On Friday, the United States House of Representatives passed the Cut Inflation Act of 2022 on a strict party-line vote. All Republicans voted against and all Democrats, who hold a slim majority, voted yes. The bill, which passed in a similar party-line vote by the Senate last Sunday, will now be sent to President Joe Biden for signing into law.
Democrats and Democratic Party-aligned media are hailing the measure as a “historic” and “landmark” breakthrough in the fight against global warming and a major step forward for tax fairness, affordable health care and climate control. ‘inflation.
None of this is true. The World Socialist Website published several articles detailing the actual provisions of the bill and exposing the cynical and misleading hype of the Democrats. It is clear that the orchestrated effort to introduce this pro-business bill as a major piece of social reform legislation is a desperate attempt to reverse the collapse of popular support for Biden and Democrats as he approaches. November 8 mid-term elections.
All of the substantial social measures included in previous iterations of Biden’s national initiative, at one time dubbed “Building Back Better,” already cut last year from $3.5 trillion to some $2 trillion over 10 years, have been removed from the current legislation, the expenditure of which is estimated at only $433 billion.
In fact, last November the House passed a $2.2 trillion “Building Back Better” bill that included universal pre-kindergarten, child care subsidies, expanded financial assistance for college, hundreds of billions of dollars in housing assistance, home and community care for older Americans, a new hearing benefit for Medicare, an expanded child tax credit, and four weeks of paid parental and medical leave.
This bill died in the Senate due to opposition from two Democrats, West Virginia Senator Joe Manchin and Arizona Senator Kyrsten Sinema.
The 2021 House bill also included a surtax on very high incomes and an increase in corporate taxes estimated at nearly $1.5 trillion over 10 years.
None of these provisions appear in current legislation. Its “clean energy” provisions consist of massive subsidies to solar, wind and other renewable energy companies in the form of $369 billion in tax credits over 10 years. This comes with sweeping concessions to the fossil fuel industry demanded by Manchin, a coal multi-millionaire and unabashed Big Oil accomplice.
Manchin, the biggest beneficiary of Senate campaign funds from oil and gas companies, used his influence in the equally divided Senate to demand that the bill include unprecedented guarantees of new leases of federal lands and territories. offshore for oil and gas exploration. He also secured the agreement of Biden, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi to vote this fall on a bill that would weaken the ability of environmental agencies to restrict the authorization of new oil and gas pipelines and other infrastructure projects.
Given that the Cut Inflation Act contains no caps on greenhouse gas emissions or penalties for carbon polluters, there is good reason to believe that the net result will be a worsening of the climate crisis.
The bill’s other major spending is $44 billion to extend for three years enhanced subsidies to private insurance buyers on Affordable Care Act exchanges, which were signed into law as part of the law. CARES in March 2020. Democrats made sure to include this in the bill because the increased support would otherwise have expired at the end of the year, and voters would have learned they faced significantly higher bonuses. high just before the November elections.
Much is made of provisions that, for the first time, allow Medicare to negotiate drug prices with pharmaceutical companies. The bill estimates that this will generate $265 billion in federal revenue through reduced Medicare spending on prescription drugs, with the benefits passed on to enrollees. However, as with the bill as a whole, this “reform” is circumscribed and pinched to minimize any shortfall on the part of the drug giants.
The government will not start negotiating drug prices until 2026 and will be limited to just 10 drugs. This will only increase to 20 drugs by 2029. A $2,000 annual cap on out-of-pocket drug costs for Medicare enrollees will not take effect until 2025 and will only help about 1.4 million older people. A levy on drug companies that raise prices above inflation will apply only to drugs purchased through Medicare, not the private market. And a $35 monthly cap on insulin costs will also be limited to Medicare.
Claims about reducing inflation are entirely false. Supposedly, the bill will generate a net excess of $300 billion in additional government revenue over net spending over 10 years, a drop in the bucket of ever-expanding public debt. That, plus projected declines in drug costs, is the entirety of what is called the impact of lower inflation.
The Congressional Budget Office called the bill’s impact on inflation “negligible at best.” The Bipartisan Policy Center projected “small impacts one way or the other”, and Penn Wharton’s budget model said the impact would be “statistically indistinguishable from zero”.
Claims of significant shifting of the tax burden from workers to corporations and the wealthy are no less fraudulent. The 2017 tax overhaul that dramatically reduced corporate and personal income taxes for the wealthy remains intact. The minimum tax hikes included in last month’s deal between Manchin and Schumer were scrapped or removed at the insistence of Sinema, the biggest beneficiary in the Senate of campaign funds from the hedge fund and billionaires from private equity. investment.
She demanded and obtained the removal of a provision, estimated at $14 billion, to close the notorious “carried interest” tax loophole that allows managers of hedge funds and private equity to pay taxes on their income at the capital gains rate, barely half of what they would pay at the normal rate for their level of income.
The other major tax provision is a minimum tax of 15% on companies declaring annual income of $1 billion or more, which is expected to generate $222 billion over 10 years. However, Sinema, after a private appeal with the National Association of Manufacturers and the Arizona Chamber of Commerce, requested and was granted reinstatement of an accelerated depreciation allowance for manufacturing businesses. This tax scam, which is used by many highly profitable manufacturers to pay virtually no federal taxes, will render the 15% minimum corporate tax largely meaningless.
Instead of closing the “carried interest” loophole, Democrats inserted a 1% excise tax on stock buybacks, estimated to generate $74 billion in tax revenue over 10 years. The the wall street journal published an article last week titled “Plan not meant to affect redemptions,” citing various financial analysts who predicted that the low fee would not dampen companies’ enthusiasm for buying their own shares, a parasitic use of profits to boost the portfolios of large investors and the remuneration of executives. Last quarter, amid soaring consumer prices and shortages, U.S. stock buybacks hit a record $281 billion.
Every so-called “progressive” Democrat in the House voted for this miserable pro-business bill. Rep. Pramila Jayapal of Washington, chair of the Congressional Progressive Caucus, said in a statement: “While we are heartbroken to see several critical pieces on the care economy, housing and immigration left on the floor of the cutting room…we know the Inflation Reduction Act makes real strides forward on key progressive priorities.
Ayanna Pressley of Massachusetts, a member of the so-called ‘Squad’, said: “While our work is unfinished – on paid leave, housing, disability justice, immigration, the care economy, environmental justice and more – this bill is historic and desperately needed. It’s another example of progressives pushing to support the president’s agenda and Biden’s White House achievement. …”
Ilhan Omar of Minnesota, another Democratic Socialists of America (DSA)-backed Squad member, called the bill “a big step forward.”