Save America. Kill the bill. Turns out the “Inflation Reduction Act” has no inflation reduction. That’s according to the CBO in response to an inquiry from Budget Committee Ranking Member Senator Lindsey Graham.
Mr. Graham will join us in just a few moments, but the CBO reports that the Manchin-Schumer bill has a negligible impact on inflation.
So, I wonder: if it has no impact on inflation, which contradicts its Orwellian title “Inflation Reduction Act,” then why are we doing this? America would be way better off not passing this bill. Just saying!
By the way, the CBO says the proposed new 15% corporate minimum tax would reduce the incentive for those corporations to invest by limiting the tax benefit of accelerated depreciation and by reducing the after-tax return on new investment. Well, we’ve been saying that on a daily basis for the last several weeks.
Going a step further, some Wall Street estimates suggest this minimum tax will cut corporate profits by some $50 billion, which means companies will have many fewer financial resources to increase wages for their workforce.
So, this crazy idea creates a tax obstacle to new investment and a profits obstacle to higher wages and we have learned from the nonpartisan Joint Committee on Taxation staff that the largest percentage increase in tax burden falls most heavily on the middle- and lower-income working folks, including a $17 billion tax hike on folks earning less than $200K and another $14 billion hitting folks making $200K-$500K.
So, we now have all these bigshot economic models directly contradicting the Manchin-Schumer bill — CBO, Joint Tax, Penn Wharton, and the Tax Foundation —but, we do know that this crazy bill would increase federal spending quite a bit, which could well turn into higher inflation.
The official print from the Democratic leadership has so many gimmicks, but the Obamacare subsidies are going to come to about $250 billion over 10 years if scored properly and Congressman Jason Smith, Ranking Republican on the House Budget Committee, estimates that total new spending in the bill will come to about $730 billion, which wipes out the so-called phony baloney deficit reduction.
Then the bill gives the IRS another $80 billion to hire 87,000 new agents who will roam the streets chasing Uber drivers, small-business owners, waitresses, conservatives, religious groups and right-to-life committees.
Remember Lois Lerner in 2013? The IRS is going to be doing more conservative censorship than even Twitter. It will become an even beastlier beast. It will become the greatest DC swamp rat in history and, according to our new friends at the Joint Committee on Taxation, up to 90% of the money raised from going after so-called underreported income will come from those making less than $200,000.
If all that weren’t enough, the Manchin-Schumer bill would step up the Biden attack on fossil fuels. The EPA will be given greater authority to regulate “greenhouse gases.” That’s going to give them leverage over time to implement the Clean Power Plan and the EPA gets millions to implement ESG, environment and social governance reporting.
Now, the legislation says these reporting requirements will be voluntary, but if the federal government’s going to give the EPA the power and funding, you think it’ll remain voluntary for long? Really? I don’t think so.
The bill slaps a 16.4 cent per barrel excise tax increase on domestic crude and imported petroleum, a 33% fee hike for onshore and offshore oil and gas drilling on federal lands and waters, a 500% hike in oil and gas lease rates, new methane emission fees for drilling on federal lands and a new methane waste emissions charge on natural gas.
Plus — don’t want to leave this one out — a $3 billion for community grants to “address climate justice.”
You know what I think “climate justice” should mean? An all-of-the-above energy policy that embraces the principles of free-market capitalism, economic freedom and energy and national security, but I seem to be in the minority.
So, I’ll just say, Save America. Kill the bill.
This article is adapted from Larry Kudlow’s opening commentary on the August 4, 2022, edition of “Kudlow.”