“Last week, House Democrats pushed through a massive appropriations package that will likely make America’s inflation crisis even worse by recklessly increasing federal spending on misguided, progressive projects.”— Rep. Richard Hudson, July 24, 2022
By the time you read this piece, the U.S. House of Representatives may have already passed the revised historic Inflation Reduction Act (IRA) and sent it to President Biden to be signed.
Why is it historic? Passed by Senate Democrats with no GOP support at all ( apparently Maine' Susan Collins and Alaska's Lisa Murkowski aren’t moderates when it really counts), the IRA breaks new ground in several areas detailed below. And, contrary to what Hudson incorrectly stated with no factual basis, the IRA final bill cuts the deficit without raising taxes one dime on the middleclass. Most of the benefits will go to GOP districts like the one Hudson represents.
Importantly, the bill creates more revenue by closing up tax loopholes, lowering the deficit by $300 billion. Because the deficit has gone up so dramatically, this move is important for our economy.
In Trump’s first year in office, 2017, we had a deficit of $665 billion. By the time he left, the deficit had grown to $3.1 trillion dollars. Here’s why the debt owed by the federal government went up so dramatically under a GOP president.
When he ran for office, Trump indicated that the debt would be gone “quickly,” and completely by the end of his second term. However, in the first three years of his Presidency (i.e., pre-pandemic), the deficit hit $984 billion, up almost 50% from when he took office. This increase in governmental debt was due to out-of-control spending.
Until Trump, the GOP was known as the party of fiscal conservativism. But no more. Trump’s Tax Cuts and Jobs Act (TCJA) encouraged this escalation of debt by cutting taxes, instead of raising them to balance the budget as needed. The impact was to raise the deficit $1 trillion to $2 trillion at a time when the economy was doing well and did not need any stimulus . That’s just poor economic policy (and also why many of Trump’s personal enterprises have gone bankrupt).
And 2020 saw a tremendous rise in the deficit, to $3.1 trillion, more than ever before or since. This increase was partially due to Trump’s abysmal failure to acknowledge that COVID-19 was a real problem and implement a cohesive strategy to deal with it.
The IRA bill provides for a 15% minimum tax on big corporations, cutting the deficit $258 billion over 10 years. It also taxes (1%) stock “buy backs” which benefit big business and their top executives to the detriment of our deficit ($74 billion raised).
The IRS gets more funding, sorely needed in that the IRS budget was cut by both the GOP and the Democrats from 1990 to 2020. Because of these funding reductions, the IRS staff went down 34% while the US population increased 30%. The IRS estimates that these cuts are causing $600 billion to go uncollected annually. Hopefully, these revenues will go towards decreasing the deficit.
The IRA bill includes $300 billion for clean energy and climate change measures, making it the largest such bill in history. Incentives for development of renewable energy infrastructure by companies are included in the bill. Also, tax incentives for homeowners for items like electric vehicles and solar panels.
Due to the IRA, Medicare will finally be enabled to negotiate for prices on 20 drugs (by 2029). Not all drugs are included, but it is a “nose under the tent,” upsetting Big Pharma, and hopefully will be expanded. There is also a $2,000 annual cap on what a Medicare-covered person pays out of pocket. I know personally that if you have a very sick family member, your costs can quickly exceed that amount.
The bill originally contained a cap on insulin prices, but that was stricken by the Senate Parliamentarian. Because this bill is being considered under “budget reconciliation,” meaning it only needs 50 votes, she can do this. The bill also caps escalation of pharmaceuticals, but once again due to a Parliamentarian ruling, restricts the cap to Medicare patients only.
The bottom line is that the Democrats have achieved the impossible — unilaterally passing a groundbreaking bill which helps all Americans while reducing the deficit. Hopefully, Americans will realize what was accomplished, despite unanimous GOP opposition based on fairy tales like the one Hudson is dishonestly peddling.
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However, due to coverage failures by Fox News and other channels watched by GOP constituents and some swing voters, many Americans will never realize what was achieved or the fact that the GOP opposed these historic measures.
Jack Bernard is the former director of Health Planning for Georgia and a retired high-level executive with a healthcare corporation. He was one of the founders of Premier, Inc. in Charlotte. He is a widely published health reform columnist.
This article originally appeared on The Fayetteville Observer: Jack Bernard: NC's Richard Hudson, GOP no help in passing historic Inflation bill