Joe Manchin Sells Out
Federal Spending, Inflation, Inflation Reduction Act of 2022, Joe Manchin
Matt Purple says he’s getting “thirty pieces of (inflated) silver.”
I, for one, never thought he would do it. I never thought Joe Manchin, who was elected in West Virginia after running an ad in which he literally shot the 2009 cap-and-trade bill, would sign on to Joe Biden’s Build Back Better climate agenda.
Yet sign on he has. Last night, Manchin announced that after over a year of logjamming Biden’s spending plans, he’d struck a deal. The legislation he agreed to weighs in at a ballpark of $700 billion, a sharp climbdown from the $6 trillion Democrats had initially asked for. But it’s still a lot of money, and even more importantly, it’s a major psychological boost for the left. Now, barring some let-the-world-burn chaos from goth kid Kyrsten Sinema or revolt from House Dems, Build Back Better will be signed into law.
Before we get to the green stuff, let’s pause for a moment and consider the clinical insanity of dumping hundreds of billions into the economy at a time of massive inflation. The Democrats audaciously claim that the package will somehow reduce inflation. They even went back and renamed it the Inflation Reduction Act of 2022, a bit of Orwellian chicanery. They cite the bill’s tax hikes on big corporations as proof it will slice the deficit and help control rising prices.
But then they make similar claims about every spending package and the deficit only ever seems to widen. Irrespective of what you think of the tax hikes — and raising taxes amid recession fears and rising interest rates is a serious gambit — the fact remains that they’re still dumping hundreds of billions of new spending into the economy. Inflation simply means too many dollars chasing too few goods; can anyone seriously argue this won’t exacerbate the problem?
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Jeffrey Carter, at Points and Figures, is justifiably outraged.
Finally, Senator Joe Manchin got what he wanted and rolled over. At least, that’s what we are hearing. Hence, a new spending bill will make its way through Congress.
Increases in government spending are INflationary. They don’t take inflation down.
Government has input into the costs of goods and services but it doesn’t set the price. The “scorecard” I saw showed how all of this spending is revenue neutral. That’s always a joke.
Details are sketchy but supposedly:
15% minimum tax on corporations
Eliminating Carried Interest tax rates on Investment
First, raising taxes during a recession is not a good idea. Second, the way to spur GDP growth is to decrease corporate taxes and taxes on investment.
Corporations do not pay taxes, they aggregate them. They pass them along to their customers. If they pay higher rates of tax, they don’t increase salaries for employees nor do they invest in property, plants, and equipment.
Interestingly, Democrats want Biden to stop sending refined oil products overseas to try and decrease gas prices in the US. You’d think that would work because it would increase the available indigenous supply. Except, there is not enough storage for those products so it would all be wasted.
This bill kills an incentive for any company to invest in storage facilities to make the Democratic scheme work.
One of the smart things Reagan did to kill the inflation beast was to cut taxes on investment. For those that don’t know, carried interest is the money that people receive when they successfully operate private equity, real estate, hedge, or venture fund. If you are a general partner at one of those funds and cover the costs of operating the fund, 20% of what’s left of the profits accrue to you.
There are various tax codes for different funds. But, you generally pay the long-term capital gains rate on gains. That’s a big incentive to invest.
Democrats just crushed the incentive.
