How the Inflation Reduction Act fails
The Inflation Reduction Act of 2022 (IRA), signed by President Biden, is now law. This act attempts to address growing concerns with U.S. inflation currently hovering around 8% to 9%; however, it does so in name alone without solving the underlying causes of inflation.
The act’s approach addresses some of the sting of inflation for some individuals, select industries, and a few large corporations. Primarily, the IRA does more to help a handful of medical, pharmaceutical, health insurance, solar manufacturing, and climate and environmental companies, then it does to help the economy.
The Democratic Party (DNC) within the Senate has praised several vital points they believe they are accomplishing by signing the “Inflation Reduction Act.” While the bill itself champions anything but inflation, the IRA goes through a slew of industries to subsidize and propagate artificial markets. At the same time, the IRA also provides a litany of industries the government wishes to tax and control.
The IRA includes: increasing the hiring of and monitoring by the IRS; supports multiple counts of blatant wealth redistribution schemes; subsidizing solar energy with a 30% tax credit; tax credits of up to $7,000 towards electric vehicles; providing additional funding to various federal programs unrelated to inflation; explicitly expanding presidential powers and the financing of their arbitrary whims.
On top of that, there is a push to enlarge the range and scope of U.S. hegemony through various titles covering environmental and climate laws; limiting prices yet also funding other programs to the same companies that experience losses; extending failing health programs, and funding of said programs, such as Obama’s Affordable Care Act or the U.S.’ Medicare system. The legislation has many more special carve-outs and perverse incentives, but you get the idea.
Surprisingly, many so-called conservatives and liberty-minded individuals have been suggesting the IRA will have an insignificant impact on inflation. Still, they profess that there will be some positive impact on inflation. I believe this is short-sighted, as it only looks at the immediate effects as opposed to the long-term known and unknown influences this act will have. By having governments dictate resources and their use, control markets to the point of totally hampering them, propagate and sustain markets artificially, continue failing government programs, extend executive and presidential powers, and generate redistribution schemes for corporate-government cronies, there is no telling what this will do to inflation and costs. In fact, by establishing more middlemen and false demand, there will more than likely be further funding and support for the newly created sectors, thus raising prices and inflation.
Not forgetting that the current electrical grid in the U.S. is predominantly powered by coal (which releases significant amounts of CO2), and it cannot sustain a significant increase in electric vehicle charging, so people will be pressured into solar energy solutions as well as opening the conversation for nuclear energy (which does not release significant amounts of CO2).
With the political demand to go “green” while putting an array of regulations on CO2 emissions and the need to keep production high, the best solution is to choose these CO2-alternative options, i.e., solar and nuclear. This suggests more demand will be created, and these will spark further costs, predictably prompting more regulation, ushering in more artificial demands, and ultimately driving higher inflation.
Overall, the Inflation Reduction Act does not address inflation. It merely satisfies some of the burden of inflation for groups and individuals for a short-term fix. At the same time, it disperses the costs to more people tending towards higher inflation in the long term. The Inflation Reduction Act is a grand-scale redistribution scheme that robs Peter to pay Paul. The signed bill does more to create voters at the expense of all taxpayers and the sacrifice of the U.S. dollar through monetary inflation instead of working towards reducing any inflation.
Joshua D. Glawson works in technology and currently resides in California.