A major goal of the Biden administration and the Democrat-controlled Congress has been the “Build Back Better” spending bill. However, since the 100-member Senate is split 50-50, a single defection could keep that plan derailed.
That seemed to be the case when Sen. Joe Manchin (D-WV) announced his opposition to the bill earlier in the summer.
However, in a surprise move, Manchin later announced he and Senate majority leader Chuck Schumer (D-NY) had reached an agreement on a (relatively) smaller package called the “Inflation Reduction Act” (IRA). Achieving this goal would give the Democrats a much-needed legislative win, especially with the important midterm elections looming in November.
In a joint statement on July 27, Virginia’s two US senators, both Democrats, released this email:
Today, U.S. Senators Mark R. Warner and Tim Kaine released the following statement regarding the Inflation Reduction Act of 2022, legislation that is expected to pass through the Senate’s budget reconciliation process next week:
“Lowering costs, expanding access to high-quality health care, and addressing climate change are priorities we’ve heard about from Virginians in every region of the Commonwealth. We look forward to voting on the Inflation Reduction Act so we can take meaningful steps toward those goals. We will continue to look for other opportunities to lower costs, like child care expenses, for Virginia families.”
The Inflation Reduction Act of 2022 will fight inflation, reduce the deficit, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. The bill will lower health care costs by finally allowing Medicare to negotiate prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025. The legislation will require the largest corporations and wealthiest Americans to pay their fair share in taxes. There are no new taxes in this bill on families making $400,000 or less and no new taxes on small businesses.
A summary of the legislation is available here.
The Senate approved the IRA measure in a squeaker reflective of our closely-divided country, 51-50. In an unusual move, the Senate met on a Sunday, August 7, to vote. In a straight party-line, all 50 Democrats voted yes and all 50 Republicans voted no. Since Democrat Kamala Harris serves as vice president, she cast the tie-breaking ballot.
Some questioned the legality of how the measure was passed. In general, according to Senate rules, 60 votes are needed to pass a bill. However, in a loophole known as “reconciliation,” a measure can pass with only 50 votes…as long as the bill involves the budget and is being “reconciled” to an identical bill being considered in the House of Representatives.
Opponents’ hopes were dashed when the Senate parliamentarian ruled that the IRA was, essentially, a budget bill and most of it could pass with a mere 50 yeas.
Overall, opposition to the IRA focused on several key areas. One was the aspect to hire an additional 87,000 IRS agents. Another was increased government spending. A third concern was raising taxes, especially during a recession.
On the issue of IRA agents, proponents claim the extra staff are needed to improve the system and look for tax cheats. The argument goes, ferreting out tax cheats will bring in more revenue.
According to Nation and State, the IRS currently has 78,661 employees. Therefore, by adding some 87,000 new ones, the IRS will more than double in size.
For perspective, according to Sandboxx.us, the US currently has 184,427 active-duty Marines. With the IRS taking on 87,000 new employees and doubling their number, they will end up having almost as many employees as the entire Marine Corps.
Or, to look at it another way, the vastly-enlarged IRS will have more government employees than the Pentagon, State Department, FBI, and Border Control combined.
In a recent satire piece, the iconoclastic Babylon Bee claimed, “Experts say Americans have been clamoring for more IRS agents for decades and are looking forward to having their finances examined and confiscated more than ever before.”
On the issue of increased government spending, The Guardian claims the act will spend $739 billion. The US Debt Clock puts our federal debt at an unprecedented $30 trillion. Moreover, the US has a high inflation rate we have not seen since the 1970’s. The classic definition of “inflation” that any high school or college student learns in an economics class is “too many dollars chasing too few goods.” Or put another way, spending money to stop inflation is like pouring wood and gas on a fire to stop the flames.
Regarding raising taxes, President Biden has promised never to raise taxes on people earning less than $400,000 a year. However, an article by CNBC claims the jury is still out on how the IRA act will affect taxpayers with this elusive headline: “Does the Inflation Reduction Act Violate Biden’s $400,000 Tax Pledge? Expect “a different answer depending on who you ask,’ Says Analyst.”
Others argue, when the IRA boasts about raising taxes on corporations but leaving the middle class alone, the bill will actually raise prices for everyone. This is because, any business exists to make a profit. If their taxes (as an expense) go up, they must pass on that additional cost to the consumer. Or, the corporation may leave the US and set up shop in a lower-tax nation. In that case, the US ends up losing both the jobs and the tax revenue.
Seeking clarification, The Roanoke Star submitted these questions to Virginia’s two US senators, Mark Warner and Tim Kaine. As Democrats, both voted “yes” on the IRA. Since 50 votes were required to get the issue to Vice President Harris so she could case the tie-breaker, one could argue that Warner’s and Kaine’s votes were “the crucial vote” that made passage possible. To be honest, of course, that same claim could be made about each Democrat who voted yes. In other words, a single defection would have doomed the legislation.
(Since the House of Representatives has a narrow Democrat majority, passage is expected there too which will send the bill to President Biden’s desk where he will sign it into law.)
- Why, in the middle of a recession, will the IRS be getting about 87,000 new agents? With the new 87,000 agents, what will that bring total IRS employment numbers to?
- Please tell us why the senator voted no on the Sen. Crapo (R-Idaho) amendment, to restrict the work of the new 87,000 IRS workers to those making $400,000 per year.
- It is reported the IRA will increase government spending by about $400 billion over 10 years. Since inflation is caused by too many dollars chasing too few goods, how will higher spending reduce inflation?
On August 9, a spokesperson for Sen. Kaine emailed this response:
“The Inflation Reduction Act includes historic investments in clean energy and finally allows Medicare to negotiate drug prices – these actions will help bring down home energy costs and drug prices for seniors. The investments are more than fully paid for – in fact, the bill will reduce the deficit by more than any bill in over a decade – by closing loopholes that have allowed large corporations to pay lower tax rates than working Virginians and ensuring that wealthy tax cheats pay their fair share. The Inflation Reduction Act includes instructions to the IRS to not use any of the funding to go after anyone who earns under $400,000. During debate, Republicans offered a bad-faith amendment that would have prevented the IRS from going after tax evaders who report no taxable income because they hide millions off-shore. These millionaire and billionaire tax evaders put more of the tax burden on working Virginians who have taxes automatically deducted from their paychecks, and it is disappointing that every single Republican senator voted to try to continue allowing them to cheat the system.”
The Roanoke Star has not received a response from Sen. Warner to the above questions as of publication time.