KEY VOTE: “NO” ON THE “INFLATION REDUCTION ACT”

The Senate will soon vote on the Inflation Reduction Act (H.R. 5376), a tax and spending spree that, despite its name, will worsen the inflation crisis that is squeezing everyday Americans while also deepening and lengthening the recession that the country is already experiencing. Democrats are using reconciliation, a special legislative process, to jam the package through on a purely partisan basis. The bill proposes nearly $570 billion in new taxes, while increasing spending by roughly $510 billion over the next decade—plus an additional $200 billion after accounting for budget gimmicks. It is a massive boondoggle that will add to the crushing weight that the federal government already imposes on the American economy.

Let’s start with tax increases, which are a bad idea at any time, as they will make the United States a less competitive place to do business while being paid for in the form of lower wages for workers and higher prices for consumers. They are an especially terrible idea during a time of economic contraction, something even Senator Joe Manchin, the author of this package, has said. For evidence, we can look to the Great Depression, where four major tax increases in the 1930s helped deepen and extend the recession nearly a decade after the stock market’s 1929 crash. In 1937 and 1938, America experienced a double-dip recession and the unemployment rate soared to 19 percent.

While Democrats claim that these new taxes, which include a 15% corporate minimum tax and a 1% excise tax on stock buybacks, will only be paid by “the rich”, estimates from the Joint Committee on Taxation (JCT) show otherwise. According to the JCT analysis, Democrats’ new tax and spending spree will increase taxes on families with incomes below $200 thousand by $16.7 billion annually, annihilating President Biden’s campaign promise not to raise taxes on anyone making under $400,000. Analysis from the Heritage Foundation shows the same. The bill also includes $80 billion dollars for the IRS, roughly six times the agency’s annual budget, to hire 87,000 new agents. There simply is no credible way for the scandal–ridden and union-dominated agency to absorb so much extra funding and power while avoiding waste, fraud, and abuse.

What will all of these new taxes on everyday Americans be spent on? The biggest chunk of money—nearly $370 billion—is earmarked for Green New Deal-style handouts to “green” energy industries. The section on “climate” spending goes on for hundreds of pages and details a combination of tax credits, subsidies, and regulations for the energy choices preferred by the D.C. elite, such as wind and solar, while increasing the costs to access more reliable, more abundant energy sources like gas and oil on federal lands. As anyone who has filled their car with gas in the past year can attest, the United States is already facing an energy crisis under President Biden. Yet Democrats want to double down on these policies and follow the European model, which has created what is now an existential energy shortage. As a result of the “climate” portion of this package energy prices will increase and the United States will be less secure.

Additionally, the package proposes spending $64 billion to extend “enhanced” Obamacare subsidies that were first enacted during Democrats’ last reconciliation bill, the American Rescue Plan. The subsidies come with no income requirements, meaning that even the extremely wealthy can benefit. Because Obamacare premiums vary by age and family composition, middle-aged and older workers qualify for the most significant subsidies, even when their income is quite high, meaning that the wealthy actually receive the largest average benefit.

Among the worst proposals in the package is a scheme that will allow the government to set drug prices in Medicare. While this may sound like a good idea, the real-world result will be a drastic reduction in innovation in the pharmaceutical industry. The U.S. leads the world in the development of life-saving new drugs, which are the result of hundreds of billions of dollars of investment. Allowing the federal government to set prices for drugs would provide a major disincentive for pharmaceutical companies to undertake this risky and expensive research. Ultimately, this will result in less drugs coming to market and more human suffering that new drugs could alleviate. Additionally, as we have seen with a similar program at the Department of Veterans Affairs, this will actually harm the seniors on Medicare that it purports to help by denying them access to many new drugs.

The U.S. economy is currently in a state of stagflation. Inflation notched a fresh 40-year high of 9.1 percent in June, and the economy shrank in the first and second quarters of the year. Instead of heeding the economic warning lights, Democrats have offered this package, which doubles down on the policies that created the current economic mess. If passed, this bill would exacerbate the economic crisis and lead to a longer and much more painful stagflation. Senators must reject this big government solution to a problem that was created by big government.