Good afternoon from Capitol Hill. As of Saturday, President Biden is in quarantine after testing positive for COVID-19 – again. Biden has been vaccinated four times and has a so-called “rebound” case after taking the Pfizer antiviral, Paxlovid. The White House reports that he has no symptoms.
Down the street, the House is in recess. The Senate, however, remains in session, preparing to process the Schumer-Manchin tax and climate reconciliation deal that took DC by surprise late last week, largely because Republican minority leader Mitch McConnell had threatened to block the $280 billion CHIPS bill if a Democrat-led reconciliation bill remained on the horizon. (The Senate’s reconciliation procedure is privileged, allowing it to pass with a simple majority instead of being subject to a filibuster, which requires 60 votes to break.)
Apparently presuming reconciliation was dead, 17 Senate Republicans, including McConnell, voted to pass the CHIPS bill last week. Hours later, Manchin and Schumer revealed they had struck a deal on a major reconciliation package including significant tax changes, major climate provisions, a restructuring of how Medicare negotiates drug prices – and money for 80,000 new IRS agents, to boot.
As Sen. John Kennedy (R-La.) said of the debacle:
“We got our a** kicked. It’s just that simple. Looks to me like we got rinky-doo’d. That’s a Louisiana word for ‘screwed.’ And we got our a** kicked. That’s the way my people back home see it.”
While the package is still undergoing review from the Senate’s parliamentarian, it’s worth taking a look at the tax overhauls, which appear to be far more significant than Democrats, including Joe Manchin, are acknowledging. Manchin, in particular, continues to claim that the bill will reduce inflation.
But the number crunchers say otherwise. The Wall Street Journal editorial board provided the following analysis this morning:
The Penn Wharton Budget Model, which Sen. Manchin has been known to watch, examined the details of Schumer-Manchin and found that it doesn’t contain any net deficit reduction until 2027.
“The impact on inflation is statistically indistinguishable from zero” through 2031, say the Penn Wharton modelers. We don’t agree with those who think deficit reduction leads in a straight line to lower inflation, but that’s what the Democrats claim for their bill. If the first deficit reduction doesn’t come for five years, what’s the help on inflation today?…
Evidence is emerging that the new Schumer-Manchin 15% minimum tax on corporate-book income is especially harmful to U.S. manufacturing firms. An analysis by Congress’s Joint Committee on Taxation (JCT), which is hardly a nest of supply-siders, found that 49.7% of the tax would hit U.S. manufacturers.
The book-income minimum tax would hit the accelerated depreciation in the tax code that lets businesses write off investment in, say, new factories. Wholesale trade (9.3%), retail trade (4.9%) and information (11.5%) companies would get off relatively easy by comparison…
An analysis by the National Association of Manufacturers says the [minimum book] tax in 2023 alone will reduce real GDP by $68.5 billion and cut labor income by $17.1 billion. One well-known economic truth is that corporations don’t really pay taxes. They are essentially tax collectors, as the corporate tax rate ultimately falls on some combination of workers, shareholders and customers. Raise the corporate tax rate, and you’re cutting wages and salaries for workers.
But most importantly:
The JCT finds that average tax rates will increase for nearly every income category in 2023 under the bill.
Taxes will rise by $16.7 billion in 2023 on Americans earning less than $200,000 a year. Taxpayers earning between $200,000 and $500,000 will pay $14.1 billion more. This gives the lie to Democratic claims that no one earning under $400,000 will pay more taxes under the bill, a promise Mr. Biden also made in his campaign. The reality is that the Schumer-Manchin bill is a tax increase on nearly every American.
The Senate begins its reconciliation process either later this week or early next. The procedure includes a vote-a-rama, which is an opportunity for Republicans to offer as many amendments as they want, forcing Democrats to vote on all kinds of issues before they leave for August and the midterm campaign trail.
The Latest From Around The Conservative Movement
- Sen. Ted Cruz: 80,000 new IRS agents are like “asking for an infestation of locusts and lice.”
- Biden administration declares “open season” on religious hospital that object to gender transitions
- Pay attention to the Dutch farmer protests, because America is next
- FDA quietly adds warning of serious side effects to puberty blockers
One More Thing…
ICYMI, America First Legal has uncovered shocking evidence of the federal government’s collusion with Big Tech companies to censor the speech of Americans. I wrote about then-White House press secretary Jen Psaki’s admission last July that the White House was flagging posts for Facebook to remove. The documents and communications obtained by AFL confirm what many of us have long suspected: that the federal government and the Big Tech companies often have a hand-in-glove relationship to decide what you can – and can’t – say online. Much more from America First Legal here.