On August 16, 2022 President Joe Biden signed the Inflation Reduction Act, a bill passed along party lines with only Democrat support, into law. Joe From Texas will provide an overview of major parts of the bill and then seek to answer the question: Will this law really reduce inflation as the title suggests?
Senate Democrats claim the bill will raise $737 billion in new revenue while adding $437 billion in new spending. Of this new spending, $369 billion is spending related to climate change. According to Congressional Budget Office Cost Estimates, Joint Committee on Taxation Estimated Budget Effects, and Senate Majority Leader Inflation Reduction Act Summary, the $437 billion in new spending and authorizations will include the following:
Tax rebates and credits for households to lower energy costs and tax credits, loans and grants to increase the domestic production of wind turbines, solar panels, batteries, and other energy production & storage. They also claim the bill supports the creation of clean energy jobs and workforce development in disadvantaged communities.
Tax credits to lower and middle-income families to encourage the sale of new and used electric vehicles.
Authorization for Medicare to negotiate the prices of prescription drugs. The bill adjusts the annual cap Medicare enrollees pay for out-of-pocket costs for prescription drugs to $2,000 (the current cap is $7,050, with an unlimited 5% coinsurance on prescriptions after that cap is met).
An extension of the temporary Premium Tax Credits of the Affordable Care Act through 2025. This is a refundable credit used to help low-income individuals and families cover premiums for their health insurance purchased through the marketplace. Under the new eligibility, households with income below 400% of the federal poverty line are eligible.
Democrats state the law will raise money through the following methods:
15% corporate minimum tax $222 billion
Prescription Drug Pricing Reform $265 billion
IRS Tax Enforcement $124 billion
1% stock buybacks fee $ 74 billion
Loss limitation extension $ 52 billion
If someone were to merely look at the numbers in this law without digging into it, it may look harmless enough. However, Joe From Texas believes there are some significant problems with this law when you look into it more deeply. To begin with, despite the name, the law does not appear to do anything to curb inflation. Other than the title of the bill, Joe From Texas was unable to find much information from Democrats on how it is supposed to reduce inflation. Jeffrey D. Sachs, a professor at Columbia University, stated in an opinion commentary for CNN that “Despite its title, the new legislation will have essentially no effect on reducing inflation during the next few years.” The Congressional Budget Office (CBO) also concluded that the law will have a “negligible effect on inflation.”
Another problem is that the bill actually raises taxes on the American people under the guise of raising taxes on corporations. An article in Forbes recently stated, “ultimately corporate taxes are paid by workers through lower wages, shareholders through lower returns, or customers through higher prices. Either way, it is American households that bear the burden from higher corporate taxes. It is due to this economic reality that the non-partisan Joint Committee on Taxation found that a majority of the tax costs from the Inflation Reduction Act will be borne by households earning less than $400,000.” The article went on to point out that this is a violation of President Biden’s promise to not raise taxes on those earning less than $400,000.
Also troubling to Joe From Texas are the provisions related to drug price negotiations, with regard to Medicare. Although he is very much in favor of lowering prescription drug costs for senior citizens, the bulk of the savings, as illustrated by the fact that the Democrats count this as revenue, will be to the government rather than directly to seniors. You may think that is not bad; however, the problem, as Joe From Texas pointed out in a brief on prescription drugs posted on his website, is that drug companies will likely look to make up for lost profits on the backs of all other Americans who are not on Medicare. To summarize, his concern is that these price negotiations will primarily benefit the government at the expense of its citizens. The Forbes article referenced above came to a similar conclusion. It stated that this provision of the Inflation Reduction Act will likely “cause patients and employer-sponsored health plans to pay more for their drugs, particularly for high-cost biologics.”
Yet another problem with this bill is what the Democrats refer to as the IRS tax enforcement provisions. You have probably heard a widely reported figure that the IRS plans to hire an additional 87,000 IRS agents as a result of this legislation. The fact that the Democrats list IRS enforcement as a source of revenue should be taken at face value. They plan for the IRS to extract more tax money from U.S. citizens. Although Democrats claim that they will only go after those making over $400,000, Joe From Texas is not buying their line. Should this provision be implemented, he believes that working families will begin to be audited far more frequently in an effort to get more money from them. Joe From Texas understands that government and the services that it provides are necessary and that we must pay taxes to fund these services. However, he believes the problem is in the way most modern-day Democrats view money. Joe believes that most of his fellow citizens view the money they earn as theirs, while it appears that Democrats view all money as belonging to the government and believe that citizens should be grateful when they are allowed to keep some of it. How else can a reasonable person explain Democrat policies that have driven up inflation, caused us to once again be dependent on foreign oil, and now propose to hire more IRS agents so that citizens can pay more taxes for government mismanagement? The good news is that Republicans have pledged to repeal this IRS provision if they gain control of congress in the upcoming midterm election.
Final thoughts from Joe From Texas
Despite their efforts to fool the American people with the title Inflation Reduction Act, the law is mostly an effort by the Democrats to take another step toward enacting their radical climate agenda, an agenda that Joe From Texas discussed at length at the climate change link on this website. If you have not already done so, please take the time to visit that link.
The so-called Inflation Reduction Act is yet another example of the main problem with the Democratic party of today. Instead of standing for working men and women as they claim, they implement policies that drive inflation and then employ tactics such as falsely naming bills, in an effort to try to fool, rather than truly support, the American people. There can be little doubt that some of the past giants of the Democratic party, such as Presidents Kennedy and Truman, would be deeply disturbed by the poor economic policies and promotion of woke ideas by the modern Democratic party.
As you may have heard, former Democrat congresswoman and presidential candidate Tulsi Gabbard recently left the Democrat party. In leaving, she stated, "I believe in a government that is of the people, by the people, and for the people. Unfortunately, today's Democratic Party does not. Instead, it stands for a government that is of, by, and for the powerful elite. I'm calling on my fellow common-sensed, independent-minded Democrats to join me in leaving the Democratic Party."
Joe From Texas believes she was very accurate in describing how an ever-increasing number of working-class Americans feel about the modern Democratic party.