Rewarding friends, punishing enemies
The Inflation Reduction Act is about growing government power, not slowing inflation
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Senate Democrats have passed what they call the Inflation Reduction Act that, in Senator Bernie Sanders’ own words, does little to reduce inflation. What the legislation actually will do is slow your pay raises, stop your hirings, and raise your prices. For churches and small businesses, prepare for government persecutions.
Many conservatives believe a corporate tax increase, the core feature of the legislation, causes prices to go up. While that is partly true, most economists would note two things happen prior to price increases. First, companies will slow or stop pay raises and cost of living adjustments. Second, companies will slow or cease hiring. After both of those, then companies will pass along the cost of the tax to consumers.
The Inflation Reduction Act had to pass the Senate with a process called reconciliation. That process allows the Senate to pass a budget framework that is “deficit neutral” without new policy ideas and bypass the 60-vote threshold of a filibuster. To make the Democrats’ climate proposals deficit neutral, the bill is centered around a minimum corporate tax of 15 percent for businesses that, due to their investments and deductions, are very large but pay little in tax.
As we head into a recession, Democrats from Nancy Pelosi to Joe Manchin have previously argued that increasing corporate taxes at the onset of a recession is a bad idea. Now, however, they all want something. Joe Manchin wants changes to permitting processes for gas pipelines. Other Democrats wants tax credits for solar panels and windmills. They all want changes to Medicare prescription drug negotiations. They put it all together around the corporate tax increase.
On top of the tax increase, Democrats are going to expand the Internal Revenue Service by hiring approximately 87,000 agents. That is more agents than could fill the Green Bay Packers Lambeau Field or Notre Dame’s football field in Indiana. Democrats claim the agents will generate billions of dollars in new revenue. From where?
In a CNBC interview on Aug. 8, Jared Bernstein, President Biden’s economic advisor, spent over four minutes refusing to answer who the IRS agents would target. Why? The Biden Administration intends to audit the middle class. Publicly, they claim the agents will target billionaires, but there are only a thousand billionaires. 87,000 new agents seems absurdly excessive.
Democrats have tried for some time to go after the so-called gig economy, workers who drive for Uber and Lyft or do grocery shopping with Instacart. Earlier this year, the Democrats proposed that banks and money transfer apps file reports with the IRS every time someone sends or receives more than $500.00 in a month from their accounts. Now, the IRS will just send agents to investigate and audit.
Given the Biden Administration’s open hostility to people of faith and precedents set by the Obama Administration to target conservative and Christian organizations with the IRS, we should undoubtedly prepare to see churches, Christian organizations, and others harassed by these IRS agents.
All the audits and tax increases will pay for the Democrats’ green new deal. One of the centerpieces is an electric vehicle tax credit. But it can only be used on electric cars with wholly American parts. There is no vehicle currently made that would qualify. If climate change is as existential a threat as the Democrats claim, one might think they would expand the credit to vehicles that actually exist.
Therein lies the rub with this legislation. A Democratic Party captured by coastal elite secularists is perfectly fine with structuring legislation with purported credits the middle class cannot actually use. At the same time, they will audit the lower middle class to fund their own perks and privileges. Green activist groups will get grants to fund climate programs while lower income minority Uber drivers will get audited.
Despite its name, the Democrats’ Inflation Reduction Act will not reduce inflation measurably. It risks sparking more inflation due to its spending. It undoubtedly will cause a slowdown in corporate investment just as we enter a recession. It will also be used to target innocent Americans who’ve done nothing wrong except work in the gig economy or for conservative non-profits.
Democrats just do not have any real ideas to fix the economy. They just had to do something to provide messaging in the midterms. The best solution to what ails us right now is for us to take responsibility for our own lives and our families, be good neighbors, be as generous with others as we can, and do not rely on Washington to save us. Washington cannot and will not save us. Washington cannot even save itself.
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