The 'Inflation Reduction Act' to Increase Inflation and Impoverish Middle Class Americans
by Pete Hoekstra • September 7, 2022 at 5:00 am
The IRA [Inflation Reduction Act] is revolutionary in what it purports to do for the climate. The only impact it will have on inflation is to increase it.
The IRA deliberately sets about impoverishing many Americans by increasing taxes "on everyone" and increasing tax audits at the same time as prices are skyrocketing. Imposing steeper taxes at a time of steeper prices may not mean that much to the rich, but has the effect of a stealth double-tax that crushes especially middle- and working-class families, who now find themselves forced to choose between necessities such as food, gasoline or rent. Reports state that 42% of Americans are struggling financially.
The political theory governing this economic sledgehammer seems to be seems to be that a bigger, centralized government that controls people is "better" -- at least for the politicians -- than a government that prizes the individual, individual freedoms and the ability to spend hard-earned money the way he or she wishes, rather than how government chooses to spend it for him.
The government can then promise everyone goodies to keep them dependent, while it decides what to dole out, when and to whom: what cars you must buy, what doctors and healthcare you are allowed to have; what "social justice" and gender issues your children are to be taught in school; which companies -- possibly of campaign donors -- should be rewarded with subsidies and handouts, and which, such as donors to other political parties, should be targeted for audits and confiscations.
As the cost of energy -- gasoline, heating air-conditioning -- continues to rise, in addition to financing America's adversaries that produce oil and gas such as Iran, Russia and Venezuela, all purchases for Americans, in an increasing downward spiral, become increasingly unaffordable. All goods that are manufactured or transported continue to cost more, forcing Americans to pay even higher prices for virtually everything. Already squeezed, many Americans will be forced to start buying less. Restaurants, even fast-food places, for instance, will become luxury items and attract fewer customers; many small businesses will be forced to close and their employees will be laid off, creating still less purchasing power.
If the Biden administration believes that the top earners in the US are not paying their fair share of taxes, then Congress should change the tax laws. Between incentivizing the golden goose and killing it are many shades of gray.
[A]s long as China "is building more than half of the world's new coal power plants," and all of us on the planet are breathing the same air, we are essentially depriving Americans of low-cost energy independence while enriching, again, overt adversaries such as Russia and Iran that export oil for as high a price as they can.
Whoever imagined that doubling the size of the IRS is just what the American people have been pining for -- spending $80 billion of the American taxpayers' hard-earned money to target not Russia, China or Iran -- but Americans? And political opponents?
Moreover, these 87,000 new IRS agents will likely have zero interest in taking on either well-lawyered corporations or "ultra-wealthy" individuals.... The easiest target, of course, would be small business owners and middle-class individuals, for whom hiring a lawyer or accountant to refute a claim would cost more than just paying the IRS to go away.
The best news of all, however, is that they are armed! The IRS recently took down a recruiting ad – at the same time as many Americans are advocating for gun control -- saying that agents must be "willing to carry a firearm" and "use deadly force, if necessary." Now, that is what you might call persuasive. It also uncomfortably resembles the start of an armed federal militia to federalize the police, replace those precincts that were defunded, and begin targeting Americans -- call it the Papa Doc or Venezuela model -- hardly what the founding fathers had in mind. That is where they came in -- and the reason for the Second Amendment.
The government, the Wall Street Journal determined, was embarking on a plan, to "raise a total of $739 billion in revenue, and spend a total of $433 billion.... to reduce the deficit by about $102 billion over a decade" – in government terms, a rounding error, with your tax dollars. But not a dollar for more Homeland Security agents to address the nearly 5 million illegal aliens — including 900,000 "gotaways" -- rampant human trafficking, escalating child sex slavery, and massive drug smuggling that resulted, last year alone, in more than 107,000 deaths.
"By forcing up the price of fossil fuels, policy-makers have put the cart before the horse. Instead, we need to make green energy much cheaper and more effective. Humanity has relied on innovation to fix other big challenges. We didn't solve air pollution by forcing everyone to stop driving, but by inventing the catalytic converter that drastically lowers pollution. We didn't slash hunger by telling everyone to eat less, but through the Green Revolution that enabled farmers to produce much more food." – Bjørn Lomborg, author and climate change expert, Financial Post; June 29, 2022
Other countries are likely to be less passionate about having clean energy and more passionate about the bottom line. Russia, for instance, has been trying for years to limit America's oil production to prod the US to transfer its dependence on oil to, you guessed it again!, Russia. If the US had the widespread, inexpensive oil production it enjoyed two years ago, Putin would never have had the resources even to think of invading Ukraine. The US is, quixotically, funding both sides of this war.
The Student Loan Relief plan is a grotesque reverse transfer of wealth from the poor to the rich.
The biggest surprise of all in the IRA may have been, unbelievably, a new "Green Bank", filled with $27 billion of your money for the Environmental Protection Agency -- which, of course, knows so much about banking. It is supposed to be a "fund for clean energy projects," but, as the government, cagily warns, "false claims risks exist." What could possibly go wrong?
The Inflation Reduction Act and Student Loan Relief act and all these giveaways by the government, are yet more examples of government largess with the money of its citizens. Once again, politicians are taking taxpayer money and distributing it to favored causes and businesses and then limiting the choices we can make as to how we want to live. It is bad policy in a country where freedom is supposed to reign.
House Speaker Nancy Pelosi wondered aloud how Republicans could vote against Mother Earth. West Virginia Senator Joe Manchin possibly wondered how Republicans could vote against his so-called "Inflation Reduction Act (IRA)." In reality, Pelosi was closer to describing the contents of the IRA than was Manchin.
The IRA is revolutionary in what it purports to do for the climate. The only impact it will have on inflation is to increase it. The IRA deliberately sets about impoverishing many Americans by increasing taxes "on everyone" and increasing tax audits at the same time as prices are skyrocketing. Imposing steeper taxes at a time of steeper prices may not mean that much to the rich, but has the effect of a stealth double-tax that crushes especially middle- and working-class families, who now find themselves forced to choose between necessities such as food, gasoline or rent. Reports state that 42% of Americans are struggling financially.
