DV Journal

President Joe Biden signed the Inflation Reduction Act — now being called the “Climate, Healthcare, and Taxes Act” by some — on Tuesday, drawing mixed reactions. Whether it would help or hurt Americans depended on party affiliation.

The mammoth $739 bill will impose a minimum of 15 percent in corporate taxes and a 1 percent excise tax on stock buybacks. It will also unleash 87,000 new IRS agents, cap insulin costs for Medicare recipients, and shovel billions in tax subsidies to “green” projects.

“Hide your wallet! The left’s behemoth tax hike and spending law will do nothing to help struggling Americans,” said Brooke Rollins, president and CEO of America First Policy Institute. “It will only make a bad situation worse. Americans deserve prosperity, economic growth, and energy independence — and that’s exactly what they aren’t getting from the Biden administration. Now, out-of-touch liberals in Washington, D.C. are delivering tax hikes, more reckless spending, and an army of 87,000 IRS bureaucrats to grab more from families who have less. Recently, 369 economists signed a letter organized by AFPI that expresses how this bill will worsen inflation.”

Sen. Pat Toomey (R-Pa.) released this statement when the Senate passed the bill. “Last year, Democrats jammed through trillions of dollars in reckless spending that fueled the worst inflation in 40 years. Now, Democrats insist on pouring fuel on the fire with another partisan tax-and-spending spree that will only further exacerbate a recession we’re already likely in.

“To fund new ‘green’ corporate welfare and give Obamacare subsidies to wealthy Americans, this legislation forces short-sighted tax hikes on American businesses and imposes innovation-crippling price controls on life-saving medicines. And contrary to the bill’s name, non-partisan analysts have confirmed that it does nothing to alleviate the inflation tax Americans are feeling every day,” said Toomey.

Rep. Madeleine Dean (D-Montgomery) tweeted after the House approved the proposal, “We’ve passed the Inflation Reduction Act! For families, seniors, and our future. That’ll lower health care costs, cut prescription drug prices, including capping Medicare insulin at $35 — and the largest investment in our climate. We all should be proud of this work.”

After voting for the bill, Rep. Mary Gay Scanlon (D-Delaware/Philadelphia) said, “The Inflation Reduction Act is a historic victory for Pennsylvania families and for our planet: delivering the investments we need to keep down health care costs, reinvigorate American manufacturing, and drive our transition to a clean energy economy. Importantly, the bill is fully paid for by ensuring that corporations can’t dodge their taxes – while ensuring that not one middle-class Pennsylvanian or small business pays a cent more in taxes. This legislation is a monumental step forward in House Democrats’ fight to build a fairer, cleaner economy, as we remain committed to putting People Over Politics: lowering costs, creating better-paying jobs, and building safer communities for all.”

Dave Galluch, the Republican running against Scanlon, said, “Despite its name, the bill does little for working families. Even Sen. Bernie Sanders (I-VT) has said the bill ‘will, in fact, have a minimal impact on inflation.’ That sentiment is confirmed by the Congressional Budget Office (CBO). So, we must ask – how does spending an additional $700 billion, raising taxes on working families, and hiring more IRS agents bring down inflation? Without mentioning spiraling costs for families, my opponent Mary Gay Scanlon celebrates this bill as the ‘the largest-ever federal effort on climate change.’ The legislation primarily consists of subsidies for green technology like solar panels and electric vehicles. Yet the average cost of installation for solar panels is nearly $20,000. The $4,000 and $7,500 tax credits for used and new electric vehicles will do little to reduce a current average price of roughly $66,000.

“This bill does nothing to help those struggling in the Fifth Congressional District now. It is another example of failed, out-of-touch leadership we must move on from this November,” Galluch said.

Guy Ciarrocchi, the Republican running for Congress against Rep. Chrissy Houlahan (D-Chester) said, “The number one issue for everyone is Inflation. That’s why I would have been an emphatic “No” vote on Biden’s so-called ‘Inflation Reduction Act.’ From Wharton to CBS, analysts have stated that the spending bill won’t lower inflation—in fact, it might make inflation worse.

“What we need is $2 gas; yet, Houlahan gives us 87,000 more IRS agents, who will harass small businesses and families. She won’t help us; so, I’m running to fix this mess,” he said.

But Democrat National Committee Chair Jaime Harrison said, “President Biden and Democrats have delivered – and today, the American people won and the special interests lost. Today, President Biden signed the Inflation Reduction Act into law, taking the action the American people are looking for to lower the costs of prescription drugs, energy, and health care. It will also reduce the deficit — helping fight inflation. On top of that, this bill will take aggressive action to fight the climate crisis that will create jobs and increase our energy security.”

Congressman Brian Fitzpatrick (R-Bucks) said on Facebook before the bill passing the House: “The reconciliation bill coming to the House floor tomorrow adds $80 billion to the Internal Revenue Service – nearly six times the agency’s current annual budget – and adds 87,000 new IRS enforcement personnel to pursue taxpayers, including the middle class.

“Wouldn’t we be better off hiring 87,000 new school resource officers and police officers to keep our schools and our communities safe?” Fitzpatrick asked.

American Petroleum Institute (API) President and CEO Mike Sommers said, “While the Inflation Reduction Act takes important steps toward new oil and gas leasing and investments in carbon capture and storage, it falls well short of addressing America’s long-term energy needs and further discourages needed investment in oil and gas. API shares the goal of addressing climate change, as evidenced in the policies we support and in the actions that our industry is taking every day. However, the considerable tax increases are simply the wrong policies at the wrong time.

“From a new corporate minimum tax to an $11.7 billion tax on crude oil and petroleum products to a new natural gas tax, this legislation imposes additional costs on American families and businesses at a time when policymakers should be looking for solutions to provide relief.

“The bill also fails to address permitting reform, which is essential to effectively delivering affordable, reliable energy to consumers in a growing economy,” said Sommers.

“Without a comprehensive plan for critical investment in American oil and natural gas and associated infrastructure, which provide nearly 70 percent of our country’s energy needs, the American people will continue to bear the brunt of short-sighted policies in Washington,” he said.

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For an alternative viewpoint see “Point: Sellout or Statesman: Manchin Charts a Prominent Path.”

Throughout Joe Biden’s presidency, Sen. Joe Manchin, D-W.Va., has acted as a check on his party’s worst excesses. Manchin has stopped billions, possibly trillions, of unaffordable government spending. He trimmed bills into a reasonable state and was the key voice bringing, for instance, the Biden infrastructure bill from $715 billion down to $550 billion of new spending.

Manchin has generally been a voice of moderation in a party under pressure from its most fervent Big Government voices. As inflation strains household budgets and recession threatens our economy, imagine how much worse off we would be without Manchin.

After all that, he caved. The now infamous deal struck with Senate Majority Leader Chuck Schumer means the absurdly named “Inflation Reduction Act,” which includes $369 billion worth of climate spending, can go forward in Congress.

There are protectionist tax credits for electric vehicles with bureaucratic hurdles such as “Made in America” provisions, income limitations and maximum vehicle value restrictions. Red tape, not the consumer, is the real winner.

The bill will also make offshore oil drilling more expensive, which can only increase energy prices. The royalty rate to the government for offshore oil will increase by a third. The minimum amount one can bid for an offshore oil lease is going up. So is the annual rental rate for holding such a lease. There will be new fees on methane leakage at oil and gas sites, including transmission and processing facilities, and royalties on flared gas.

And while the bill does include some incentives for opening up new offshore oil leases, those offshore rigs will still face years of slow, inefficient regulatory processes such as environmental impact statements before oil can come out of the ground.

What does it all mean? Your energy bill every month will be higher. You’ll pay more at the pump to fill up your car — even if you own an electric vehicle. Sixty percent of power still comes from fossil fuels, after all, so even Tesla owners will be paying more for using their cars.

Climate bills aim to make fossil fuels more expensive and make renewables seem less expensive by subsidizing them. To that end, the bill includes $60 billion for domestic manufacturing of clean energy, including solar panels, wind turbines, batteries and mining. But those incentives will take time to take effect, and new manufacturers and renewable energy providers in the meantime will have to navigate regulations and red tape at both the state and federal levels.

Meanwhile, the penalties — the disincentives against fossil fuels — have no delay. They go into effect immediately, punishing energy producers with higher taxes, fees and penalties, leading to price hikes. Manchin and the Democrats put the cart before the horse. They’re trying to transition Americans to a renewable energy world that simply doesn’t exist. And in the end, people will suffer as energy costs skyrocket.

That can’t bode well for Democrats come election time, with people upset about higher prices at the pump, the grocery store and their energy bills. Even in Manchin’s home state of West Virginia, a potential Republican challenger for his Senate seat is already attacking Manchin’s support of the Inflation Reduction Act for “betraying West Virginia and destroying our economy.”

Manchin made his choice. And in 2024, voters in the Mountain State might feel done with those bad policies.

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Inflation may be high and the U.S. economy may have dipped into recession, but Democrats are still rushing to back major new spending initiatives. And not just Democrats in deep-blue districts. In swing states like New Hampshire, Nevada and Pennsylvania, Democrats are on board with an additional $1 trillion in spending from the Biden administration.

Last week, Congress voted to spend $280 billion to subsidize domestic microchip manufacturing and fund science and tech research. While the House and Senate votes were bipartisan, every Democrat voted yes, while most Republicans voted no. And many of the GOP “yes” votes came from members who are retiring (Adam Kinzinger of Illinois) or are in purple districts Biden carried in 2020 (Brian Fitzpatrick of Pennsylvania).

Voting to spend a quarter of a trillion dollars at a time when polls show many voters blame the current inflation crisis on trillions in new federal spending under President Biden might appear politically risky. But Democrats remain undaunted.

“I voted to pass the #CHIPSandScience Act — including my priority to foster innovation in regions like ours!” tweeted Rep. Susan Wild of Pennsylvania, considered one of the most vulnerable Democrats in Congress.

“Thrilled to see the CHIPS and Science Act I helped pass head to the president’s desk to become law,” added Sen. Catherine Cortez Masto of Nevada, another endangered Democratic incumbent up for re-election in November.

Now comes news of a deal between Senate Majority Leader Chuck Schumer and moderate West Virginia Democrat Sen. Joe Manchin to spend an additional $739 billion on green energy, healthcare subsidies and — according to Manchin — paying down the national debt. The plan includes $500 billion in new tax revenues, some from a 15 percent minimum corporate tax, and doubling the number of IRS agents to conduct more audits of taxpayers.

Manchin has labeled it the “Inflation Reduction Act of 2022,” though the effect of $450 billion in new spending on climate and healthcare on inflation is less than clear. However, advocates for green energy policies say the effect will be significant.

“This is the most significant action on climate and clean energy that we’ve ever taken in this country,” said Sen. Tina Smith, D-Minn.

Between the two plans, Biden is proposing $1 trillion in new spending even as inflation hits a 41-year high of 9.1 percent.

New Hampshire Sen. Maggie Hassan, another high-profile target of GOP efforts to take back the Senate, said she was “encouraged by the agreement on the Inflation Reduction Act, which will fight inflation, pay down the deficit, make prescription drugs cheaper and lower energy costs.”

“We have an opportunity to address pressing priorities for Granite Staters and all Americans, and I’ll keep working with my colleagues to finalize a measure that reduces costs and strengthens our economy.”

Rep. Annie Kuster, another New Hampshire Democrat whose race is rated a “toss-up” by Cook Political Report, used her support for the Manchin-Schumer proposal to dodge questions about inflation. Asked by Punchbowl News about the data showing two quarters of declining gross domestic product and what it means, she replied:

“To be honest, I haven’t (looked). I’m more focused on the package that might be passing in the Senate. I’m super excited about the jobs and opportunities that are going to come out of this.”

And Pennsylvania’s Democratic senator, Bob Casey, said via Twitter: “The Inflation Reduction Act will lower everyday costs for families while also reducing the national deficit and putting us on a path to meet our climate commitments. I look forward to working with my colleagues to get this done.”

While Democrats may be basking in the glow of an agreement with the recalcitrant Manchin, questions remain about their ability to get the bill passed. Sen. Kyrsten Sinema of Arizona, for example, has expressed reservations in the past about supporting the tax policies it includes.

Meanwhile, Republicans are already using the proposal to label Democrats the party of “tax and spend” economics.

“Now that the data scientists have confirmed that the U.S. is indeed in a recession, clearly fueled by excessive government spending and a strangling of domestic energy, it is even more unconscionable for congressional Democrats to conspire to force yet another tax-and-spend bill on the American people,” said Paul Teller, executive director of Advancing American Freedom, an organization founded by former vice president Mike Pence.

Akash Chougule with Americans for Prosperity called the legislation “a random grab bag of corporate welfare and tax hikes that will do nothing to address inflation — except potentially put us even deeper into recession. For years, members of both parties — including Sen. Manchin — agreed you don’t raise taxes in a recession because it would be devastating to the economy. With a rapidly shrinking economy, inflation at historic highs, and gas prices over $4 a gallon, you’d be hard-pressed to find a worse time for more spending and higher taxes.”

In the past, spending tax dollars offered a bigger political bang for the buck than fiscal restraint. Have the politics of inflation and recession changed the Election Day math? Democrats are about to find out.

Inflation may be high and the U.S. economy may have dipped into recession, but some Delaware Valley politicians signed off on $280 billion in new federal spending, with more on the way bringing the taxpayer’s tab up to nearly $1 trillion.

The Senate on Wednesday approved the $280 billion “CHIPS Act” to support semiconductor manufacturing in the U.S. with assurances to the Republicans that another huge spending bill was off the table. The House passed CHIPS on Thursday.

Sen. Bob Casey (D-Pa.) voted for the CHIPS Act that also funds science and technology research. Reps. Chrissy Houlahan (D-Chester/Berks), Madeleine Dean (D-Montgomery/Berks) and Mary Gay Scanlon (D-Delaware/Philadelphia) also supported the spending package.

“We have some of the best manufacturers in the world right here in Pennsylvania,” said Houlahan. “My district is home to multiple semiconductor manufacturers and the passage of CHIPS will make our supply chains more resilient, lower costs, and help us to outcompete China. CHIPS is a good example of Democrats and Republicans coming together on legislation that helps our businesses, consumers, and economy. I’m proud of this legislation and will continue to reach across the aisle for the good of our community, Commonwealth, and country.”

Congressman Brian Fitzpatrick (R-Bucks/Montgomery), a co-chair of the Problem Solvers Caucus, was one of 24 Republicans to vote in favor of CHIPS.

“Semiconductor manufacturing is central to our ability to compete with Communist China and forms the core of USICA under the CHIPS provisions. American defense and civilian applications of artificial intelligence, next-generation wireless technology, and biotechnology require a competitive and self-sufficient domestic semiconductor industry,” Fitzpatrick said in a joint statement with fellow Problem Solvers Chair Rep. Josh Gottheimer (D-N.J.)

However, Republican Sen. Pat Toomey voted no on CHIPS, saying on Wednesday, “Tonight, the Senate failed at even the most basic of functions: being able to disclose what it was voting on prior to doing so. Unfortunately, the one item that is certain to be included is a corporate welfare handout of more than $76 billion to an extremely sophisticated, profitable industry in the U.S. — semiconductor manufacturing.

“As history has taught us, centrally planning economies never works. When the government allocates capital, it inevitably drives investments to the politically well-connected at the expense of taxpayers. It’s not the government’s job to pick winners and losers, yet that is exactly what this effort is intended to do. If we truly want to beat China, we can’t emulate Beijing’s semi-socialist economic model. The best way to encourage investment, spur economic growth, and enhance American competitiveness is to create policies that benefit all industries, businesses, and workers alike,” Toomey said.

Now comes news of a deal between Senate Majority Leader Chuck Schumer (D-N.Y.) and moderate West Virginia Democrat Sen. Joe Manchin to spend an additional $739 billion on green energy, health care subsidies and — according to Manchin — paying down the national debt. The plan, dubbed the Inflation Reduction Act of 2022, includes about $500 billion in new tax revenues, some from a 15 percent minimum corporate tax and the rest from increasing the number of IRS agents and conducting more audits of taxpayers.

Between the two plans, Sen. Schumer and the Biden White House are proposing $1 trillion in new spending, even as inflation hits a 41-year high of 9.1 percent.

Toomey believes the Inflation Reduction Act is Biden’s Build Back Better Act in another form and does not plan to support it, said his spokeswoman.

Toomey tweeted this: “Democrats’ reckless spending and growth-killing regulation is exactly what led to 40-year high inflation and contracted our economy. Hiking taxes, enacting price controls, and spending billions more dollars will only make this disastrous situation even worse.”

Lt. Gov. John Fetterman, a Democrat running to replace Toomey, was in favor of the CHIPS Act.

“To fight inflation, we’ve got to start making more s**t in America–and that includes the semiconductors and microchips in everything from our cars to our cell phones. It’s about time that the Senate finally passed this bill to invest in domestic manufacturing, help us compete with China, and fix our broken supply chains so we can bring costs down,” Fetterman said.

A spokeswoman for Houlahan said that the congresswoman has not seen the text of the Inflation Reduction bill yet so she has not yet decided whether to support it.  Other DelVal representatives did not respond to questions Thursday to state their positions on the $740 billion bill.

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