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SENATOR Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY) reached a new agreement to salvage some aspects of Joe Biden’s defunct spending plan, known as Build Back Better, which aims to raise corporate taxes, “enforce” the Internal Revenue Service (IRS) and involves minimum spending of $433 billion. The deal hides a progressive spending agenda under the guise of reducing inflation.
The Inflation Reduction Act of 2022 proposal is more like climate change legislation than one to combat inflation. Schumer’s congress’s largest package on climate change ever passwords would be “the largest package on climate change ever passed by Congress.”
The Inflation Reduction Act of 2022 will be the largest package on climate change ever passed by Congress. Period.
— Chuck Schumer (@SenSchumer) July 28, 2022
Manchin: fight inflation with a tax increase?
According to a statement from Manchin, the legislation would “fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030” and project a supposed deficit reduction of about $300 billion.
The Inflation Reduction Act would seek to invest $369 billion in the domestic energy industry to stimulate the use of electric cars and reduce fossil fuel consumption. In addition, it proposes a total of $64 billion in premium subsidies for the Affordable Care Act, which is intended to “agree” on prices with the pharmaceutical industry through Medicare.
In addition, the legislation seeks to impose a 15% minimum tax on corporations, which would raise an estimated $313 billion, and drug pricing reform, which would raise an estimated $288 billion.
Through a legislative “enforcement” of the IRS, which would essentially increase its ability to monitor Americans’ income, the legislation seeks to raise another $124 billion.
Additionally, while the senators note that no new taxes will be imposed on families earning $400,000 or less a year and that they are making “the biggest corporations and ultra-wealthy pay their fair share,” they intend “closing the carried interest loophole” to raise an additional $14 billion.
More spending, more inflation
So far, like Biden’s Build Back Better agenda, the Inflation Reduction Act is not at all clear on how it intends to reduce inflation. In fact, according to an article by David Harsanyi for the New York Post (NYP), the Democratic senators’ proposal could make matters worse.
“The Inflation Reduction Act 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,” Harsanyi writes, clarifying that “pumping hundreds of billions into the economy will do nothing to alleviate inflation,” but quite the opposite.
The corporate tax hike with which Democrats plan to fight inflation could degenerate into fewer jobs and higher prices, and the goal of reducing the deficit by raising consumer taxes and strengthening the IRS to tighten collection even further doesn’t seem reasonable either.
While Manchin claims that the legislation is intended to reduce energy costs, he does not explain how a multi-billion dollar investment to “promote the transition” to electric vehicles is going to solve the crisis in gasoline prices, especially when new taxes against natural gas and coal production are included. Nor does it take into consideration that the intended drug pricing could lead to shortages.
In the midst of a shrinking economy, which Democrats refuse to call by name (recession), an increase in corporate taxes, bundled with increased political spending, does not sound like the ideal recipe for controlling inflation.
To quote Manchin’s own words during a debate in West Virginia in 2010, “I don’t think during a time of recession you mess with any of the taxes or increase any taxes.”
Matthew D. Dickerson, director of the Grover M. Hermann Center for the Federal Budget at the Heritage Foundation, puts it bluntly: “The so-called Inflation Reduction Act of 2022, in reality, only would add to the inflationary pain families are already feeling thanks to hundreds of billions in new government spending and job- destroying tax hikes.”
Tomás Lugo, journalist and writer. Born in Venezuela and graduated in Social Communication. Has written for international media outlets. Currently living in Colombia // Tomás Lugo, periodista y articulista. Nacido en Venezuela y graduado en Comunicación Social. Ha escrito para medios internacionales. Actualmente reside en Colombia.