Ending days of heady speculation, Arizona Senator Kyrsten Sinema has signified that she is willing to back the so-called Inflation Reduction Act. “We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation,” Sinema said. “Subject to the Parliamentarian’s review, I’ll move forward.”
With Senator Joe Manchin (D-WV) already on board, it looks like all 48 Democrats and two Independents in the Senate are willing to back the bill. With Vice President Kamala Harris’ deciding vote as president of the Senate, it appears the legislation will achieve a successful passage when it hits the floor on Saturday, August 6.
Senate Majority Leader Chuck Schumer (D-NY) said the agreement with Sinema “preserves the major components of the Inflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit by $300 billion.”
What’s In a Name?
Questions have been raised regarding the name of the act and whether it is more spin than description. On August 3, a letter by 230 economists to Congress read that 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 authors argued that the $433 billion spending “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.” The economists are not the only ones sounding the alarm, however.
Senator Lindsey Graham (R-SC), ranking member of the Senate Budget Committee, spoke with the Congressional Budget Office regarding its assessment of the bill. He said:
“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.”
The negative reports on the bill did not dampen Democrat enthusiasm. President Joe Biden celebrated Sinema’s support, saying, “Tonight, we’ve taken another critical step toward reducing inflation and the cost of living for America’s families … The Inflation Reduction Act will help Americans save money on prescription drugs, health premiums, and much more. It will make our tax system more fair by making corporations pay a minimum tax. It will not raise taxes on those making less than $400,000, and it will reduce the deficit.”
Biden’s pledge to institute “no new taxes” on those earning under $400,000 is facing severe blowback. As Liberty Nation reported last week, the nonpartisan Joint Committee on Taxation estimates that taxes will increase by roughly $16.7 billion for Americans earning less than $200,000 annually and by $14.1 billion for those making $200,000 to $500,000 yearly. If the figures are correct, that means more than half of the new tax revenue raised next year would come from those earning less than $400,000.
Inflation Reduction Bill Vote-a-Rama
The only thing standing in the way of the bill’s passage now is approval by Senate Parliamentarian Elizabeth MacDonough, who is currently reviewing the legislation for conformity to the Byrd Rule. If MacDonough agrees, the bill can be passed via reconciliation, requiring just a simple majority.
When it reaches the Senate floor on Saturday, Republicans will likely subject the bill to a “vote-a-rama,” in which an unlimited number of amendments can be proposed. But with a united front, Democrats should be able to defeat each proposal.
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