The Economy

Policy Matters

  • If, like me, it’s been a hot minute since you’ve taken an Econ Course, here’s a refresher.

  • POLICY MATTERS: “According to the Joint Committee on Taxation (JCT), the Inflation Reduction Act would raise taxes on taxpayers in nearly every tax bracket, with $14.1 billion being added to the tax burden of those making between $200,000 and $500,000, and $16.7 billion added to those making less than $400,000.  By 2031, those making less than $400,000 would be hit with more than two-thirds of the tax burden, mostly due to the increased level of subsidies provided to higher-income earners through Green New Deal programs. It is unclear how progressives can agree that is a progressive result.”

  • POLICY MATTERS: “Income data published by the IRS clearly show that on average all income brackets benefited substantially from the Republicans' tax reform law [Trump tax cuts], with the biggest beneficiaries being working and middle-income filers, not the top 1 percent, as so many Democrats have argued…The fact is, Republicans' 2017 tax reform law did exactly what was promised: It lowered taxes for all income groups, provided the greatest benefits for middle-income households, and spurred economic growth that helped reduce poverty and improve prosperity.”

  • POLICY MATTERS: “A study from the American Enterprise Institute found that the American Rescue Plan failed to create any of the 4 million new jobs Democrats promised. In fact, it was quite the opposite. Approximately 1.8 million Americans reportedly turned down a job because of the extended unemployment bonuses that were included. The Democrats’ bill even eliminated work requirements for federal food assistance programs and the Child Tax Credit. No wonder America faced a massive worker shortage.”

Sources for charts : Bureau of Labor Statistics, Federal Reserve, NASDAQ, Energy Information Agency

Numbers Don’t Lie (but the government does)

  • When President Biden took office, he was handed an economy growing at an annualized rate of $1.5 trillion. Inflation was a mere 1.4%. Yet instead of simply allowing the economic recovery to continue, Mr. Biden spent trillions of dollars the nation didn’t have and declared war on American energy.

  • Since the Treasury couldn’t borrow enough money to meet the avalanche of spending, the Federal Reserve created the money for the government to spend. That devalued the dollar by about 20%, causing prices everywhere to rise.

  • In addition, Mr. Biden’s so-called green energy policies drove up energy costs across the board. The price of gasoline, for example, rose by about 46%, and the price of electricity by about 29%. Since energy affects the price of everything we do and everything we buy, this added insult to injury, increasing prices beyond the effect of runaway government spending

For Your Consideration:

Myth: “The President Doesn’t Affect Gas Prices.”

The Real Reason for Record Gas Prices https://www.youtube.com/watch?v=z3AV9GXem6o

September ‘23: How Gas Prices Have Changed Since Joe Biden Took Office https://www.newsweek.com/how-gas-prices-changed-since-joe-biden-took-office-1823422

Specific Policies That Have Impacted the Economy

American Rescue Plan Act of 2021 ($2 trillion in spending) https://www.congress.gov/bill/117th-congress/house-bill/1319 

  • American Rescue Plan Ignited Inflation, Reduced Real Wages, and Wasted Billions  https://budget.house.gov/press-release/house-budget-committee-hearing-exposes-how-american-rescue-plan-ignited-inflation-reduced-real-wages-and-wasted-billions/ including but not limited to:

    • $1,400 checks to Japanese citizens living in Japan

    • $783 million worth of stimulus checks to prisoners, including Boston Marathon Bomber

    • $4 million for a bird sanctuary

    • $7 million to social media influences to promote seafood

    • $140 million for a luxury hotel development in Florida

    • $20 million to modernize fish hatcheries in Maine

    • $2 million to plant trees in New York

    • $4 million for beach bathrooms and parking lots in South Carolina

    • $7 million for horse racing

    • $5 million for moonshine walking trail

    • $250k for pickleball courts

  • One Year Later: Why Biden's "American Rescue" Plan Failed https://budget.house.gov/press-release/smith-op-ed-one-year-later-why-bidens-american-rescue-failed/

    • Delaware: $40 million of "emergency COVID-19 funding" to build libraries

    • New Jersey: $15 million on a sports complex

    • Philadelphia: $18 million to hand out free money via a universal basic income pilot program

    • A city in Connecticut is spending almost $1 million to build 40 luxury apartments

    • Palm Beach Gardens, Fla: $17 million to build a golf course with a two-story clubhouse

    • Nearly $2 billion was sent to county governments that do not even exist.

    • “During his State of the Union address, President Biden claimed that the American Rescue Plan “created jobs. Lots of jobs.” Simply put, that is malarkey. Over 20% of the bill’s spending went to supporting policies that destroy jobs, encouraging Americans to depend on government checks instead of getting back into the workforce. A study from the American Enterprise Institute found that the American Rescue Plan failed to create any of the 4 million new jobs Democrats promised. In fact, it was quite the opposite. Approximately 1.8 million Americans reportedly turned down a job because of the extended unemployment bonuses that were included. The Democrats’ bill even eliminated work requirements for federal food assistance programs and the Child Tax Credit. No wonder America faced a massive worker shortage.”

    • “Democrats such as former Obama economic adviser Larry Summers warned that it would cause “inflationary pressures of a kind we have not seen in a generation.” 

    • “The San Francisco Bank of the Federal Reserve found that the American Rescue Plan helped ignite the highest spike in consumer prices in 40 years — a crisis that is making it harder for families to put food on their tables, clothes on their backs, and gas in their cars.”

Inflation Reduction Act of 2022 https://www.congress.gov/bill/117th-congress/house-bill/5376/text …\[]\

  • $80 billion to IRS - makes the agency larger than the Pentagon, State Department, FBI, and Border Patrol combined

  • Hundreds of billions of dollars in green energy slush funds for the federal government to dole out

  • $2.2 billion in financial assistance to farmers, ranchers, and forest landowners that experienced “discrimination.”

  • language in the Inflation Reduction Act vowing “nothing in this subsection is intended to increase taxes on any taxpayer with a taxable income below $400,000″ was removed from the bill.

  • $385 billion on energy and climate change

  • $100 billion of new spending for health care in the form of expanded Obamacare subsidies and expanded prescription drug and vaccine coverage

  • CBO Confirms to Graham:  “Inflation Reduction Act” Won’t Reduce Inflation https://www.budget.senate.gov/ranking-member/newsroom/press/cbo-confirms-to-graham-dems-inflation-reduction-act-wont-reduce-inflation  

  • According to the Joint Committee on Taxation (JCT), the Inflation Reduction Act would raise taxes on taxpayers in nearly every tax bracket, with $14.1 billion being added to the tax burden of those making between $200,000 and $500,000, and $16.7 billion added to those making less than $400,000.  By 2031, those making less than $400,000 would be hit with more than two-thirds of the tax burden, mostly due to the increased level of subsidies provided to higher-income earners through Green New Deal programs. It is unclear how progressives can agree that is a progressive result.  https://www.finance.senate.gov/ranking-members-news/jct-democrats-proposals-increase-taxes-on-millions-of-americans-

    • According to JCT: In 2023, taxes will increase by $16.7 billion on American taxpayers earning less than $200,000—a nearly $17 billion tax targeted solidly at low- and middle-income earners next year, amidst stagflation.

    • The $17 billion hit alone is confirmation that the Biden pledge to not raise taxes on anyone earning less than $400,000 is shattered by the latest tax-and-spend bill.

    • The proposal would raise another $14.1 billion from taxpayers earning between $200,000 and $500,000.

    • According to JCT data, 98 percent of all tax returns filed by those in the $200,000 to $500,000 category are filed by those earning between $200,000 and $400,000, with at least three-fourths of the income in the $200,000 to $500,000 category also coming from those below $400,000, meaning it is likely that at least half of all new tax revenue raised next year would come from those earning under $400,000.

    • Throughout the ten-year window, the average tax rate for nearly every single income category would increase.

    • By 2031, when the new green energy credits and subsidies provide an even greater benefit to those at higher incomes, those earning below $400,000 are projected to bear as much as two-thirds of the burden of the additional tax revenue collected that year. 

  • Inflation Reduction Act will cost middle class $20B in new taxes: CBO https://nypost.com/2022/08/15/inflation-reduction-act-will-cost-middle-class-20b-cbo

  • The Inflation Reduction Act Is a Fiscal Disaster https://www.cagw.org/thewastewatcher/inflation-reduction-act-fiscal-disaster

  • Climate initiatives laid out in President Joe Biden’s Inflation Reduction Act (IRA) come with a bigger price tag than anticipated: over $400 billion more, per the latest estimates. The Congressional Budget Office (CBO) revealed the increased $428 billion cost in its budget and economic outlook for the next decade. The agency admitted that its projections were subject to change, citing variables such as the pace of deployment and use of low-emissions technologies and electric vehicles, as well as the number of taxpayers who have yet to claim certain tax credits enacted in the IRA.  https://www.cbo.gov/publication/59710#data

  • IRA allotted an estimated $1 trillion for environmental spending on clean energy, yet “Even assuming the worst about global warming, the U.S. could eliminate all its GHG emissions today and it would have almost no impact on global temperatures by the end of the century, reducing global temperatures by no more than about 0.2 degrees Celsius by 2100.  Of course, the IRA’s green tax credit provisions will come nowhere near eliminating U.S. emissions. A project led by Princeton University’s Zero-carbon Energy Systems Research and Optimization Laboratory (Zero Lab)—a research lab that seeks to “accelerate rapid, affordable, and effective transitions to net-zero carbon energy systems”—estimates that the IRA will reduce U.S. emissions by about 6.3 billion metric tons of CO2-equivalent during the course of a decade. Even U.S. Climate Envoy John Kerry has acknowledged that the elimination of GHG emissions by the U.S. and other developed nations would have no meaningful climate impact.   This would mean a less than 14% reduction in GHG emissions for the decade. In other words, supposing the IRA’s provisions remained intact and remained equally effective for the rest of this century, the total effect on global temperatures likely would not be more than one-seventh of one-fifth of a degree (less than 0.03 degrees) https://roar-assets-auto.rbl.ms/documents/34985/REPEAT_IRA_Prelminary_Report_2022-08-12.pdf

  • “Instead of helping the economy, the misnamed IRA will raise taxes on Americans in every income bracket, increase spending, and prolong the worst inflation in 40 years. The Congressional Budget Office estimates that those making less than $400,000 will pay $20 billion more in new taxes over 10 years, which breaks President Biden’s pledge not to raise their taxes. Sen. Manchin’s IRA provides $80 billion to hire 87,000 new IRS employees, which is six times the agency’s current budget and will make it larger than the State Department, FBI, and Customs and Border Patrol combined. The IRA also imposes new drug price controls that will crush innovation, increase healthcare costs, and prevent hundreds of new cures. More than half of the $739 billion tax increase will be spent on wasteful Green New Deal programs like “tree equity,” “clean” garbage trucks, and studying cow farts. Despite his claim before the bill was passed that it would cut inflation, Sen. Manchin admitted after the August 16, 2022, signing ceremony that the IRA will not help reduce inflation anytime soon.” https://www.businesswire.com/news/home/20220817005644/en/Citizens-Against-Government-Waste-Names-Senator-Joe-Manchin-August-2022-Porker-of-the-Month

  • The largest U.S. producer of solar panels donated $1.5 million to Joe Biden’s 2020 presidential campaign, reportedly spent $2.8 million lobbying the Biden administration and Congress after Biden was inaugurated, then reaped enormous financial benefits from Biden’s Inflation Reduction Act. A signature Biden law aimed to boost renewable energy. It also helped a solar company reap billions. Meanwhile, investors in the company who donated huge sums to Biden’s 2020 campaign have been raking in the cash. Farhad Ebrahimi, co-founder of the software company Quark who owns roughly 5% stake in First Solar, donated at least $1 million to Biden’s campaign four years ago. He “was added to Forbes billionaires list in 2023 thanks to the skyrocketing value of his roughly 5% stake in First Solar,” AP noted. https://apnews.com/article/biden-solar-inflation-reduction-act-dca914675cd0855004214d82aab5b10c

Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act of 2022 https://www.nist.gov/system/files/documents/2023/02/28/CHIPS_NOFO-1_Building_Skilled_Diverse_Workforce_Fact_Sheet_0.pdf

  • DEI killed the CHIPS Act https://thehill.com/opinion/4517470-dei-killed-the-chips-act/

    • The law contains 19 sections aimed at helping minority groups, including one creating a Chief Diversity Officer at the National Science Foundation, and several prioritizing scientific cooperation with what it calls “minority-serving institutions.” A section called “Opportunity and Inclusion” instructs the Department of Commerce to work with minority-owned businesses and make sure chipmakers “increase the participation of economically disadvantaged individuals in the semiconductor workforce.”

    • requirements that chipmakers submit detailed plans to educate, employ, and train lots of women and people of color, as well as “justice-involved individuals,” more commonly known as ex-cons.

    • For instance, chipmakers have to make sure they hire plenty of female construction workers, even though less than 10 percent of U.S. construction workers are women. They also have to ensure childcare for the female construction workers and engineers who don’t exist yet. They have to remove degree requirements and set “diverse hiring slate policies,” which sounds like code for quotas. They must create plans to do all this with “close and ongoing coordination with on-the-ground stakeholders.”

  • Top microchip makers are postponing US expansion and instead expanding in dangerous Israel and Russia because American grants come with so many 'equity' caveats https://www.msn.com/en-us/money/markets/biden-s-dei-rules-are-worse-than-hamas-top-microchip-makers-are-postponing-us-expansion-and-instead-expanding-in-dangerous-israel-and-russia-because-american-grants-come-with-so-many-equity-caveats/ar-BB1jC2pI

    • Companies including Samsung and Intel are backing out of using the US as a hub to build semiconductor microchip makers

    • An opinion piece in The Hill (see above) points the finger at the diversity, equity and inclusion necessary in government subsidies as the main reason for the exodus

    • The subsidies are paid for by the CHIPS and Science Act, a $280 billion bill to fund semiconductor chip manufacturing and boost competitiveness with China