The Inflation Reduction Act signed into law by Joe Biden will cost three times as much as supporters claimed, notes the Wall Street Journal. As a result, the national debt will get substantially bigger, and inflation will likely increase.
The Inflation Reduction Act was supposed to cost $433 billion, while increasing taxes by more than $739 billion, thus reducing the national debt by $300 billion. But instead, it will cost $1.2 trillion, adding another $500 billion to the national debt. Much of its spending may be wasted: It has been called “a recipe for corruption and waste.”
As the Journal notes,
The Inflation Reduction Act may go down as one of the greatest confidence tricks on taxpayers in history. Democrats used accounting gimmicks to claim the partisan law would reduce the budget deficit. But now a Goldman Sachs report projects its myriad green subsidies will cost $1.2 trillion—more than three times what the law’s supporters claimed.
The Biden administration is making things worse through its expansive interpretation of the handouts that companies can receive under the Inflation Reduction Act. It is “loosely interpreting conditions” for the tax credits contained in the law, which critics decry as “corporate welfare.”
Before the Inflation Reduction Act became law, the Heritage Foundation predicted that “the bill would increase spending on crony corporatist subsidies and wealth redistribution by roughly $510 billion over the next decade. However, the true cost would be nearly $200 billion higher after accounting for budget gimmicks.”
Contrary to its name, it will not cut inflation. Economist Chris Edwards says it will “increase inflation by shrinking the economy’s supply side and intensifying the problem of too much money chasing too few goods.” The University of Pennsylvania’s Wharton School predicted that it would increase inflation this year.
It continues Biden’s record of massive, inflationary government spending. Biden’s big spending spawned inflation, according to economists like Bill Clinton’s Treasury Secretary, Larry Summers, and Obama advisor Steven Rattner. As Rattner noted in the New York Times, Biden has spent “an unprecedented amount” of taxpayer money, which resulted in “too much money chasing too few goods.”
The national debt is now $32 trillion, up by trillions of dollars since President Biden took office. It’s now much bigger than the size of the entire U.S. economy.
Under the Inflation Reduction Act, taxpayers will be on the hook for bad loans to crony capitalists. As Phil Kerpen notes, the “bill authorizes” the 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 national debt will get substantially bigger.
As the New York Post points out, the bill dumps billions of dollars into “boondoggles” that serve as “a slush fund for Democrats.” For example, it includes “$60 billion for ‘environmental justice‘”, a code word for race-based wasteful spending. It may also result in increases in the launch price of drugs, which will cost consumers more.
Although costly, the Inflation Reduction Act pales in comparison to other progressive legislation the Biden administration may enact if Democrats retake control of Congress in 2024, as many expect. For example, Biden has said that he is in “favor of paying slavery reparations” if “studies found direct cash payments to be a viable option.” As the New York Times notes, reparations would cost trillions of dollars. Reparations advocates have recommended spending $10-$12 trillion. Biden’s infrastructure and Build Back Better plans would also add trillions of dollars in new federal government spending if either were enacted.
