The tax and spending package that Sen. Joe Manchin now has blessed is even more destructive and inflationary than the first placeholder version.
The confiscatory taxes on the pharmaceutical industry are still there, along with big subsidies for Obamacare insurance for middle-income people, big spending on green energy, and new taxes on businesses during a recession—all shockingly bad policies.
Today’s lead Wall Street Journal editorial provides a concise description:
“Talk about bad timing. As the economy slouches near recession, Majority Leader Chuck Schumer and West Virginia Sen. Joe Manchin late Wednesday unveiled a tax-and-spending deal that they call the Inflation Reduction Act. Is their aim to reduce inflation by chilling business investment and the economy?” the Journal asks.
“Mr. Manchin is selling the deal as deficit reduction and a rescue for fossil fuels. If he believes this, he hasn’t thought through the impact of the 725-page bill. A more accurate name would be the Business Investment Reduction and Distortion Act since that will be the result of its $433 billion in climate and healthcare spending, and $615 billion in new taxes and drug price-control ‘savings.’”
The taxes would slam businesses, except for the politically favored with $369 billion in corporate welfare for green energy. And this is on top of a $1 trillion infrastructure bill Congress passed last year that also was full of “green pork.”
One way they play to pay for this is by having HHS “negotiate” price controls on dozens of drugs, expected to raise $288 billion. But it will backfire. Drug developers now have big incentives to guard against future losses by launching drugs at higher prices. So much for lowering drug costs! And there will be fewer new drugs as companies become much more risk averse.
Another way they plan to raise more money to pay for the bill is by allocating tens of billions more to the IRS so it can hire more than 86,000 new IRS employees/agents and crack down on taxpayers.
As Chris Jacob of Juniper Research explains, the draft bill contains an $80 billion “investment” in the Internal Revenue Service. The Biden Treasury Department earlier released its “tax compliance agenda,” Jacobs writes, “showing where it would like to spend that money.”
“And on page 17 of that document, it helpfully included a chart demonstrating the IRS agents it would hire with that additional cash. All told, the Biden Administration wants to hire 86,852 agents, expressed in [the] chart as ‘FTEs,’ or full-time equivalent employees.” Here’s a link to his post with the chart.
Democrats expect to get all 50 senators, now that Manchin is on board, to approve the deal, with Vice President Harris’ vote to produce a bare majority. And of course Speaker Pelosi will twist arms to get the House to go along, with President Biden eagerly awaiting a signing ceremony.
The Senate parliamentarian could derail the package if provisions don’t pass the Byrd reconciliation rules. We should know next week.
Brian Blase writes in today’s Wall Street Journal that if the bill does pass with its wasteful and counterproductive spending on boosted Obamacare tax credits, the least Congress can do is limit the enhanced subsidies to existing enrollees.
In “An Alternative to Expanded ObamaCare Subsidies,” Brian writes, “While poor Americans do receive these expanded subsidies, the biggest benefits have gone to relatively wealthy families and health-insurance companies.
“For example, a family of four earning 800% of the poverty line may now qualify for an exchange subsidy of $10,000 or more—several times the subsidy increase that households at 200% of the poverty line received,” he writes.
“Entitlement programs are bankrupting the country. If Sen. Manchin is serious about his concerns over federal spending and inflation, he would back a grandfathering amendment. And Senate Republicans should support it. The reconciliation bill will still be packed with bad policy, but this change, at least, would make it better.”