The “Inflation Reduction Act” Will Do Almost Nothing That Joe Manchin Says It Will

By James D. Agresti

Overview

In a major reversal, U.S. Senator Joe Manchin (D–WV) struck a deal with Senator Chuck Schumer (D–NY) to enact a major climate, entitlement, and tax bill. This legislation has been praised by President Biden, Al Gore, and other proponents of highly progressive policies.

Dubbed the “Inflation Reduction Act of 2022,” Senate Democrats voted to pass this bill only 11 days after releasing its 725 pages of text. Democrats are pushing this bill so rapidly through Congress that the Congressional Budget Office estimates it won’t be able to “provide a complete cost estimate for the legislation” until more than week after Congress is expected to pass it.

Manchin’s press release claims the law will:

  • “address record inflation by paying down our national debt, lowering energy costs and lowering healthcare costs.”
  • “displace dirtier products” and ensure “American energy is affordable, reliable, clean and secure.”
  • bring “good paying energy and manufacturing jobs back to America.”
  • “make America more energy secure” and “financially sound.”
  • not raise taxes on “families and small businesses making less than $400,000 a year.”
  • “lower the cost of healthcare for working families and small businesses.”
  • support “the everyday hardworking Americans we have been elected to serve.”
  • adopt “a tax policy that protects small businesses and working-class Americans….”

In reality, the legislation will do almost none of what Manchin claims it will—and often the exact opposite. If it becomes law, the Inflation Reduction Act of 2022 will:

  • have no material impact on inflation.
  • increase pollution by subsiding electric vehicles, which emit more toxic pollutants over their lifespans than normal cars.
  • enrich “green” energy investors while doing little-to-nothing to help workers.
  • raise energy costs and make America poorer by subsidizing products that are much more expensive.
  • harm the manufacturing sector.
  • enact hidden taxes that fall on Americans of all income groups.
  • reduce incentives to work by giving people more welfare.
  • increase the costs of prescription drugs for working Americans by pushing more of the research and development costs onto them.
  • target wealthy people with IRS audits while letting the vast bulk of tax dodgers continue cheating the honest taxpayers of America.

Inflation

Contrary to its name, there is no credible evidence the Inflation Reduction Act will reduce inflation.

The Penn Wharton Budget Model—which is often touted by Democrats like Schumer—estimates that the bill’s effects on inflation are “statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation.” Moreover, the model is biased in favor of the bill because it uses an admitted “assumption” that reducing carbon dioxide makes society “more productive.”

Likewise, the Congressional Budget Office (CBO) estimates the bill could increase or decrease inflation by up to 0.1 percentage points in 2023, a result that is also statistically indistinguishable from zero.

Manchin, Schumer, and the Committee for Responsible Federal Budget claim that the bill’s tax increases will reduce inflation by decreasing the federal deficit. There is a grain of truth in this because the Federal Reserve has been aggressively printing money to finance the federal debt, a policy which fuels inflation.

However, any deflationary aspects of the bill must be measured against its inflationary elements. CBO notes that these include but are not limited to the “inflationary effects” of “health insurance subsidies” and “government purchases of goods and services.” In fact, CBO found that such dynamics can lead to a situation where the bill causes inflation “even when the overall deficit was reduced.”

More importantly, Manchin and Schumer’s statement that federal deficits spur inflation is a tacit admission that the deficit spending they previously voted for—which is far greater than the supposed deficit reduction in this bill—is fueling the high inflation that is punishing Americans. Since the start of the Biden administration less than two years ago, Manchin, Schumer, and nearly all Democrats voted for:

  • the “American Rescue Plan,” which enacted $1.9 trillion in deficit spending mainly devoted to social welfare programs and bailouts for state and local governments and private union pension funds.

This was on top of the bipartisan “Covid relief” spending of 2020, which added $3.4 trillion to the national debt. Taken together, this is $5.5 trillion in deficit spending, or 18 times the supposed deficit reduction of the Inflation Reduction Act, which CBO estimates to be about $300 billion.

Put another way, the bill’s deficit reduction would undo about 5% of the inflationary damage that Manchin and company caused by deficit spending in the past 2.5 years.

That also assumes the enhanced Obamacare subsidies in the bill will end in just three years, a budget gimmick used to shroud the long-term costs of this policy. The bill raises taxes for 10 years but only funds this entitlement for three years. If Congress extends it, as lawmakers often do with entitlements, the bill will reduce the deficit by $87 billion, or less than one-third of CBO’s estimate.

Manchin’s press release decries “the severe threat of inflation and the consequences of unprecedented domestic spending,” but this bill increases spending on a host of programs detailed below. Far from a course change, Manchin is now voting for “taxing and spending” instead of mere “spending.”

Pollution

Contrary to Manchin’s claim that his bill will “displace dirtier products,” it heavily subsidizes electric vehicles, which emit more pollution over their lifespans than normal cars. Yet, Manchin’s bill codifies an alternate reality by rewriting federal law to define electric vehicles as “clean.”

The belief that electric vehicles are “clean” is based on a childish notion that ignores all pollution which doesn’t come out of a tailpipe. Assessing the environmental impacts of energy technologies requires measuring all forms of pollution they emit over their entire lifespan, not a narrow slice of it. To do this, researchers perform “life cycle assessments” or LCAs. Per the EPA, LCAs allow for:

the estimation of the cumulative environmental impacts resulting from all stages in the product life cycle, often including impacts not considered in more traditional analyses (e.g., raw material extraction, material transportation, ultimate product disposal, etc.). By including the impacts throughout the product life cycle, LCA provides a comprehensive view of the environmental aspects of the product or process and a more accurate picture of the true environmental trade-offs in product and process selection.

LCAs are subject to multiple levels of uncertainty, but an assessment published by the Journal of Cleaner Production in 2021 shatters the notion that electric cars are environmentally friendly. The LCA found that manufacturing, charging, operating, and disposing of electric vehicles increases “fine particulate matter formation (26%), human carcinogenic (20%) and non-carcinogenic toxicity (61%), terrestrial ecotoxicity (31%), freshwater ecotoxicity (39%), and marine ecotoxicity (41%) relative to petrol vehicles.”

Even before that LCA, the European Environment Agency admitted in 2018 that electric vehicles “could be responsible for greater negative impacts” on “human toxicity” than standard cars. On the other hand, the report notes that electric vehicles “potentially offer local air quality benefits” because the pollution from their manufacturing, charging, and disposal is usually emitted away from densely populated areas.

However, electric vehicles emit local pollution due to road, tire, and brake wear, and these forms of pollution are worse in electric vehicles than standard cars. Per a 2016 paper in the journal Atmospheric Environment, “Electric vehicles are 24% heavier than their conventional counterparts,” and this creates more “non-exhaust emissions” like “tire wear, brake wear, road surface wear and resuspension of road dust.”

LCAs have found that electric cars emit less carbon dioxide (CO2) than standard cars, but carbon dioxide is an organic, colorless, non-carcinogenic gas that has no toxic effects on humans until concentrations exceed at least 6 times the level in Earth’s atmosphere. Thus, CO2 has no bearing on which product is “dirtier,” to use Manchin’s word.

Beyond giving consumers $7,500 towards the purchase of each new domestically manufactured electric vehicle, the bill also provides $4,000 for used ones. This is on top of state handouts for electric vehicles, like $2,500 in MA and $4,000 in NJ. All of this money goes towards creating more pollution.

Jobs

Contrary to Manchin’s claim that the bill will bring “good paying energy and manufacturing jobs back to America,” it will enrich green energy investors while neglecting workers and harming the manufacturing sector.

As explained in scholarly publications like the encyclopedia Environmental and Natural Resource Economics, the financial benefits of “green energy” subsidies “largely accrue to the owners of capital” because:

  • “energy development,” whether “green or fossil fuels,” is “capital-intensive,” which means it uses much more materials and equipment than human labor.
  • growth in “the green jobs sector does not necessarily imply net job creation” since it reduces the jobs “that would have been produced from fossil fuels,” and thus, “net job creation may be zero (or negative).”
  • consumers suffer because green energy mandates subsidize “inefficient technologies that are more costly,” and this reduces people’s standards of living.

The bill also increases taxes on certain large corporations, and half of these taxes would come from the manufacturing sector. Per CBO, this “would reduce the incentive for those large corporations to invest,” which means less productivity and lower standards of living.

Taxes

Contrary to Manchin’s claims that his bill does not raise taxes on “families and small businesses making less than $400,000 a year,” it does exactly that by enacting hidden taxes that fall on Americans of all income groups.

Hidden taxes are those that are not apparent because they generally don’t appear on purchase receipts, paychecks, or tax returns. Some examples include excise taxes, employer payroll taxes, and corporate income taxes. Although businesses write the checks for such taxes, they are ultimately borne by individuals via lower wages, higher prices, and lower profits.

In the words of the Congressional Budget Office, “the ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government.” Likewise, the Congressional Research Service explains that individuals “bear the burden of the taxes paid by businesses” because “corporations are not persons who can bear the burden of taxes, but merely legal entities through which individuals earn income.”

U.S. households paid an average of $7,000 in hidden federal taxes in 2018, and Manchin’s bill adds to this tab via taxes on corporations, crude oil, methane, offshore drilling, and more.

As such, Congress’ Joint Committee on Taxation estimates that the bill will slightly increase average taxes on every income group for the next 10 years. This includes families who make less than $10,000 per year to those who make more than $1,000,000.

Energy Costs

Contrary to Manchin’s claim that the bill will lower energy costs, it enacts a form of stealth spending (called tax preferences) to subsidize products that are far more costly than other options. Regardless of whether these additional costs are paid by consumers or taxpayers, they ultimately make America poorer and less competitive because they deliver less energy for every dollar spent.

Due to government interventions and the complexities of the electricity market, measuring the costs of energy technologies can be extremely difficult and uncertain. However, there are simple ways to estimate their relative competitiveness. One of them is to compare their market shares and how much government subsidizes and restricts them.

For example, solar provided 1.5% of all U.S. energy in 2021, while natural gas supplied 32%. This 20-times differential is in spite of 40+ years of aggressive government actions to bolster solar while constraining the use of fossil fuels through taxes and regulations. Some examples of how government has boosted solar include the following:

  • Since 1978, the federal government has continuously provided tax credits for solar energy systems ranging from 10% to 30% of their production or capital costs.
  • In 1998, the U.S. Energy Information Administration (EIA) reported, “For many years, state and federal governments, as well as environmentalists and utilities, have strongly supported the use of solar energy—especially in the U.S. Department of Energy’s research and development budget.”
  • In 2011, the New York Times reported that “taxpayers and ratepayers are providing subsidies worth almost as much as the entire $1.6 billion cost” for “a compound of nearly a million solar panels,” and “similar subsidy packages have been given to 15 other solar- and wind-power electric plants since 2009.”
  • From 2007 to 2016, the federal government subsidized solar at 200 times the rate of natural gas.
  • In 2016, EIA reported, “More than 70% of [energy-related] physical science grants went to solar energy research with virtually all of the remainder for other renewable energy (e.g., fuel cells).”
  • Many states have required utilities to purchase electricity from customers with solar panels for much more than its actual value, thus transferring these costs to the electric bills of customers who don’t have solar panels.
  • 30 states and the District of Columbia have required utilities to generate or obtain specified amounts of their electricity from renewables like solar, essentially forcing its use.

Collectively, these facts prove beyond all doubt that solar energy is not competitive.

Another simple way to estimate the relative cost of energy technologies is to look at the prices of energy in places with different energy mixes. California, for example, gets more of its electricity from solar than any other state and also has the highest electricity prices in the continental U.S., or 77% more than the national average. Moreover, this doesn’t account for all of the government spending on solar that is borne by taxpayers instead of consumers.

Another prime example is Germany, where wind and solar provide 33% of the country’s electricity, as compared to 12% in the United States. As a consequence of this and other factors, the average price of household electricity in Germany is about three times that of the United States.

Manchin claims his bill won’t move the U.S. “closer to the unstable and vulnerable European model of energy we are witnessing today,” but it takes the U.S. down that road by using taxpayers’ money to subsidize the same technologies that Europe has supported.

Worse still, Manchin’s bill hides those costs from consumers and voters by using tax preferences that don’t show up in electricity bills or appear as line items in federal budgets.

Welfare

Contrary to Manchin’s claim that the bill will “lower the cost of health insurance,” it will make taxpayers pick up the tab for enhanced Obamacare subsidies. Moreover, all of this welfare will go to people with incomes greater than 400% of the poverty line.

Per CBO, the bill “would reduce the incentives of some people to work, mainly because of the enhanced health insurance subsidies, pushing down output and pushing up inflation.” Likewise, the Penn Wharton Budget Model found that this handout “reduces the incentive to work.”

CBO estimates that some of this work-deterring, inflation-producing welfare will go to people with high incomes, like:

  • 64-year olds with incomes up to $163,700 per year.
  • young families with incomes up to $192,700 per year.
  • older families with incomes up to $304,100 per year.

Prescription Drugs

Contrary to Manchin’s claim that his bill will “lower the cost” of prescription drugs, the bill will simply shift more of those costs onto working Americans.

The main reason why Americans pay more for prescription drugs than almost anywhere else in the world is because the governments of other nations use price controls and bargaining power to get rock bottom prices, while pharmaceutical companies are able to fund R&D and make profits by selling to Americans.

Manchin’s bill empowers Medicare, which pays medical costs for almost everyone aged 65 and older, to employ the tactics of foreign governments. This leaves U.S. workers to shoulder more of the tab for drug development and the profits that drive it. Medicare already does this with hospitals by paying them an average of 13% below their costs of caring for Medicare patients. Hospitals then make up the difference by charging the private sector exorbitant rates.

This is part of a trend in which politicians shift the costs of their welfare policies to the private sector. These are stealth taxes on Americans that increase the costs of their products and services.

IRS Audits

Contrary to Manchin’s claim that the extra IRS funding in his bill won’t be used to target people making less than $400,000 per year “because they are already paying their taxes,” the bill will let the vast bulk of tax dodgers continue to cheat the honest taxpayers of America. It also complicates tax code, which is a major cause of tax misreporting and a waste of people’s time and money.

In 2021, the IRS spent $13.7 billion and employed 78,661 full-time equivalent workers. Manchin’s bill would supercharge this agency by adding about $80 billion to it over the next 10 years. CBO estimates this would increase the 2031 IRS budget by more than 90% and would “more than double the IRS’s staffing.”

Biden’s Treasury Secretary and the IRS Commissioner have promised that they won’t use these added resources to audit people making less than $400,000 year, but that is where a massive amount of tax fraud occurs. This is especially true of people who work under the table, which is very common for illegal immigrants. A 2019 IRS study found that the tax non-compliance rate for people whose incomes were subject to:

  • withholding is 1%.
  • “substantial information reporting but not withholding” is 5%.
  • “subject to little or no information reporting” is 55%.

Beyond outright fraud, one of the main reasons why people and corporations misreport their taxes is because the tax code is extremely complicated, a problem that Manchin’s bill makes worse. As explained by CBO:

The complexity of the tax system partly results from tax expenditures that are designed to affect behavior by taxing some endeavors more or less than others. … Complexity also arises from efforts to achieve certain equity goals. Provisions that phase out various tax credits and deductions at higher income levels are designed to target benefits toward people with the greatest need, but they make taxes more difficult to calculate.

Manchin’s bill does this in droves by implementing the provisions above and many more detailed by CBO. As explained by the IRS’s Taxpayer Advocate, “tax law complexity leads to perverse results” because:

  • “taxpayers who honestly seek to comply with the law often make inadvertent errors, causing them to either overpay their tax or become subject to IRS enforcement action for mistaken underpayments.”
  • “sophisticated taxpayers often find loopholes that enable them to reduce or eliminate their tax liabilities.”

U.S. taxpayers (including businesses) spend roughly six billion hours per year complying with the requirements of federal tax law. This amounts to 48 hours per household, or the labor equivalent of more than three million full-time workers. Per the IRS’s Taxpayer Advocate:

  • these figures do not include “millions of additional hours that taxpayers must spend when they are required to respond to IRS notices or audits.”
  • the cost of complying with federal income tax laws was $195 billion in 2015, or 10% of income tax receipts.

Manchin claims the tax code is “unfair” because “some of America’s largest companies pay nothing in taxes” and that his bill will fix this by forcing them to pay a “minimum tax of 15%.” However, progressive Ph.D. scholar Robert D. Atkinson explains that the reason why large companies pay “less than 15 percent in profit taxes is because Congress put in place tax provisions to encourage companies to invest in ways more aligned with the public interest.”

In brief, Manchin’s bill stokes the tax problems he bemoans and punishes successful Americans by siccing more IRS agents on them.

Summary

The very name of the “Inflation Reduction Act” and nearly everything Joe Manchin has said about it is a farce that betrays his promise to support “the everyday hardworking Americans we have been elected to serve.” Contrary to Manchin’s claims that his bill will:

  • reduce inflation, there is no credible evidence it would do so.
  • “displace dirtier products,” it heavily subsidizes electric vehicles, which emit more pollution over their lifespans than normal cars.
  • will bring “good paying energy and manufacturing jobs back to America,” it will enrich green energy investors while neglecting workers and harming the manufacturing sector.
  • lower energy costs, it enacts a form of stealth spending to subsidize energy products that are far more costly than other options.
  • not raise taxes on “families and small businesses making less than $400,000 a year,” it does exactly that by enacting hidden taxes that fall on Americans of all income groups.
  • “lower the cost of health insurance,” it will make taxpayers pick up the tab by forcing them to pay Obamacare subsidies for people with incomes above 400% of the poverty line.
  • “lower the cost” of prescription drugs, it will simply shift more of those costs onto working Americans.
  • ensure people “making less than $400,000 and small businesses will not be targeted” by the IRS “because they are already paying their taxes,” the bill will let the vast bulk of tax dodgers continue cheating the honest taxpayers of America.

James D. Agresti is the president of Just Facts, a research and educational institute dedicated to publishing rigorously documented facts about public policy issues.

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Simonsays
August 12, 2022 11:11 pm

Ronald Reagan 1981. “the government is not the solution to our problem. Government is the problem.”

Tom Abbott
Reply to  Simonsays
August 13, 2022 5:18 am

Nothing has changed. Instrusive Government is still the problem.

Scissor
Reply to  Tom Abbott
August 13, 2022 5:54 am

It’s grown immensely in terms of spending to GDP.

Reply to  Simonsays
August 13, 2022 9:19 am

Demrats are not the solution to our problems….demrats are the problem……why is that man smiling?

Last edited 1 month ago by Antigriff
Reply to  Simonsays
August 13, 2022 9:35 am

Tax all demrats 100%….both Joeys…Nanci Piglosi…Chuck E, Schemer… Do the opposite of what demrats want….it will be a wonderful world.

Chaswarnertoo
August 12, 2022 11:14 pm

‘Progressive’. Progress towards what? You will own nothing and be happy…

Brad-DXT
Reply to  Chaswarnertoo
August 12, 2022 11:52 pm

The progressive politicians are trying to progress away from the constitution.

Manchin and Sinema always were democrats willing to follow the party line rather than the benefit of their constituents. Apparently they’re also big on drama and back room deals.

Tom Abbott
Reply to  Brad-DXT
August 13, 2022 5:22 am

Manchin and Sinema have shown their true colors now.

Their vote on this bill will hurt average Americans, and I just don’t think either one of them is so naive as not to understand the harmful effects of this vote on the people. So they voted for this bill for selfish purposes, whatever that may be, and not for the greater good.

Let’s see how this plays out in their next election attempt.

Reply to  Tom Abbott
August 13, 2022 6:44 am

I almost thought Manchin had some integrity, but like most politicians, dangle some shiny pork in their face and they fold like a cheap suit.

fretslider
Reply to  Chaswarnertoo
August 13, 2022 4:00 am

Progress towards what?”

The latest [woke] fad, of course.

According to woke archaeologists and anthropologists, ancient human remains should no longer be classified as either male or female. Apparently, this is because we do not know how these people would have identified themselves.”

https://www.spiked-online.com/2022/08/10/theres-no-such-thing-as-a-nonbinary-skeleton/

But they do know the social habits of dinosaurs – at least they say they do.

Nowadays conjecture and speculation are passed off as [scientific/logical] certainties. Furthermore, they do not question classifying dinosaur or any other animal remains as female or male.

What a curious species Homo sapiens wokus is.

Scissor
Reply to  fretslider
August 13, 2022 5:57 am

I wonder if species affirming surgery will become a thing.

starzmom
Reply to  Scissor
August 13, 2022 9:16 am

I have been wanting to self-identify as a cat for some time now. Do you think I can become one with a little surgery to have my ears adjusted? (sarc, in case you couldn’t tell.

Philip CM
August 13, 2022 12:13 am

By what year will the $700Billion USD GND Bill see a return?
Any takers?

SMC
Reply to  Philip CM
August 13, 2022 5:46 am

That depends on who you are.

Mark Krebs
Reply to  Philip CM
August 13, 2022 6:12 am
Philip CM
Reply to  Mark Krebs
August 13, 2022 1:40 pm

https://taxfoundation.org/inflation-reduction-act/

…says the bill would lose about $84 billion in revenue over the budget window.

Gunga Din
Reply to  Philip CM
August 13, 2022 4:13 pm

I’d guess sooner than any of the CAGW “projections” come to pass.

Old Man Winter
August 13, 2022 1:20 am

0inflIRA.jpg
rah
Reply to  Old Man Winter
August 13, 2022 2:19 am

Oh, after they passed it, they gave up that “title”. It is now:

comment image

Bruce Ploetz
Reply to  rah
August 13, 2022 3:43 am

Naturally they pass it late on a Friday when the “news cycle” is obsessed by Trump again. They think nobody will notice! Probably planned to be that way.

But the joke is on them. All these new EVs are supposed to be American Made. No car that is sold today meets the requirements to receive a subsidy. Teslas are assembled partly in the US from mostly Chinese parts. All the nasty Blood Minerals like cobalt are from off-shore sources.

Maybe Elon will have to start asteroid mining instead. No Delta Smelt in space!

Watch what happens when they try to open pit mines in national parks to produce rare earth minerals in the continental US. Or evaporation lakes to produce lithium saline brine. The Chinese keep that kind of activity far from view, in places like Tibet and on the African or South American continents. The happy Eloi know little about the subterranean Morlocks.

Nobody is going to get any of these EV “tax breaks” so the spending will have to stall until some rational future congress (an outrageous oxymoron, I know) simply repeals it.

If they were honest, they would call it the “Mid-Term DNC Campaign Cash Act”. Any spending that actually gets authorized will go to DNC cronies of one kind or another and largely back to them.
The “Resue Dems from the Voters Act”.
The “Resurrect Solyndra Act”.
The “Kiss your Retirement Savings Goodbye Act”.
The “End of Medicare As We Know It Act”.
The “Princeling Slush Fund Act” (think Hunter and Paul Jr.)

I’m not the slightest bit bitter or upset about all that. “Happy and Owning Nothing” just like the WEF says…

fretslider
Reply to  Bruce Ploetz
August 13, 2022 4:20 am

I’m not the slightest bit bitter or upset about all that. “Happy and Owning Nothing””

IPCRESS works!

Only it isn’t funny at all.

Reply to  Bruce Ploetz
August 13, 2022 7:47 am

I would call it the “Scorched Earth Act”. The Marxists know they’re going to take a beating in November and while they still can, they want to put as many obstacles in the path of the serious reform the Republicans want to get done once they can restore sanity to government.

Carlo, Monte
August 13, 2022 4:17 am

What a liar, another scaly swamp creature that needs to be sacked.

Tom Abbott
August 13, 2022 4:53 am

Fropm the article: “The Penn Wharton Budget Model—which is often touted by Democrats like Schumer—estimates that the bill’s effects on inflation are “statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation.” Moreover, the model is biased in favor of the bill because it uses an admitted “assumption” that reducing carbon dioxide makes society “more productive.”

That made me laugh because it is so stupid. I wouldn’t be depending on a model like that. The model creators appear to be clueless.

Tom Abbott
August 13, 2022 5:07 am

From the article: “U.S. households paid an average of $7,000 in hidden federal taxes in 2018, and Manchin’s bill adds to this tab via taxes on corporations, crude oil, methane, offshore drilling, and more.
As such, Congress’ Joint Committee on Taxation estimates that the bill will slightly increase average taxes on every income group for the next 10 years. This includes families who make less than $10,000 per year to those who make more than $1,000,000.”

If taxes are raised, everyone will pay the taxes, one way or another.

On top of that, raising taxes on corporations discourages companies from locating their business in the United States. They go to where the taxes are lowest. You want short supply chains? Keep the corporate taxes lower than other countries’ corporate taxes and the products will be made in the United States.

MarkW
Reply to  Tom Abbott
August 13, 2022 10:18 am

Under Trump, corporate tax rates were cut from the highest in the world to amongst the lowest. Companies started bringing activity from other countries back to the US. Now that the Democrats have successfully raised corporate taxes, this activity will stop and even reverse.
It really is amazing how leftists can convince themselves that raising taxes on groups that have the ability to move their income out of the US, is such a great idea.

ResourceGuy
August 13, 2022 5:37 am

It’s the tax, spend, and distort thought that counts in DC. I’ll personally benefit but not the global climate or the interglacial period. When does the tax credit package for moon gravel mining begin?

tgasloli
August 13, 2022 5:57 am

This article used a lot of words just to say, Manchin is a Democrat.

Mark Krebs
August 13, 2022 6:09 am

First: Great overview

Second: The “devil is in the detailS” and there are many. It will take time to sort them out. For example:
All-Electric Forcing in the “Inflation Reduction Act” (up to $14,000 per home)
https://www.masterresource.org/krebs-mark/schumer-manchin-bill-electrification/

Kevin kilty
Reply to  Mark Krebs
August 13, 2022 8:24 am

With all due regard, it takes no time at all to see where many of the details lead. Forcing electricity to provide all U.S. energy requires a more or less full rebuild of energy distribution. If the electricity were to come from wind turbines alone I calculate 1/2 the land area of the continental U.S. and that is before provisions to make the system as reliable as we currently enjoy. Environmentally ruinous. Financially ruinous. Promotes superstition and magical thinking which need no encouragement at all. No this is simply a modern potlatch.

Olen
August 13, 2022 7:37 am

Manchin himself is he opposite of what he claims to be. What is the opposite of hero?

Gordon A. Dressler
Reply to  Olen
August 13, 2022 8:11 am

Well, I know exactly what’s at the opposite end of a open mouth.

🙂

Kevin kilty
Reply to  Olen
August 13, 2022 8:24 am

Goat.

Gordon A. Dressler
August 13, 2022 7:57 am

As quoted in the above article, Senator Joe Manchin in his press release claims this single bill, the so-called “Inflation Reduction Act of 2022” will:
“address record inflation by paying down our national debt, lowering energy costs and lowering healthcare costs.”

I used to have some respect for this US Senator, but not one scintilla any more after seeing that outright lie.

The US federal debt now stands at some $30.6 TRILLION, not including debt that is “off the books”. There is no way on God’s green earth this legislation creates a path to pay down so much debt while at the same time making any significant reduction in our annual Federal deficit, which is a specifically-stated goal of the bill.

IMHO, the US debt will only begin to be “paid down” when this country introduces confiscatory taxation rates on the less-than-half-of-US-tax-filers that still pay any Federal income taxes at all . . . and this will bring about the certain destruction of these United States of America.

No, both the Executive and Legislative branches of US Government are ADDICTED to increasing Federal debt and forevermore will be. Let me put that into perspective:
— at end FY 2003, the gross national debt was $6.76 TRILLION
— at end FY 2010, the gross national debt had doubled to 13.5 TRILLION
— at end FY 2021, the gross national debt had more than doubled again to 28.4 TRILLION
(source: https://www.whitehouse.gov/omb/budget/historical-tables/ , click on “Table 7.1” to download excel spreadsheet showing the historic data)

The US national debt will NEVER be paid off.

marlene
August 13, 2022 8:00 am

 “Contrary to its name, there’s no credible evidence the Inflation Reduction Act will reduce inflation” That’s their intention. It’s less of an Act and more of a funding bill.

Kevin kilty
August 13, 2022 8:14 am

What an excellent analysis, James. Thank you.

Mike McHenry
August 13, 2022 8:31 am

Primary beneficiary of corporate profits are the shareholders. The largest shareholders are institutional investors ie Pension funds, IRAs, Mutual funds etc. So the 15% minimum tax on corporations actually targets middle class savings

Gordon A. Dressler
Reply to  Mike McHenry
August 13, 2022 8:55 am

In a famous apocryphal (of questionable authenticity) story, Mr. Willie Sutton was asked by a reporter why he robbed banks. Mr. Sutton replied: “Because that is where the money is.”

Last edited 1 month ago by Gordon A. Dressler
Tom Halla
August 13, 2022 9:25 am

I would follow John Lott’s analysis that the reason the EU and such have low drug prices is freeloading off the US. As the companies threaten US companies with expropriation in their price controls, the companies have to make up the development expenses somewhere.
Forcing the EU, the Uk, Japan, and Canada to negotiate with the drug companies, with the backing of the US government sanctions for violating intellectual property rights would ensure lower prices in the US, and maintain the supply of new drugs.

John VC
August 13, 2022 9:32 am

It is all the “new speak” Best get use to understanding that any thing the government says means just the opposite

MarkW
August 13, 2022 9:42 am

In order to believe that this bill cuts the deficit you have to believe in 3 impossible things.
1) The subsidy cuts over the next 10 years will be allowed to happen.
2) That government spending causes the economy to grow
3) That taxes will not slow the economy.

The reality is that this bill will cause the deficit to grow. At least the Democrats are on record as finally admitting that deficit spending causes inflation. Something they have been adamantly denying for decades.

ResourceGuy
Reply to  MarkW
August 13, 2022 5:25 pm

The Dems planned some time ago to devalue the debt with inflation and a tiny virus handed them the opportunity of MMT policy with extra stimulus spending when the need had already disappeared. Unlike the virus, net zero is their ongoing crisis crutch to keep spending and inflating.

MarkW
August 13, 2022 9:52 am

This is part of a trend in which politicians shift the costs of their welfare policies to the private sector.

Those politicians then turn around and declare that only government is capable of delivering affordable health care, which is why government needs to be in complete charge of your health care.

MarkW
August 13, 2022 9:58 am

If you were an IRS agent, and your bonus depended on how much tax revenue you were able to generate, would your rather one family that made $500,000 or 10 families that made $50,000.
The IRS is already heavily reviewing the rich. This means that the new will either re-audit the rich, or audit the non-rich. Which do you think will bring in more bonuses?

Kit P
August 13, 2022 1:40 pm

I am glad the author brought up LCA to describe EEV (eleswhere emission vechicles).

I have a first aid kit with bandages. Yet I am not wearing any bandages. Why you ask? Because I am not bleeding.

The US Senate passed a bill for the US which is not bleeding. Since the measured air quality is ‘good’. Therefore BEV will not improve air quality in places that do not have a pollution problem.

However, this is not to say other places are not bleeding to produce BEV. Some of those places also do not have a first aid kit.

They have a communist that benefits

Dena
August 13, 2022 4:13 pm

People didn’t listen to Manchin and Sinema and because of that, thought they were conservatives. What they said was the bill cost to much and they didn’t want to destroy the filibuster in order to pass it. They were able to get the cost into a range they were comfortable with and because it was passed as a budget bill, the filibuster wasn’t a problem. I pretty much expected this would happen if they could get what they want because they are democrats and in the past have followed the party line. Fortunately this will probably be their last shot for a few years and it could be much longer if the Republicans get their act in order. Not that I am holding my breath that the Republicans will get some common sense.

Neo
August 13, 2022 7:04 pm

In other crazy politician news:
California governor proposes $1.4 billion loan to keep nuclear plant open

Yes, it’s Diablo Canyon

Last edited 1 month ago by Neo
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