Intelligence Reduction Acts
Intelligence Reduction Acts
Eighteen months on, the Inflation Reduction Act's gimmicks do not appear to be working.
As we gear up for the fall campaign, we prepare for an endless spin about the candidates’ records. In one recent example Seth McFarlane - creator of the Family Guy and other juvenile romps - posted on X Sunday that Biden had signed, “groundbreaking climate legislation contained in the Inflation Reduction Act,” (IRA for short). We hear this a lot - the IRA was the “largest action on climate change ever,” according to many including the Guardian.
The Inflation Act was born of the Green New Deal, a phrase which has been used for decades to combine FDR’s “New Deal” - which implemented social supports during the depression including government-created jobs for public works, farmer supports and Social Security - with the far-left Green agenda. Versions of the Green New Deal were introduced twice in 2019 and 2021 by Rep. Alexandria Ocasio-Cortez and Sen. Ed Markey. Both resolutions were non-binding but nonetheless died in Committees. Sen. Bernie Sanders is also a major proponent.
According to the Aspen Institute, the Green New Deal provisions include, “(1) a Low-Carbon Electricity Grid, (2) a Net Zero Emissions Transportation System, (3) Guaranteed Jobs, (4) Universal Health Care, (5) Guaranteed Green Housing, and (6) Food Security,” at a total cost somewhere between $52T and $93T to accomplish. However, much of the total projected cost is driven by the social programs in the package - not climate.
So, when then-former Vice President Biden began his campaign for President in 2020, he introduced his “Build Back Better Plan,” which included three different initiatives to accomplish some of the Green New Deal’s goals. Two were passed and became law in some form or another as part of the American Rescue Plan Act of March, 2021 and the Infrastructure and Jobs Act of November, 2021 through the Democratic House and Senate.
When the third portion of the Build Back Better Plan - called the Build Back Better Act - came to the Senate (after passing the Democratic House in 2022) it stalled. In a last minute secret negotiation between Joe Manchin and Chuck Schumer, a deal was struck that became the “Inflation Reduction Act,” so named because inflation had skyrocketed to 7% in 2021. Major backlash over the deep deficit spending of Biden’s plans were creating big problems for Democrats, but they were nonetheless able to sell this bill by naming it something else. This despite the nonpartisan Congressional Budget Office’s clear scoring that the, “proposal’s effect on inflation is negligible at best.”
Only in Washington does the Green New Deal become the Build Back Better Act only to become the Inflation Reduction Act that doesn’t reduce inflation. When the pitch has nothing to do with the product, you’re probably being screwed.
So let’s see what’s in the bill and how it has performed. Here how the White House described the IRA’s benefits on the first anniversary of its passage, with reflections:
In the 12 months since the Inflation Reduction Act was signed into law:
The private sector has announced more than $110 billion in new clean energy manufacturing investments, including more than $70 billion in the electric vehicle (EV) supply chain and more than $10 billion in solar manufacturing. Since the President was elected, the private sector has announced approximately $240 billion in new clean energy manufacturing investments.
The White House is touting announcements of investments - not actual spending - which may or may not have been a result of the IRA, and may or may not come to fruition. This statement also ignores the serious trouble traditional American car manufacturers are having selling their new EV cars under the IRA regime, saying they can’t sell the EVs.
Investments in clean energy and climate since the Inflation Reduction Act was signed into law have created more than 170,000 jobs, and the law is projected to create more than 1.5 million additional jobs over the next decade according to estimates by outside groups.
The jobs picture is very murky; the new jobs in 2023 are predominantly part time (full time workers decreased by more than 280,000) and predominantly go to foreign born workers (native born workers are still net 0 since COVID).
Public and private sector investments driven by the Inflation Reduction Act and the Bipartisan Infrastructure Law are expected to reduce greenhouse gas emissions by approximately 1 billion tons in 2030.
From the Congressional Research Service: The models indicate that under baseline conditions (i.e., without IRA), U.S. GHG emissions would decrease by 24% to 35% by 2030 compared with 2005 levels. The models estimate that with the addition of IRA, U.S. GHG emissions would decrease by 30% to 43% by 2030 compared with 2005 levels.
Ergo, these projections indicate the US will not hit its 50% reduction target. The IRA, despite it’s huge cost, only decreases our emissions by an additional 6% to 8% by 2030 if the projections are accurate (projections on a predicted baseline are crude measures often used to manipulate the story).
The Administration has already awarded over a billion dollars to help communities become more resilient and protect them from the disastrous impacts of climate change, including drought, heat, and extreme weather.
That sounds good, but seems a small amount based upon the size of the bill (estimates range the bill will cost between $783B and $1T). The rebuild of the Francis Scott Key bridge in Baltimore alone will likely cost more.
American families are projected to save $27-38 billion on their electricity bills from 2022-2030 relative to a scenario without the Inflation Reduction Act, according to new data released by the Department of Energy today.
Really?
Nearly 15 million people are saving an average of $800 per year on their health insurance premiums, the nation’s uninsured rate has reached an historic low, and millions of seniors on Medicare are paying less in out-of-pocket costs for prescription drugs—including insulin, which is capped at $35 per month.
The health insurance and Medicare prescription cost “savings” are increased subsidies the government is paying to insurance and pharmaceutical companies as part of the IRA. The bill did nothing to reduce these costs, they are just transferred from the individual to the government.
The Internal Revenue Service (IRS) is strengthening enforcement against wealthy tax cheats and increasing recoveries from delinquent millionaires—while improving customer service for law-abiding taxpayers, including cutting phone wait times from 28 minutes last tax season to 3 minutes this year.
While this may increase tax receipts, the IRS hired 87,000 new agents to chase tax cheats has nothing to do with inflation reduction nor climate change. Almost ALL of the projected spending on climate change in the IRA is actually tax credits buried in the new tax codes based upon the legislation - an estimated $663B. This is a terrible way to run government programs, but a great way to add union government jobs and reward the tax accountant’s lobby.
Finally, The White House statement does not mention the new taxes enacted as part of the IRA, including a 15% minimum corporate tax rate, a 1% tax on stock buybacks and the aforementioned “savings” through additional IRS enforcement.
Suffice it to say, the IRA is full of gimmicks. It enables the Democrats to pat themselves on the back, and now campaign with the catchphrase, “largest climate action in history.” We are expected to ignore that results are much less clear, that they are based upon dubious projections which depend on subsidies for cars Americans don’t want.
That is governing in today’s America: bait and switch tactics to sell legislation, wildly speculative projections of benefits, dozens of unmentioned provisions that grow the size, scope and power of the federal government with more taxes and regulations, and no real reflection on the actual results of the provisions.
HL Mencken described it best:
Democracy is the theory that the common people know what they want, and deserve to get it good and hard.