By M.D. Kittle
MADISON — The so-called Inflation Reduction Act signed into law Tuesday by Spender-in-Chief Joe Biden won’t reduce inflation, but it will reduce manufacturing jobs, according to the state’s largest chamber of commerce and manufacturers’ association.
Biden and his pals in the mainstream media have reworked the talking points of the bill, ditching the Inflation Reduction language after scores of prominent economists predicted it will do no such thing. Upon Biden’s signature, The Washington Post described it as a “sweeping bill to tackle climate change and lower health care costs.”
However you slice it, the $750 billion spending package will hit manufacturers and middle-income Americans particularly hard, said Scott Manley, senior vice president of Government Relations for Wisconsin Manufacturers & Commerce.
“It will do several things, none of which are good,” Manley said.
The package includes a 15% minimum tax on corporations, raising taxes on U.S. businesses by hundreds of billions of dollars in a sagging economy bruised by recession, historic high inflation and lingering supply chain woes. Manley said U.S. manufacturers will be harder hit by a factor of two to three times compared to other sectors in the economy.
In the words of former Vice President Joe Biden, that’s a big (expletive) deal for Wisconsin because the Badger State is more manufacturing-intensive than others. Per capita, Wisconsin employs more people in manufacturing than any other state. Manufacturers in Wisconsin account for nearly 20% of the total output in the state, employing some 16% of the workforce, according to the National Association of Manufactures. Total output from manufacturing was $63.31 billion in 2018.
“The old axiom of macroeconomics is, if you want less of something, tax it,” Manley said. “If you want to tax manufacturing, that will mean less manufacturing workers.”
Make no mistake, Biden and his liberal allies want to tax manufacturing. And they’re hellbent on putting producers of the most reliable and affordable forms of energy out of business.
The “Inflation Reduction Act”, according to estimates, would hike taxes by north of $1 billion on coal production and $6.5 billion natural gas. Who’s going to ultimately pay for those increased costs? Consumers — homeowners and businesses.
“Given more than three-quarters of Wisconsin’s energy generation comes from coal and natural gas, this would result in higher prices for Wisconsin ratepayers,” states a letter from WMC CEO and President Kurt Bauer to Wisconsin’s congressional delegation.
Biden celebrated the “victory” Tuesday afternoon, coming back early from his vacation with troubled son Hunter to sign the legislation.
“With this bill, the American people won and the special interests lost,” the president said.
The package dumps $370 billion on radical climate change initiatives, including all kinds of incentives for highly subsidized green team pals. Fat cats in solar, wind and other renewables get rich while taxpayers pick up the bill — in so many ways.
As Manley notes, the spending package comes with rebates and tax credits for those who purchase electric vehicles, but the rising costs of production will only add to the already hefty price tags of EVs. An estimate from the Congressional Budget Office forecasts 11,000 new EVs will receive tax credits in 2023 assuming $7,500 per vehicle. The average price of a new electric vehicle is in excess of $66,000, according to Kelly Bluebook. Ford recently announced it’s jacking up the price of its cheapest all-electric truck by $7,000.
So much for those taxpayer-subsidized incentives.
Ford said the price hike is the direct result in the rise of materials costs.
The big winner from the big spending bill is China. The economic super power dominates the critical minerals market. It produces 40% of the world’s copper, nearly 60% of all lithium, 73% of cobalt and the vast majority of magnesium. These are the components that make tech and clean energy run.
“It’s really a lifeline to China,” Manley said. “They’re struggling with a population crisis thanks to their misguided one child policy, they’ve got problems related to the world real estate market, and all kinds of economic problems. Now, congress and the president just threw them a lifeline. To have control over these critical minerals is going to be wonderfully profitable for China.”
While Biden and Democrats are taking a victory lap, Americans are still struggling with an 8.5% inflation rate, gas prices much higher than when Biden took office, and declining confidence in an economy in recession.
Manley said the Inflation Reduction Act, with all of its newly printed money, will make life harder for most Americans. And they will take it out on the left at the polls in November.
“Voters are angry right now, largely because of difficult economic conditions persisting,” he said. “I don’t see this legislation doing anything to change that dynamic. It’s more likely than not to make it worse.”