The massive new spending bill agreed to between Senate Majority Leader Charles Schumer (D-NY) and Senator Joe Manchin (D-WV) will open the door to a lot of potential bad loans, by letting the Commerce Department make loan guarantees to get lenders to make loans to shady people they never would make a loan to, if the taxpayer wouldn’t pick up the tab in case of a default. As Phil Kerpen notes, the “bill authorizes [Commerce Secretary] Jen Granholm to make $250,000,000,000 in loan guarantees for ‘energy infrastructure.’ That’s a lot of Solyndras. If any substantial portion of these loans go bad,” the budget deficit could rise.
As the New York Post observes, “The bill also dumps another $369 billion into green boondoggles, which also acts as a slush fund for Democrats.”
The bill is called the “Inflation Reduction Act.” But it won’t cut inflation. “The University of Pennsylvania’s Wharton School examined the bill. Here’s what it concluded: ‘The impact on inflation is statistically indistinguishable from zero.'” Worse, “the Act would very slightly increase inflation until 2024.”
It also won’t do much to fight climate change, even though that’s one of its stated goals. In an example of political recycling, it pushes many of the same pork and big-government agenda items that were found in Biden’s failed Build Back Better plan. As the Climate Change Dispatch notes, “The Inflation Reduction Act of 2022 is crammed with the very same spending, corporate welfare, price fixing, and tax hikes that were part of Build Back Better.” Its philosophy seems to be, “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Senator Manchin thinks the bill will cut inflation by raising taxes. But tax increases don’t cool inflation if they are coupled with spending increases — and the bill may end up costing far more than projected, due to its funny accounting. As the New York Post notes, “The Dems claim their bill raises $313 billion with a minimum 15% corporate tax rate. They seem to be under the impression corporations that pay less than 15% are evading taxes rather than using completely legal tools like accelerated depreciation [for things like investing in manufacturing] or taking advantage of tax credits [that encourage investment]. Whatever the case, raising corporate taxes means fewer jobs or higher prices. Maybe both. What it won’t do is lower inflation.”
