The reconciliation bill Sens. Chuck Schumer and Joe Manchin came to an agreement Wednesday that the reconciliation bill Sens has absolutely nothing to do with inflation, despite its absurd name.
The Inflation Reduction Act of 2022 is crammed with the very same spending, corporate welfare, price fixing and tax hikes that were part of Build Back Better—long-desired progressive wish-list agenda items. Inflation can’t be controlled by pumping hundreds upon billions of dollars into the economy. The opposite.
Let’s also remember the Democrats’ deflection on inflation last year—claiming it was “transitory” and “no serious economist” is “suggesting there’s unchecked inflation on the way,” and so on—was all part of a concerted political effort to ignore the problem long enough to cram through a $5.5 trillion iteration of their agenda. The Biden administration claimed that more spending would reduce inflation when it suddenly became non-transitory and politically problematic. They don’t care about the economy, as long as dependency is being expanded.
Consumer prices will likely rise if the bill is passed. You can hate corporations with the heat of a thousand suns and grouse about the lack of fairness in the world, but it won’t change the fact that businesses don’t pay taxes, they collect them.
The Dems’ bill claims it raises $313 billion with a minimum 15% corporate tax rate. Democrats seem to think that corporations that pay less then 15% are evading tax rather than using fully legal tools like accelerated deduction or taking advantage of tax credit. Whatever the case may be, raising corporate taxes can lead to lower wages or fewer jobs. Perhaps both. What it won’t do is lower inflation.
The same establishment media that is suddenly unsure how to define a recession is going to falsely claim that the bill has a “deficit reduction package,” even though anyone who’s spent five minutes in D.C. knows that the bill features a bunch of accounting gimmicks that will allow Manchin to go back to West Virginia and claim his concerns about spending are allayed.
The deficit reduction number—which relies not only upon raising taxes on consumers but creating a more powerful IRS (and IRS public-sector union)—is plucked from the ether. We don’t know how much new taxes or audits will increase. We do know that any new spending program implemented today will remain in place for the foreseeable future.
The bill also transfers $369 billion more into green boondoggles. Democrats also have a slush fund. Now, even if you’ve convinced yourself that slight variations in temperature are an existential threat to humanity, there has never been an instance of energy becoming more affordable due to pumping money into green economies.
A bill with “investments” that will “encourage” a “transition,” as political journalists would say, is really just force-feeding inefficient and expensive alternatives that elbow out reliable, affordable gas and oil, and push prices higher. Manchin claims the bill will bring down energy prices. The bill does not provide any benefit to West Virginians unless they are eager to purchase heavily subsidised electric cars. It’s all they need.
The only aspect of the bill that even feigns at being about prices allows Medicare to “negotiate” (some) prescription drug prices. This is known as price fixing because the government is large enough and powerful enough that it can demand any price it wants from rent-seeking businesses. It will, as price fixing always does. It will reduce innovation and investments and create supply shortages, which will result in higher prices for ordinary consumers.
The Inflation Reduction Act includes new taxes on natural and industrial gas and coal production. How can a senator from West Virginia support a proposal promising a 40% reduction of greenhouse gas emissions by 2030? It would lead to the economic destruction of his state. But, to be fair these policies would result in economic destruction of all the economy.
Manchin—who once said, “I don’t think during a time of recession you mess with any of the taxes, or increase any taxes”—always plays this game, making it difficult for Dems to create the impression of moderation at home, and then basically giving in.
Nearly every reporter is going allow Democrats pretend that $430billion is a simplified bill, a huge political sacrifice because they really wanted a $3.5 trillion bill. They’re going to allow Democrats to pretend that bill lives up to its name, when it does nothing of the sort. The Inflation Reduction Act is to inflation what the Affordable Care Act—which doubled premium costs—was to health care insurance.
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