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Though the new legislation takes some steps in the right direction on climate and drug prices, it falls far short of what is needed. The Democrats, with control over the White House and both houses of Congress, squandered the historic opportunity for a progressive breakthrough.

There are four big reasons to be skeptical of the Democratic Party's self-congratulation.

1. Despite its title, the new legislation will have essentially no effect on reducing inflation during the next few years.

Today's inflation, running at 8.5% year-over-year in July, results from economy-wide imbalances of supply and demand. Even the small steps on drug pricing in the new law—allowing Medicare to negotiate the prices of some drugs as of 2026—will have no effect on current inflation, and only tiny effects later. One study at Penn Wharton, for example, expressed "a low level of confidence that the legislation would have any measurable impact on inflation."

2. Most of President Joe Biden's original social agenda was left out of the legislation.

Unlike the first draft of the legislation (under the original banner of "Build Back Better"), the new law stripped out most of the social programs in Biden's original program, essentially because conservative Democrats blocked all of the proposed tax hikes on the rich that would have paid for such programs. The Dems abandoned earlier proposals for universal pre-kindergarten and subsidized child care, paid family and medical leave, free community college and expanded child tax credits, among other initiatives.

3. Democrats once again sided with campaign donors and lobbyists over everyday voters.

Biden's initial plan called for at least partly reversing the unjustified giveaway to the rich in former President Donald Trump's 2017 corporate tax cut. It also called for raising personal income taxes on the richest Americans and on ending some egregious tax loopholes. These tax objectives were abandoned when conservative Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona protected the rich rather than their own constituents. They went with the campaign contributions, not the voters.

With no meaningful tax increases on the rich, the federal government will continue to run chronic and irising budget deficits as a share of GDP, even with the legislation stripped of important social initiatives. Federal outlays as a share of GDP are rising over time as the US population ages, health care costs rise and as money continues to be squandered on record military budgets and overseas wars. Direct outlays on wars since 9/11, including the current war in Ukraine, have cost $2.3 trillion and many trillions more in other costs, such as veterans' care.

The long upward march of the debt-to-GDP ratio will therefore continue. When former President Ronald Reagan assumed office in 1981, the federal debt was 24.6% of GDP. He sold the American people on the idea that they could have their social programs and tax cuts at the same time. Yet the real result has been a 40-year build-up of public debt. In 2021, the debt was 96.9% of GDP. According to the most recent projection of the Congressional Budget Office, the debt will grow to a staggering 185% of GDP in thirty years on the current tax and spending plans.

4. The much-touted climate actions will deliver modest results despite the headline promises and bravado.

Here's a hint why: Sen. Manchin, owner of two coal companies and darling of the oil lobby, let the bill pass. He knows the truth that the Democrats won't admit. This bill will not come close to putting the US or the world on the path to energy decarbonization.

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According to much-touted claims, the new law will direct nearly $370 billion to clean energy and will reduce US greenhouse gas emissions as of 2030 by around 40% below the 2005 level. Yet this claim is easily misunderstood. The Princeton study used to support it actually asserts that the legislation will reduce emissions by around 15% of 2005 emissions, with the remaining 27% reduction as of 2030 predicted to occur based on pre-existing trends, even without the new legislation.

Yet there is more worrying news. The Princeton study also comes with the following small print: "Several constraints that are difficult to model may limit these growth rates in practice, including the ability to site and permit projects at requisite pace and scale, expand electricity transmission and CO2 transport and storage to accommodate new generating capacity, and hire and train the expanded energy workforce to build these projects."

Put more simply, the actual reduction of emissions under the new law is likely to fall short of the widely advertised 40% relative to 2005.

What the US truly needs is a decarbonization plan involving public land use, the national transmission grid, limits on new deployments of fossil-fuel infrastructure and more—not simply a set of tax incentives, as provided in the new law. The new legislation includes no energy plan, and the Supreme Court recently struck down the authority of the Environmental Protection Agency to put forward any such plan.

In short, despite some steps for a safer climate—almost all revolving around tax credits for clean energy—we are almost surely stuck with an inadequate pace of decarbonizing the energy system. Global warming is likely to hit very dangerous levels, and US efforts to cajole other countries to decarbonize faster will be stymied by insufficient action at home.

Yes, the legislation marks a small step forward. It is better than not having it. But Biden certainly shouldn't have handed his signing pen to Sen. Manchin as a mark of honor.

It was Manchin, with Sinema and probably Democratic Party conservatives behind the scenes, who scuttled the country's once-in-a-generation chance for the progressive change we need to achieve a prosperous, fair and sustainable society. We could have had a progressive breakthrough of the kind that Biden proposed last year but later abandoned, when conservative members of his party sided with the rich and powerful lobbies rather than the interests of the working people of this country.

A staggering 85% of Americans say that the country is on the wrong track. We are often told that this is because America is divided. The real reason is that our political system represents narrow interests, not those of the vast majority of Americans. Alas, there is far too little to celebrate in this regard with the new legislation.