Congress never cared much for truth in labeling, but even by its own standards, the “Inflation Reduction Act of 2022” is ridiculously absurd.
The deal, struck by West Virginia Sen. Joe Manchin and Senate Majority Leader Chuck Schumer, is being projected by the media as a presidential-reviving achievement for Joe Biden, when in fact it is a flaw in his legislative agenda that hastened. I have been thrown into an incongruous. Misleading under misleading name.
A sign of Biden’s legislative strategy is pursuing broad legislation that has nothing to do with voters’ genuine concerns. Worried about inflation? Don’t worry, we have a partisan, overly ambitious voting-rights bill, police-reform bill or new multi-billion-dollar spending bill just for you.
Fortunately, Munchkins bid adieu to what Biden and the rest of the party initially spent on the so-called Build Back Better. otherwise the new deal is the same as a non sequitur as always. In times of inflation, this offers hundreds of billions of new spending. As the economy approaches a recession or near one, it offers hundreds of billions in new taxes. And a key element of this is more green-energy spending at a time when climate is far below voters’ priority lists.
None of this makes much sense. The Penn Wharton budget model predicts that the Act will raise inflation slightly in the near term, when inflation is a problem, and reduce it greatly after 2024, when – one hopes – it will have already fallen.
It’s just some random model, you say? Well, Manchin was up to it.
ManChain claims about $300 billion in deficit reduction over 10 years, which is considered one of the bill’s counter-inflation brags. A week or two ago, however, he voted for the Senate’s $280 billion Chips bill. What West Virginia gives with one hand, it takes with the other.
Certainly the Democrats will continue with the new spending to the extent that they can.
Munchkin deserves credit for sounding the alarm about inflation when Democrats were still in denial. However, his own record is not exactly sterling. He voted for a “rescue plan” of $1.9 trillion, which had some role to play in worsening inflation. He now claims that while dealing with this inflation through fiscal correctness, he spends more money independently.
In short, Munchkin is an arsonist who comes to put out a fire with a leaky hose.
The tax piece doesn’t get any better. The 15% corporate income tax will hit manufacturers especially hard, including semiconductor makers that Manchin and the Senate went out of their way to subsidize. Then, which is it – should those companies be subsidized more or taxed more?
Manchin denies that there is a tax increase. He calls it closing a loophole, a classic Beltway euphemism for a tax increase.
And he further denies that the bill increases on those earning less than $200,000 per year, despite the finding of the Joint Committee on Taxation. The committee estimates that people earning between $50,000 and $75,000 will see a 0.8% increase over the next year.
Then there is the additional corporate tax that is a deterrent to business investment, when it is most needed. Inflation is a result of supply exceeding demand, so it is imperative that the government move out of the way of doing business that creates excess supply.
Finally, Manchin said in 2010, “I don’t think you mess with any taxes or raise any taxes in times of recession.” They have apparently suspended that rule until further notice.
At the end of the day, it’s all an unproductive waste, but it could have been much worse. The bill isn’t going to remake Joe Biden’s founding presidency, but it will make Democratic activists feel a little better — Joe Manchin’s contribution to the republic.