Saturday, August 6, 2022
Big spender Democrats will instead of winning accolades for these unwise bursts of unprecedented deficit spending will be punished at the polls for creating even more of the hated inflation which is the root of their present unpopularity.
The so called “Inflation Reduction Act” is being voted on in the Senate today as I write. It is likely to pass —but not on merit. Republicans have only 50 votes—Dems have 50, plus the vote of VP Harris. The misnamed “Inflation Reduction Act” is a hodgepodge of spending designed to insure that the Democrats have something to brag about to voters in November. They desperately need it. For Joe has made an unprecedented, horrible mess of his first two years.
As recession and a two front Cold War looms over the nation, President Biden’s populaity polls are down in the low 30s and for good reason. Our southern border is awash with illegal immigrants and has become “the Biden open freeway” for Mexican drug and human traffickers. Our major cities are cesspools of crime, violence and racial discord. Gasoline prices are still almost two dollars above what they were in the previous administration. Inflation at 9.1% is at a level not seen in 40 years. The President has made a mess of foreign affairs by generating the inflationary spiral he is now so desperate to reduce. He single-handedly cut the supply of domestic fossil fuel as a sop to the “green wing” of his party and in doing so generated sky high gasoline prices and domestic inflation. Then he turned to the foreign sphere where he instituted unwise sanctions and a foreign policy that helped create a world-shattering, unprecedented economic disaster and a dangerous two front Cold War—with both nuclear armed Russia AND China.
At home, President Biden has spent our hard earned tax money like a drunken sailor on shore leave. Joe has already passed and signed the unprecedented, unwise and inflation-generating $1.9 trillion Covid Relief Bill, (or American Rescue Plan) as well as the $1.2 trillion Infrastructure Bill. If the Senate passes the IRA (Inflation Reduction Act) it would add an additional $733 billion ($0.733 trillion) dollars to the existing $3.1 trillion already spent. That would total up to $3.8 trillion dollars, or almost $4 trillion dollars, in additional Biden inflationary spending.
Just for background information you should know that the US tax revenue expected for 2022 is $4.2 trillion dollars. This amount is Uncle Joe’s (and ours) only income.
But out of this amount President Joe is constrained to pay : $4.0 trillion for mandatory expenses (social security, health care, military etc.), as well as @0.3 trillion for interest on our debt, and Joe budgeted an additional @ $2 trillion dollars of “discretionary spending”. Thus even before Uncle Joe’s recent spending spree— the amount he has already spent is a whopping $6.3 trillion dollars. We can not pay this amount, with only $4.2 trillion in income. President Biden, began his term with a deficit of $2.1 trillion dollars we do not have. These funds must be borrowed from someone or somewhere and then will be added to our national debt (so far above $31 trillion) and will increase our burden of interest on debt.
The President and his team (and Congress) have now added to the 2022 deficit of $2.1 trillion dollars an additional $3.8 trillion dollars of new spending (this over ten years)— a huge amount we have no hope to cover.
So what does this new $733 billion dollar ($0.733 trillion dollars) Inflation Reduction Act do? Does it reduce inflation? Hardly. It taxes corporations, makes drugs and health care more affordable, and fights climate change. None of this will reduce inflation.
The bill slates about $433 billion dollars of the total for new spending on renewable energy and to reduce greenhouse gas emissions. In addition, the rest of the funds are slated to extend health care subsidies to Medicare recipients, for payouts which would have expired next year. Other funds go to a program that will reduce prescription drug prices by permitting Medicare to bargain with pharmaceutical companies to lower prices. And more money is spent on the IRS to catch tax cheaters. It also places a 15% tax on large corporations.
Inflation is the economic consequence of too much money chasing too few goods, products or commodities. To reduce inflation a government must either increase goods, product or commodity availability, or decrease the amount of money circulating in the hands of purchasers. However, the Biden team started out on the wrong foot—by putting trillions of dollars into the hands of the nation’s consumers with its ($1.9 trillion dollars) American Rescue Plan. This was sure way to generate inflation—it worked. The Inflation Reduction Act (regardless of its misleading title) will simply add to that problem—not solve it. It will exacerbate the inflation by increasing the amount of inflated (cheap) dollars already circulating in the monetary system.
Reducing the costs of drugs is certainly desirable, but in effect, any decrease in costs simply frees up more cash from consumers to purchase other products many of which are in short supply, with the result of generating more demand and more inflation. Extending healthcare subsidies, will add to the dollars in the hands of consumers and as desirable as that may seem, will only increase inflation, and further reduce the buying power of the already inflated dollars these recipients of government largess have at hand.
By increasing a tax burden on certain corporations, the IRA can be seen to increase inflation by either reducing the availability or the quantity of product these corporation produce, (thus stimulating inflation) or making those products more expensive as a result of the fact that these targeted corporations will likely pass on the increase costs of production to consumers.
President Biden and big spender Democrats will instead of winning accolades for these unwise bursts of unprecedented deficit spending will be punished at the polls for creating even more of the hated inflation which is the root of their present unpopularity.
Uncle Joe (and his irresponsible, sparse majority in Congress) can’t seem to get anything right. From his first domestic acts on fossil fuels which set the stage for high gas prices in the USA, to the chaos of Afghanistan, the horror of Ukraine in Central Europe, and to the disaster of Taiwan in the East Pacific—Biden is not only a threat to the well being of the USA but threatens the world at large with economic and even perhaps nuclear disaster.
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