definite. Head and shoulders above issues that we're playing very big. Six , eight months ago , crime , things like that really have kind of fallen off. You know , I think Democrats are getting a little bit of a respite. We're seeing inflation cool off a little bit. It's not the prices are falling by any means. Believe me , my grocery bill is insane with two boys at home. But I do think that between that and gas prices starting to fall , it gives Democrats an opening to talk about this bill. You know , to Kitty's point , nothing legislatively changes the world overnight or very few things do. I guess we can't say nothing , especially after the last few months. But I think when you look at this bill , when you look at the other accomplishments of the Biden administration , which , again , we kind of I think it's been such a bizarre few years , it's it's hard to remember. But , you know , the infrastructure bill , the Recovery Act , this I think these are some of the biggest investments we see in the government. Make sense , FDR. Right. So there is something for Democrats to campaign on. I think the question is whether voters can hear it when they are still having these very real day to day challenges. And so that is going to be the task. And Republicans are , of course , going to be out there going after them , saying that , you know , despite any of this , people are still hurting. It's hard right now. It's hard after the last six years to ever make any predictions. But I do think that we'll have a better sense in the coming weeks and days whether inflation is the only thing or if some of these other issues , abortion , gun rights are also energizing voters on the left. It's just it remains to be seen.

S1: And final question here. We'll go to you , Michael. You know , we've seen Republicans pouncing on the money for the IRS , for investigations and enforcement , a sort of a response to this.

S3: And I think , you know , the IRS is not a popular institution by any stretch. But I think the Democrats the Democrats are responding. I mean , Treasury Secretary Janet Yellen announced that the increased money for the IRS would not go to increased audits for people earning under $400,000. Now , she didn't just do that out of the blue that came after that $400,000 level in the tax increases in the bill that nobody would be getting taxed more that earned less than 400,000. But because of the attacks about that money , we can go to , you know , sort of a Gestapo IRS. She wanted to make clear that they wouldn't be increasing their rates of audits to people in the middle income. So that to me seemed to be a direct response to the Republican attacks , which suggest they're they're having some effect.

S1: And we're going to have to end it there. I want to thank you all so much for your time on this episode of KPBS Roundtable , Marisa Lagos from KQED , Kitty Alvarado from KPBS News , and Michael Smolens from the San Diego Union-Tribune. You can stream the KPBS roundtable podcast anytime , wherever you get your podcasts. I'm Matt Hoffman , and we'll be back with you all next week.

President Biden laid out his plan to tamp down on inflation and rising costs in a speech at the White House Tuesday.
Manuel Balce Ceneta
President Biden laid out his plan to tamp down on inflation and rising costs in a speech at the White House Tuesday.
The Inflation Reduction Act commits billions of dollars to climate, health care and tax reform. We discuss how funding from the bill will impact California and how local residents and politicians are reacting.

KPBS reporter Matt Hoffman hosts a discussion on how the Inflation Reduction Act will benefit California. Guests include KQED "Political Breakdown" co-host Marisa Lagos, KPBS reporter Kitty Alvarado and San Diego Union-Tribune columnist Michael Smolens.