Ad targeting Elissa Slotkin on Inflation Reduction Act ignores the facts

A conservative activist group seeking to influence Michigan’s competitive U.S. Senate race targeted Democratic U.S. Rep Elissa Slotkin and her vote for the Inflation Reduction Act of 2022.

"Slotkin voted for the $1.2 trillion Inflation Reduction Act that drove inflation higher," the group said in an ad.

The ad is paid for by Americans for Prosperity Action, the campaign arm of Americans For Prosperity, a conservative activist group. It began running on Facebook and Instagram in early September. Americans for Prosperity did not respond to a request for comment. 

Despite what the ad claims, though, year-over-year inflation has gone down, not up, since President Joe Biden signed the Inflation Reduction Act into law in August 2022.

The attack builds on a running theme in other tight Senate contests and the presidential race. Republicans have framed the law as a Democratic failure that caused higher inflation, even though the inflation rate has fallen by more than two-thirds in the last two years. 

Slotkin is running against Republican former Rep. Mike Rogers for the Michigan U.S. Senate seat to replace outgoing Sen. Debbie Stabenow, a Democrat. 

On Aug. 16, 2022, Biden signed the Inflation Reduction Act, following approval by Democratic-led party-line votes in the House and Senate. Slotkin voted for the bill. Though it had "inflation" in its name, the law focused mainly on climate change, health care and taxes. It included clean energy subsidies, allowed Medicare to negotiate drug prices and boosted Internal Revenue Service funding.

In August 2022, when Biden signed the law, year-over-year inflation was 8.3%, not far below its June peak of around 9% — the highest in about 40 years.

In June 2023, year-over-year inflation fell to 3%, and it has remained below 3.7% every month since. August 2024’s rate was 2.5%, close to its pre-pandemic level and near the Federal Reserve’s 2% goal.

So, the act didn’t drive inflation higher. However, it likely didn’t play a major role in reducing inflation in the last two years either, economists have told us for previous fact-checks.

Some of the bill’s provisions may one day help keep prices down — for example, rules enabling Medicare to negotiate some drug prices. But the law’s elements were phased in over several years and could not have had a significant effect during 2022 and 2023, when most of the two-thirds decline in the inflation rate occurred.

Economists told us that Federal Reserve rate hikes, falling oil prices and an economic slowdown in China played more important roles in easing inflation over the past two-plus years.

Inflation’s easing after the bill’s passage undercuts Americans For Prosperity’s claim that the law "drove inflation higher." 

Americans for Prosperity Action’s assertion that the law cost $1.2 trillion is possible, but it’s on the higher range of estimates economists made after the law passed. It also ignores the potential budget offsets caused by lower costs for Medicare and higher revenue from tax collection. 

After the law passed, the Congressional Budget Office estimated it would end up reducing the deficit by around $240 billion over 10 years. Lower costs from Medicare negotiating drug prices and higher revenues from improved IRS enforcement were expected to offset the costs for climate tax credits and subsidies. 

The law’s climate spending provisions had no cap, though, and U.S. businesses and consumers have capitalized on tax credits and subsidies more than initially expected. A 2023 emissions rule by the Environmental Protection Agency is expected to increase electric vehicle adoption and subsidies, driving up the law’s cost. 

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The estimates of the cost of those climate provisions now range between $780 billion and $1.2 trillion. Goldman Sachs estimated in April 2023 the cost could be as much as $1.2 trillion, which is among the highest estimates. Credit Suisse estimated the costs at around $800 billion, while the Wharton School of Business at the University of Pennsylvania produced a $1 trillion estimate. 

The Congressional Budget Office, meanwhile, released new figures in February estimating the climate portions of the Inflation Reduction Act would cost about $786 billion, according to the Tax Foundation, a nonpartisan think tank.

Those estimates take into account only the direct spending on climate initiatives. How much revenue raised through better tax enforcement and the reduction of Medicare spending will offset the cost is uncertain. In February, the Republican-led House Budget Committee estimated the law, based on the new Congressional Budget Office estimates and the original projected savings, would increase the deficit by $306 billion over 10 years.

The Tax Foundation gave a similar estimate of a $300 billion deficit increase over 10 years, but cautioned that it was mixing two baselines from different years. The uncertainty showed the need for a new impact study from the Congressional Budget Office and the Joint Committee on Taxation, the group wrote.

Neil Mehrotra, an assistant vice president and policy adviser at the Federal Reserve Bank of Minneapolis, told PolitiFact the Congressional Budget Office has not reconsidered the other parts of the law since it was passed. He said the higher spending is "likely somewhat offset by higher likely revenue from better IRS tax enforcement." 

If the Inflation Reduction Act’s climate subsidies and tax credits end up costing more, then the net cost will also be higher. But the ad pinning a $1.2 trillion price tag on the legislation did not take into account the uncertainty of that estimate, or the savings that will offset that cost. 

Americans for Prosperity Action said the Slotkin-supported Inflation Reduction Act "drove inflation higher."

The law Slotkin supported did not drive inflation higher. Inflation has fallen by more than two-thirds since it took effect. While the lower inflation is likely not because of the law, it’s wrong to attribute higher inflation to it. 

The law could eventually create direct spending of as much as $1.2 trillion, but that’s one of the highest estimates, while others peg the spending at around $780 billion. Some of that spending will be offset in more tax collections and savings elsewhere. 

On the central claim that the law drove inflation higher, we rate it False.

PolitiFact Chief Correspondent Louis Jacobson contributed to this report