Sinema joins Manchin in fighting inflation with inflation
Or something like that.
Sinema has agreed to this bill, and as far as I know that means the Democrats have the 50 Senate votes – plus the tie-breaker vote of Harris – to pass this by reconciliation. The only remaining question, as far as I can see, is whether the CBO will score it as acceptable, and since the bill-writers know how to game the system, that will probably happen as well. Then there’s also the Senate parliamentarian, and if I’m not mistaken, even if there’s an objection there the Senate majority does whatever it wants.
The act will help people save money on prescription drugs and health premiums, Biden said in a statement on Thursday.
“It will make our tax system more fair by making corporations pay a minimum tax,” he said.
And I’m quite sure the corporations involved will never, never ever, pass the charge on to the consumer.
Sinema said she had reached an agreement with other Democrats to remove a provision that would impose new taxes on carried interest. Without the provision, private equity and hedge fund financiers can continue to pay the lower capital gains tax rate on much of their income, instead of the higher income tax rate paid by wage-earners.
She cautioned that her agreement to “move forward” was subject to the review of the Senate parliamentarian. The parliamentarian has to approve the contents of the bill to allow it to move forward through the “reconciliation” process that Democrats plan to use to bypass the chamber’s normal rules requiring 60 Senators to agree to advance most legislation.
About the bill’s effect on inflation:
A letter sent to House and Senate leadership from 230 economists argues that the Inflation Reduction Act is expected to contribute to skyrocketing inflation and will burden the U.S. economy, contrary to President Biden and Democrats’ claims.
The economists wrote in the letter first obtained by Fox News Digital that the U.S. economy is at a “dangerous crossroads” and the “inaptly named ‘Inflation Reduction Act of 2022’ would do nothing of the sort and instead would perpetuate the same fiscal policy errors that have helped precipitate the current troubling economic climate.”…
The economic experts point to the $433 billion in proposed government spending, which they argue “would create immediate inflationary pressures by boosting demand, while the supply-side tax hikes would constrain supply by discouraging investment and draining the private sector of much-needed resources.”
“Inaptly named”? The economist authors need to brush up on their Orwell. The bill is very aptly named.
Last week, Graham asked CBO about the current fragile state of our nation’s economy and the potential impact of this latest Reckless Tax and Spend bill.
“When it comes to the Manchin-Schumer so-called ‘inflation reduction’ proposal, another shoe has just dropped. According to CBO analysis, the proposal’s effect on inflation is negligible at best. The estimate ranges from reducing inflation by 0.1 percent to increasing it by 0.1 percent in the near term. The idea that this tax and spend proposal is going to blunt inflation is yet again rejected, this time by CBO. Democratic statements about the proposal are quite frankly wrong and misleading.
“Further, CBO indicates that the Obamacare subsidies can go to a family of four earning $304,000 a year. This is, by any reasonable definition, people who are doing well and not in need of subsidies from the government. Also, CBO confirmed my suspicion that the way the 15 percent corporate minimum tax is constructed would hurt economic growth.
“So what have we learned today from CBO? The bill does not lower inflation, it hurts economic growth and the Obamacare subsidies are absurd.
Par for the course. It will pass.
Commenter “PA Cat” calls our attention to this; it’s not just about inflation or no inflation:
This week news broke that congressional Democrats had finally reached a deal on the largest piece of climate legislation in American history. The bill is a tax-and-spend cornucopia of some $369 billion for wind, solar, geothermal, battery, and other industries over the next decade, along with generous subsidies for electric vehicles and incentives to keep nuclear plants open and capture emissions from industrial plants. . . . Understand that the Senate bill isn’t the end, it’s the beginning. Climate activists and ideologues are working at the highest levels to transform not just the global food supply, but the nature of private property and property rights, all in the name of saving the planet. What Rutte and his government are doing to Dutch farmers, Schumer and Biden are planning to do to American farmers and American industries. So pay attention to the roadside fires and blocked highways and mass civic unrest in places like the Netherlands and Sri Lanka. America is next.
One thing I’m very much in favor of from that list is keeping nuclear plants open. And I have nothing against other alternative sources of power – except that many are unrealistic and don’t do what they’re cracked up to do.
NOTE: Here’s some speculation as to what Manchin might think he’ll get from acquiescing to the bill. I’ve not seen much about what Sinema thinks she’ll get, except that the removal of the carried interest provision (eliminated at her insistence) will curry favor with groups that have contributed quite a bit of money to her in the past.
One of problems with the bill is that so much of the impact will be down the line, maybe when a Rep is President or Congress is in the hands of the inept Republicans. Blame game coming up.
The “elites” will not be impacted at all, I mean will they stop flying their jets. The food shortages will get much worse in the coming years, and gas prices will go and stay much higher.
Fun times, right.
“Climate activists and ideologues are working at the highest levels to transform not just the global food supply, but the nature of private property and property rights, all in the name of saving the planet.”
Just as with a metastizating cancer, there’s only one way to deal with the ideological fanatic willing to sacrifice millions of lives upon the altar of their ideology. One way or another, it must be cut out of the body.
Sinema and Manchin join the other Benedict Arnolds infesting Congress.
The bill is hostile to US manufacturing. From the WSJ:
“Evidence is emerging that the new Schumer-Manchin 15% minimum tax on corporate-book income is especially harmful to U.S. manufacturing firms. An analysis by Congress’s Joint Committee on Taxation (JCT), which is hardly a nest of supply-siders, found that 49.7% of the tax would hit U.S. manufacturers.
The book-income minimum tax would hit the accelerated depreciation in the tax code that lets businesses write off investment in, say, new factories. Wholesale trade (9.3%), retail trade (4.9%) and information (11.5%) companies would get off relatively easy by comparison.”
Depreciation provisions are especially relevant to ‘thing’ businesses, those that invest in plants and equipment, because they determine the period between the time that the money is spent and the time that it can be deducted from income on their taxes.
But…but…how is that possible? Hasn’t Biden been talking about the need to provide more good manufacturing jobs (especially good union manufacturing jobs)? Hasn’t he just pushed through a bill to subsidize the chip industry, so we can make more of our semiconductor requirement domestically?
The answer to this apparent conflict is simple: Biden will indeed incentivize you to make things, but only those things he explicitly wants you to make. And this will be determined not just at the level of an industry, but at a much more detailed level. He’s made it pretty clear just how detailed. WSJ again:
“He told business and labor leaders on a conference call that the bill’s $52 billion in grants for Intel and other chip makers would not be “a blank check to companies.” The President said he will “personally have to sign off on the biggest grants.”
So, basically, Stop Making Things, Except Those Things We Order You to Make!
The “elites” will not be impacted at all, I mean will they stop flying their jets.
I think they will be affected more than they presently realize. Take those precious private jets: the elites need not only licensed pilots, their jets need competent mechanics to service them; factories to produce or overhaul engines and supply spare parts; jet fuel and lubricants to get the planes off the ground; maintenance workers to keep airport runways clear of ice and snow and resurface them when needed; firefighters to staff airport emergency vehicles; well-trained air traffic controllers . . . . and on and on it goes. The “elites” are far more dependent than they care to admit on us “deplorables” to keep their transport networks running as well as their food supply.
Then consider health care. Mark Rutte and his WEF buddies won’t be young or middle-aged forever. Rutte is already 55, Trudeau is 50, Ardern is 42 . . . . as they age, they will need checkups at the very least; possibly hip or knee replacements when the joints give out; vaccines against the next pandemic virus; drugs to treat hypertension, headaches, digestive problems, maybe even cancer or dementia . . . and where do they think the doctors, dentists, pharmacists, and nurses are going to come from when the present health care professionals retire? You cannot “grow” a teenager into a board-certified neurosurgeon in 5 years. Next, who will invent the next generation of life-saving medical equipment, and who will service these ever-more-complex machines? Who will manage the high-throughput computers increasingly needed to screen people for genetic disorders? Last, who will keep hospitals decently clean and sanitized so that they don’t become death traps for inpatients?
I could go on with unintended consequences in other occupations, but you get the idea. Someone could write a fine dystopian novel along the lines of Atlas Shrugged about the fates that await the Davoisie when they get rid of the people they presently consider “useless.”
The Democrats should send DJT a fruit basket in appreciation for his gift of the two Georgia Senate seats, without which this disastrous bill would not pass.
And of course the Senate GOP, being so sure that the staunchly “moderate” Democrats Manchin and Sinema would never change their position on BBB, gave up their leverage by allowing the CHIP bill to come to a vote (and many of them, including McConnell, voted for it).
Both Trump and the Establishment GOP are hopeless. Trump only cares about himself and the Establishment GOP cares only about its donors, who only care about their perceived short term private financial interests.
“The Democrats should send DJT a fruit basket in appreciation for his gift of the two Georgia Senate seats, without which this disastrous bill would not pass.”
I’m pretty sure the polling in those races turned toward the Democrats AFTER Mitch McConnell said a GOP Senate would not approve any more COVID stimulus payments.
As for the legislation, this is what America voted for. This is what it should get. Corporations especially deserve any and everything coming for their support of Democrats and liberal activist groups.
We’re about to enter hard times. The hard men will take a bit longer to get here.
Mike
WSJ again: “He told business and labor leaders on a conference call that the bill’s $52 billion in grants for Intel and other chip makers would not be “a blank check to companies.” The President said he will “personally have to sign off on the biggest grants.”
Rick Perry is reporting that there is a giant slush fund contained in the bill for the DOE (Energy) to spend as they wish to “incentivize” the businesses they like. He said, “Think Solindra” which was something of a predicted (and planned IMO) bankruptcy. With Solindra’s fed. loans they build the most lavish factory and the contractors worked around the clock. All that overtime means big union salaries and dues and Democrat donations.
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The recent SCOTUS decision EPA vs. W. Virginia disallowed the EPA engaging in heavy handed carbon dioxide regulation, since that pollutant or its regulation was not specified by congress. Larry Kudlow is reporting that tucked away in the pages of the reconciliation bill is language that would explicitly grant the authority or possibly the requirement that the EPA shall regulate carbon. That would precisely undo the SCOTUS’ complaints.
Sinema is being credited with the removal of the carried interest tax and also a scaling back of some the corp. minimum tax elements. (Not sure about the latter point.) However, several days ago, some retired congress person (forgot who) said that these exact changes were the ones that Pelosi wanted.
I suspect that Sinema had nothing to do with these changes and that she was handed a gift in return for her vote.
I’ve not paid any attention to Paul Pelosi over the years, although I did know he had these unseemly excellent stocks investments. With all the recent brouhaha I notice that he is in the investment business and also into venture capital. So duh, carried interest taxes would directly subtract from Pelosi household income.
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An oddball investor rumor I heard said that one of the functions of Nancy Pelosi’s visit to Taiwan was to gain access or lock down a portion of Taiwan Semiconductor’s future production of superconducting integrated circuits. Not all venture capital is in high tech, but much of it is. Another Paul Pelosi factor? It could also be a national security issue as well.
“Trump only cares about himself…”— djf
That would certainly explain why President Trump’s net worth fell nearly $1 billion during his term as president– not.
Yes, he’s still a billionaire, so the decline from $3.5 billion to $2.4 won’t see him on any soup lines, but the rabid left did everything possible to harm his businesses.
President Trump went along with the COVID lock downs, even though he knew it was disastrous to business.
From a not conservative rag (now digital):
https://www.newsweek.com/donald-trumps-net-worth-fell-third-during-his-presidency-forbes-says-1581266
How many senators voted for the chips bill 17 so those two would really make a difference, sarc
“An oddball investor rumor I heard said that one of the functions of Nancy Pelosi’s visit to Taiwan was to gain access or lock down a portion of Taiwan Semiconductor’s future production of superconducting integrated circuits. — TommyJay
TSMC was already building a plant in Arizona, and I believe one in Texas. They’re building a plant in Japan.
I watched a little segment with Pelosi talking to Taiwan representatives and it sounded like she was making a pitch for Taiwan semiconductor business touting the $280 billion largess available to chip manufactures– then caught herself. Not good politics to seem to be making a pitch for Taiwan’s manufacturing while meeting with government reps. Awkward.
TSMC produced 24% of the world’s chips in 2020.
https://www.cnbc.com/2021/10/16/tsmc-taiwanese-chipmaker-ramping-production-to-end-chip-shortage.html
Brian E,
It was a small shocker to me when Intel decided a year or two ago that some of their production would be farmed out to TSMC. Now I’m hearing about this superconducting chip “thing” and TSMC is in the catbird seat there too? Intel management is now blaming the old CEO Paul Otellini for focusing on financial and salesmanship issues to the near exclusion of technological advancement.
The quicky survey of superconducting chips suggests that it is niobium based Josephson Junction technology which is at least 40 years old, except for the IC fab part of it which is new or newer. Twenty years ago I saw IBM researchers were making experimental multipole JJ SQUID magnetometers with similar technology, though I’d guess now all the interest is in computer chips.
Supposedly, JJ computer chips can operate at several hundred GHz in the 4 to 10 deg. Kelvin temperature range. Or they can be operated at the 2 to 5 GHz speed with super low power consumption. 80 times lower power. Green New Deal!
the taxpayer will get the shaft.
TommyJay,
I’m not a computer geek, so most of what you said is greek (or latin, I don’t know which).
TSMC is in the supercomputing chip business, but I think as a foundry, they concentrate on advancing existing technologies.
I kind of recognize some of the terms and it seems pretty fast to me. TSMC is working on:
“Considering architectural and node-related improvements expected by 2023, it is fair to expect such behemoth multi-die chips to offer 6X – 7X peak theoretical performance of today’s flagship solutions. How about GPUs with a whopping 126 FP32 TFLOPS compute horsepower (A100 x6.5) three or four years from now?
To enable such massive theoretical performance, each 4X chip assembly will be equipped with 12 HBM2 memory stacks, which means a 12,228-bit bus. Even using currently available SK Hynix’s HBM2E 3600MT/s memory chips, that translates into an incredible 5.53TB/s memory bandwidth.”
@neo:Then there’s also the Senate parliamentarian, and if I’m not mistaken, even if there’s an objection there the Senate majority does whatever it wants.
Absolutely correct. The Senate Parliamentarian serves at the pleasure of the Majority Leader and can be overruled by simple majority vote. In 2001 the Republican Majority Leader fired the Parliamentarian because of his rulings on budget.
Any rule of the Senate may be set aside at any time by a simple majority vote–there is nothing in the Constitution that can prevent this, as the Senate has the power to decide what its rules are. A recent example happened in December 2021 when Mitch McConnell joined the Democrats to break a threatened Republican filibuster on the debt ceiling, and no breathless articles on “the nuclear option” were penned.
Taiwan Semiconductor Manufacturing is a great counterexample to the claim that ‘manufacturing doesn’t matter’…the company decided *not* to design their own chips, but rather to provide manufacturing for chips design and marketed by others.
And they are *very* profitable.
What that ‘manufacturing doesn’t matter’ crowd has missed is that ‘how to make it’ involves skills and knowledge, just as ‘what to make’ does.
Skills, knowledge, suppliers, workers, infrastructure, regulatory and governmental stability, ….
The eGOP lost the Ga seats with horrible candidates, plus the allowance of challenging voting methods they allowed to happen. Plus McConnels bs on Covid reliefs, deliberate timing so he could be in the minority. More money…
The blithe irresponsibility of our political class just astounds.
The Manchin Green New Deal will kill the American economy.
The tiny Omaha Public Power District plans on spending $28 billion in order to achieve net zero carbon. OPPD only has 1 million customers. The US has 330 million people. Do the math.
We wouldn’t need an inflation bill if the Dems hadn’t created near-record inflation, and in what probably *is* record time, to begin with. They will never acknowledge how destructive their covid response was, either. This is not a good development.
If everyone was required to take a high-school economics class, they’d know that corporations never pay any taxes. Corporations take money from their shareholders, employees, and customers and pass it on to the government. When politicians tell you that they’re taxing your corporate employer, understand that they’re taxing you.
It’s NOT an “inflation” bill—that’s just a cover, an excuse, a ploy, a ruse. More Democratic Party Orwellianism—heh, they sure LOVE that guy!!
(Actually, it IS an “inflation” bill in that it’s an inflation GENERATOR; IOW it will most certainly FLAME MORE inflation(!)—not that Paul Krugman will tell you that…or care one way or the other—outrageously absurd partisanship does have its uses(!)…)