Georgia’s Warnock and Ossoff key in passing Inflation Reduction Act
Published 8:00 pm Thursday, August 11, 2022
By Jack Bernard
Bernard is a retired corporate executive
As usual, Rep. Drew Ferguson is purposefully misinterpreting a great bill that lowers the record deficit (created directly by Ferguson and the GOP under Trump), while addressing the climate change and reducing healthcare costs to seniors, as detailed below.
By the time you read this piece, the House may have already passed the 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 Collins and Murkowski aren’t really moderates when it counts), the IRA breaks new ground in several areas.
And, contrary to what Ferguson incorrectly stated, it cuts the deficit without raising taxes one dime on the middle class. Importantly, the bill creates more revenue by closing tax loopholes on corporations and the ultrawealthy, lowering the deficit by $300 billion.
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 spendthrift GOP president.
When he ran for office, Trump indicated that the debt would be gone “quickly,” 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. 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-$2 trillion at a time when the economy was doing well and did not need any stimulus.
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 toward 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 $2000 annual cap on what a Medicare covered person pays out of pocket. The bill also caps escalation of pharmaceuticals for Medicare patients.
The bottom line is that the Democrats, like Ossoff and Warnock of Georgia, 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 Ferguson is dishonestly peddling. However, due to coverage failures by Fox 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.