The Betrayal of the ‘Inflation Reduction’ Act

 

Manchin and Sinema had a chance to go down in history as heroes. They courageously withstood withering criticism to save the republic from trillions of dollars of inflation–fanning intergenerational theft.

But finally they fell for the oldest trick in the book – the “dad can I have a pony” swindle, traditionally practiced by clever youngsters who were willing to settle for a puppy in the first place. Exhausted by the mental energy required to resist intraparty pressure and not wanting to be responsible for poor election outcomes, they caved.

They supported the Inflation Reduction Act for $740 billion after sinking (again, thank you) the original $3.6 trillion version.

But what they got was possibly the most deceitful bill in the history of bills. The “IRA will reduce the deficit by $300 billion” claimed huckster-in–chief Joe Biden. “And we’ll do it without raising taxes a penny on those making less than $400,000 per year.”

Are you joking? Let’s start with the IRS, which received an $80 billion spending boost, an amount the Treasury Department reported would result in 87,000 new FTEs, mostly auditors and examiners.

That’s bad news for the middle class. Only 1.8% of American taxpayers earn more than $400,000 yearly. It’s inevitable that the other 98.2%, who make about 75% of the total income, will also receive increased scrutiny.

The only purpose of hiring an army of new auditors would be to increase collections. Anyone familiar with IRS audits knows that even taxpayers who have done no wrong often capitulate to aggressive harassment. The bottom line is that the Congressional Joint Committee on Taxation estimates that 70% to 90% of the money raised from unreported income would likely come from those making less than $200,000 per year.

The bill writers, sensing the problem, added this gem: “Nothing in this section is intended to increase taxes on any taxpayer or small business with a taxable income under $400,000.”

Get it? Nothing here provides actual protection to any lower-income taxpayers. Instead, the party of good intentions is attempting to avoid accountability, while claiming any unfortunate outcomes won’t be their fault.

The Inflation Reduction Act, it is now well established, will not reduce inflation and won’t reduce the deficit either, according to the bipartisan Joint Committee on Taxation. Instead, all of us will pay for this boondoggle by 1) forking over more money to the IRS (see above), 2) the effects of the new 15% corporate minimum tax passed on to workers and consumers, and 3) another government spending spree which will (again) be inflationary. Even Bernie Sanders gets it this time.

But the damage doesn’t stop there, as Steve Moore recently noted in the Wall Street Journal. The IRA would transfer $250 billion from Big Pharma to Big Climate.

Bad idea. Pharmaceutical companies spend $100 billion yearly on R&D, bringing us life-saving and misery-reducing drugs which have, among other benefits, reduced death rates from cancer and heart disease by half in the last 50 years.

The IRA price controls would inhibit innovation with a resulting cost in lost years of life estimated to be 30 times that from Covid, in addition to the increased human suffering and economic losses.

The climate change funds will go mainly to subsidies of wind and solar, which after decades of “start-up” funding produce 7% of America’s total energy. They’re not only unreliable but expensive too. A University of Texas study showed subsidies per megawatt hour of electricity range from 50 cents for coal up to $43 to $320 for solar. Yet we’re going to spend $380 billion more to chase the chimera of avoiding mostly inevitable climate change by vastly reducing our quality of life.

Americans deserve better governments than this. Passing trillion dollars spending bills for no essential reason has become the new normal.

It’s tempting to feel helpless, but what we can do is vote smarter. For starters, Arizonans should remember this in November: Mark Kelly was a tie-breaking vote on the Inflation Reduction Act. With just 51 votes, it couldn’t have passed without him.

He campaigns as a bipartisan centrist, but votes like a socialist. It’s time for us to wise up.

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  1. DonG (CAGW is a Scam) Coolidge
    DonG (CAGW is a Scam)
    @DonG

    The tax revenue of the act is a phantom.  It will never appear.   It is an accounting gimmick used to spend more money under reconciliation rules.

    • #1
  2. Flapjack Lincoln
    Flapjack
    @Flapjack

     Passing trillion dollars spending bills for no essential reason has become the new normal.

    This is the key point.  Neither party can or would actually reduce the scope and cost of gov’t.  And I’m guessing that most of the voting public doesn’t actually want gov’t spending to touch what benefits they get.  So, it’ll all end badly.  At some point.  Probably without advance notice.

    • #2
  3. I Walton Member
    I Walton
    @IWalton

    Good article.  Dead on.  I was not surprised by the “fiscal hero” joining the mob.  There is only a little room for folks to play that role and he played it well.  He needs to lose as well.   

    • #3
  4. Miffed White Male Member
    Miffed White Male
    @MiffedWhiteMale

    Tom Patterson: The bill writers, sensing the problem, added this gem: “Nothing in this section is intended to increase taxes on any taxpayer or small business with a taxable income under $400,000.”

    They won’t be “increasing” taxes, they’ll be “collecting” taxes, and they people they’ll be collecting them from  will be the poor and middle class.  Mostly in the form of finding undeclared income.  Anybody who does side jobs for cash, look out.

    And truthfully, I can’t say I have a problem with that.

    (most) “rich” people don’t cheat on their taxes.  They have lawyers and accountants to make sure they stay within the letter of the law.  As someone who’s been self-employed, and has family members who ran a business for a few decades, the scandal of small business taxation isn’t what’s illegal, it’s what you can get away with that’s completely legal.

    I always laughed at the people who claimed that Trumps leaked tax returns showed that he was going to be in legal trouble – you know who’s had complete copies of Trumps tax returns for every year of his life?  The IRS.  And they’ve never charged him with anything.

    • #4
  5. DonG (CAGW is a Scam) Coolidge
    DonG (CAGW is a Scam)
    @DonG

    I Walton (View Comment):
    Good article.  Dead on.  I was not surprised by the “fiscal hero” joining the mob.  There is only a little room for folks to play that role and he played it well.  He needs to lose as well.   

    Do you remember these stories about Manchin grift?

    President Biden‘s $1.2 trillion infrastructure package is set to be a boon for the wife of Sen. Joe Manchin III, a West Virginia Democrat and key swing vote for the White House‘s agenda.

    Mr. Biden‘s legislation, as written, greatly expands funding for the Appalachian Regional Commission. The federal agency, which is responsible for promoting economic development in the 13 states that make up Appalachia, is led by Mr. Manchin’s wife, Gayle.

    and:

    Heather Bresch [Joe Manchin’s daughter], the former president and CEO of the drugmaker Mylan, worked directly with the CEO of Pfizer to keep prices of the company’s EpiPen product artificially high, according to new documents released as part of an ongoing lawsuit.

    The documents also show Bresch approving a scheme to force customers, captured by the company’s monopoly, to purchase two EpiPens at once, regardless of medical need. The EpiPen is an auto-injectable device that injects epinephrine into the body and can be the difference between life or death for a person suffering a severe allergic reaction.

    • #5
  6. Bishop Wash Member
    Bishop Wash
    @BishopWash

    DonG (CAGW is a Scam) (View Comment):
    The documents also show Bresch approving a scheme to force customers, captured by the company’s monopoly, to purchase two EpiPens at once, regardless of medical need.

    My wife recently had an EpiPen prescription filled. I forget what our co-pay was, but it did come in a two pack, which I wondered about.

    • #6
  7. Bishop Wash Member
    Bishop Wash
    @BishopWash

    A number of commentators thought that Manchin and Sinema were probably providing cover for a few Democrats who didn’t want the bill to pass but didn’t want to stick their necks out. The thought was they could tell their voters that they wanted to pass the bill but those two darn holdouts wouldn’t play ball. Trying to have the best of both worlds. Now that it got this far, it was too late to pop one’s head up and become the contrarian. This bill should play large in their reelection campaigns this year.

    Early on, I think it was Sen. Klobuchar who put up a bit of resistance and got some concession. People wondered when Senators would realize that they could be a Manchin and demand things. It never happened though.

    • #7
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