Despite the Inflation Reduction Act, America remains dysfunctional


By Carlton Joseph

Carlton Joseph

The dysfunctional United States Senate remains dysfunctional, but Senate Democrats were able to strike a deal with Dixiecrat Democrats, Manchin and Sinema, to pass a multi-billion-dollar climate, health care and tax package, with no republican support, and Vice President Kamala Harris using her vote to secure passage. The bill now goes back to the Democrat controlled House, and assuming passage, to President Biden for his signature.

One must recall that Biden’s “Build Back Better Bill (BBB)” passed in the House back in November 19, 2021 and has been stuck in the Senate because two democrats, Manchin and Sinema, refused to support the package to enable it to be passed through the reconciliation process, which allows the bill to be passed with a simple majority vote.  Manchin after complaining that he’d been “ostracized” and “victimized” after not supporting the BBB, relented and decided to introduce his own bill “The Inflation Reduction Act,” and this is the bill that will be on Biden’s desk.

Although the Bill eliminates about $2 billion from the BBB, G7 countries, International and Domestic Climate Change Advocates, the International Community, and “red and blue states” should welcome this bill, especially since most Americans believed that the BBB Bill was dead.  Signatories to The Paris Climate Agreement should be elated because the bill allocates $369bn to reducing greenhouse gas emissions and investing in renewable energy sources. Experts claim that the climate provisions of the bill will reduce America’s planet-heating emissions by about 40 percent by 2030.  Good news for mother nature.

G7 industrial countries and the 129 other countries that agreed on the 15% global minimum corporate tax, can now breathe a sigh of relief now that the tax will be approved in the US.  The new tax system, scheduled to take effect in 2023, will set the rate at 15 percent. The rate cannot be increased, corporations are to pay tax wherever they operate not just in the Head Quarter’s (HQ) country. The details on how taxes are to be spread across jurisdictions are to be determined.  Hopefully, underdeveloped countries hosting multinational corporations will receive some new revenue.

The legislation touched the fringes of America’s health problem, and refused to join the rest of the world’s developed economies in providing universal health care for its citizens.  The legislation would allow Medicare to negotiate lower drug prices with pharmaceutical companies, although negotiations will not start for another four years (2026). This applies largely to seniors on Medicare, not the millions of people who get health insurance through their employer.  Also, the bill provides $64 billion to extend health insurance for people enrolled in the Affordable Care Act in order for them to maintain their insurance.

This is America’s Congress, everything that Republican lawmakers and two Dixiecrat Senators wanted removed from the bill was removed, and republicans unanimously opposed the bill.  Worse, because the people are so misinformed or illiterate – a CBS poll showed that only 10 percent of Americans knew “a lot of the specifics” about the Build Back Better plan while 29 percent did not know what was in it at all – Republicans can act against their people’s interest and have no fear of being voted out of office.

The Senate Republican lawmakers and two Dixiecrat senators have rejected the social parts of the BBB bill, that could transform millions of Americans’ lives, and have hoodwinked Americans into accepting that 10 percent of something is better than nothing.   This is the apex of dysfunction; how can Americans be contented when the people they elected to represent them only represent corporations? 

This is what they rejected:  a guarantee of preschool for all US children aged three and four; 2 years of free community college; expanded Medicare services to cover vision, hearing and dental health needs; removal of certain income and health limitations to allow more low-income families to qualify for the Medicaid; increasing the child tax credit from $2,000 to $3,000 for children ages six and older; the new tax credit for children under the age of six would be $3,600. Poverty experts claim it would cut child poverty in half, lift 5 million children out of poverty, and provide paid family leave of up to 3 months.  Invest in the production, preservation and retrofitting of more than a million affordable rental housing units and 500,000 homes for low- and middle-income aspiring homebuyers, as well as increase rental assistance agreements.  

In a country where the U.S. Census Bureau Reports that 34 million (10.5 percent) Americans are considered impoverished, and a Pew Research Center reports that the middle class has been shrinking for the past 40 years, it is obvious that these lawmakers are in Congress to increase their net worth, serve corporations and the super-rich.  Interestingly, Americans are very confused about their class standing: doctors and lawyers, welders, waiters, almost everyone thinks they are middle class.  What’s certain, is that for the past 40 years, earnings have been stagnant or flat for many middle-class workers in America, while healthcare, education, and housing costs have been rising.

Republicans, who unanimously opposed the bill, and blasted it as too expensive and for its taxes on businesses should not be in Congress.  For them, it’s too expensive in the richest country on earth to lift people out of poverty, to have people live in housing rather than in tents under bridges, and educate American children so that America’s future would be assured. As far as taxes on business, Forbes estimates that 33 of the 100 largest U.S. companies could be subject to the 15 percent proposed corporate minimum tax and pay a total extra tax of $20 billion annually to the treasury.

Few investments could have a greater impact on inflation than affordable housing, and housing costs are a primary driver of rising inflation.  An Inflation Reduction Act that doesn’t address skyrocketing rents and dwindling housing supply leaves the lowest income renters and people experiencing homelessness to suffer needlessly.  But it’s extremely difficult or impossible to get any kind of bipartisan consensus to pass any kind of legislation in America, so Americans must settle for being able to live or survive in America. 

Although this legislation is lacking in many areas, passing this legislation would boost Biden’s and US credibility within the G-7, and members of the Organization for Economic Co-operation and Development (OECD). 

Since assuming the Presidency, Biden has been pressuring countries to join him in condemning and sanctioning Russia.  He convened a Summit for Democracy to help stop democratic backsliding and erosion of rights and freedoms worldwide.  He organized the Indo-Pacific Economic Framework (IPEF) in an attempt to engage participants in countering China’s increasing economic and political influence in that region.

These countries have been closely monitoring America’s slide to authoritarianism and the inability of Congress to pass meaningful legislation. This IRA legislation might increase Biden’s credibility and partially restore America’s leadership, since other countries can now believe that there is still a pathway for legislation to be adopted to back up America’s international commitments and America’s incessant need to force the G7 and other countries to adopt America’s interests as their own.  

The virtual Summit, to take place on December 9 and 10, will galvanize commitments and initiatives across three principal themes: defending against authoritarianism, fighting corruption, and promoting respect for human rights. The goal is to economically engage these participants so as to counter China’s increasing economic and political influence in the region.