Tangle - Senate passes Democrats' "Inflation Reduction Act".

Episode Date: August 8, 2022

After a year of negotiations between Democrats' progressive wing and their more conservative flank, the Senate passed the Inflation Reduction Act  51-50, with Vice President Kamala Harris casting the tie-breaking vote. You can read today's podcast here.You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here.Our podcast is written by Isaac Saul and produced by Trevor Eichhorn. Music for the podcast was produced by Diet 75.Our newsletter is edited by Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle’s social media manager Magdalena Bokowa, who also created our logo.--- Send in a voice message: https://podcasters.spotify.com/pod/show/tanglenews/message Hosted on Acast. See acast.com/privacy for more information.

Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is Chinatown is streaming November 19th, only on Disney+. yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at flucellvax.ca.

From executive producer Isaac Saul, this is Tangle. Good morning, good afternoon, and good evening, and welcome to the Tangle podcast, the place where you get views from across the political spectrum, some independent thinking without all that hysterical nonsense you find everywhere else. I'm your host, Isaac Saul, and on today's episode, we are going to be talking about the Inflation Reduction Act. That's its name, so that's what we got to call it. We will discuss why that might not be a great name for it in a little bit.

Before we do, though, we'll jump in with our quick hits. First up, the Biden administration declared a public health emergency over monkeypox. More than 6,600 cases have been reported with zero deaths. cases have been reported with zero deaths. Number two, Alex Jones, the founder of InfoWars, was ordered to pay $4.1 million to the parents of children killed in the 2012 Sandy Hook school shooting. Number three, U.S. employers added 528,000 jobs in July and the unemployment rate fell to 3.5 percent. Number four, Israeli forces and the militant Iran-backed group Islamic Jihad continued to clash in the Gaza Strip, with Israel carrying out multiple airstrikes after the group launched 100 missiles into Israel. A tentative ceasefire was called yesterday. 5. Indiana Governor Eric Holcomb

signed a new law banning most abortions after 10 weeks, with exceptions for rape, incest, health risks to the mother, and lethal fetal abnormalities. But we do begin tonight with a major victory for President Biden and the Democrats, the Senate passage of a landmark $740 billion economic package. Vice President Harris was in the chamber casting that deciding vote. A sweeping bill to address a host of issues, including climate change and prescription drug costs, is now one step closer to becoming law today.

The Senate Democrats successfully pushed through the Inflation Reduction Act over the weekend. Today, after more than a year of hard work, the Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative feats of the 21st century. After a year of negotiations between Democrats' progressive wing and their more conservative flank, the Senate passed the Inflation Reduction Act by a 51-50 vote, with Vice President Kamala Harris casting the tie-breaking vote. The measure passed in the Senate using a special process called reconciliation, which allows bills to move forward with a simple majority rather than the 60 votes usually required. However, the process does mandate legislation be strictly related to the budget, which limits what can be done in such bills, and then it must undergo an open-ended amendment process. In order to win over every

Senate Democrat, the bill, which began as a $3.5 trillion social spending plan last year, had to be whittled down, amended, and adjusted until the very final vote to appease the entire caucus. Senators Joe Manchin, the Democrat from West Virginia, who agreed to the bill just last week, and Senator Kyrsten Sinema, the Democrat from Arizona, drove significant changes in the final hours. More on that in a minute. The bill received no Republican votes. In the end, the legislation will spend about $430 billion, including $369 billion on energy and climate initiatives and another $64 billion on federal subsidies for health insurance through the Affordable Care Act for another three years. It will raise new revenue through taxes on large and profitable corporations,

as well as increase IRS enforcement. So what is in the bill? First and primarily, the bill is the largest climate change legislation ever enacted. It invests hundreds of billions of dollars in new tax credits and subsidies to drive both consumers and domestic manufacturers toward electric vehicles and wind and solar energy. Many of these tax credits will go to accelerate manufacturing of solar panels, wind turbines, batteries, and critical mineral processing, including $30 billion for domestic manufacturing. Consumers can also receive subsidies for special windows, heat pumps, and other energy-efficient products, including $7,500 tax credits for buying electric vehicles. There are also new fees to penalize certain petroleum and natural gas facilities for excessive emissions of the greenhouse gas methane. On top of tax incentives and subsidies, the bill includes millions of dollars in climate resiliency funding for tribal governments and

Native Hawaiians and $60 billion to help disadvantage areas disproportionately impacted by pollution and climate warming. Rhodium Group, an independent research firm, estimates that these investments will cut U.S. greenhouse gas emissions by 31 to 44 percent from 2005 levels by 2030. Estimates based on current policy range from 24 to 35 percent. President Biden aimed to cut emissions 50 percent by 2030. Second, for the first time, the bill allows Medicare to negotiate the cost of as many as 10 drugs beginning in 2026. It also caps out-of-pocket drug costs for Medicare recipients at $2,000 a year beginning in 2025. It gives seniors access

to free vaccines and extends pandemic-era health care subsidies to purchase insurance through the Affordable Care Act for three more years. The New York Times called it, quote, the largest change to national health policy since the passage of the Affordable Care Act. Finally, to pay for the bill, Democrats included a new 15% corporate minimum tax on about 150 large profitable companies and a 1% excise tax on companies' stock buybacks, and they invested an additional $80 billion in the IRS to bulk up tax enforcement. While the bill does not raise taxes directly on middle-class Americans, higher business taxes can result in smaller profits to shareholders, lower wages to paid workers, or layoffs. Economists are deeply divided on how much corporate tax increases impact

shareholders, workers, and consumers. What's not in the bill and what got added late? So, the Senate passed the bill on Sunday afternoon after an all-night session where amendments were voted up and down. Over the 15 hours, Republicans attempted to amend the bill with immigration restrictions, changes to the tax policies, and energy provisions, none of which made it into the bill. However, at the request of Senator Sinema, Democrats did scale back a corporate minimum tax to shield companies operating under the umbrella of a single owner, which will protect private equity firms that own those companies. They also relaxed the

corporate tax measure, allowing companies to accelerate depreciation for tax purposes, then added the 1% excise tax on stock buybacks to make up for the lost revenue. Sinema also got a $4 billion addition to help fund the Bureau of Reclamation to tackle drought remediation in the West. Senator Manchin, for his part, insisted the package provide subsidies and credits for oil, gas, and coal as well as nuclear power, which it does. Democrats also agreed to take up legislation to streamline permitting for energy projects later this year, and Manchin fought to include tax credits for carbon capture technology and new oil drilling leases in Alaska's Cook Inlet and the Gulf of Mexico. Finally, the Senate parliamentarian, who rules on what can and cannot be included in the reconciliation process, ruled earlier this

week that a $35 price cap on the cost of insulin could not be included in the bill through reconciliation. That meant such a cap needed 60 votes to make it into the bill. On Sunday, seven Republicans, all of whom opposed the bill as a whole, joined Democrats to include the cap, but the rest of the caucus voted against it. That left the measure with just 57 votes failing to hit the 60-vote threshold, and it was stripped from the bill. A budget estimate said an earlier version of the bill would raise $740 billion and spend $430 billion over a decade. However, the last-minute amendments meant the Congressional Budget Office, the CBO, Congress' nonpartisan scorekeeper, couldn't produce a final analysis of the bill before it was passed.

Previously, the CBO said 90% of the promised deficit reduction would come after 2026. It also estimated that the bill would have a negligible impact on inflation in 2022, and inflation would be between 0.1% higher and 0.1% lower in 2023 due to the measure. A group of 230 economists warned that the bill could increase inflation, not reduce it. The Democratic-controlled House is expected to break its summer recess on Friday to clear the bill and send it to President Biden for his signature. A brief reminder, we covered the rough outlines of this bill last Monday when Senator Manchin announced he would vote for it. In a moment, you're going to hear some arguments from the right and the left on the bill and then my tape.

The Democratic-controlled House First up, we'll start with what the right is saying. The right is deeply critical of the bill, saying it doesn't do any of what it claims to do. Many argue the bill will make inflation worse and increase the prices of energy and health care. Some say the bill's limited benefits, like deficit reduction, won't be seen for years. In the Daily Caller, RNC co-chair Tommy Hicks said the bill was seriously deceptive and out of step with the economic reality of Americans. The Democrat-led bill would, without a doubt, raise taxes on Americans, Hicks wrote. According to the Joint Committee on Taxation, Americans making as little as $30,000 would pay more, with over half of the estimated new tax burden in 2023 paid by Americans making under $400,000. To help collect, the bill would double

the size of the IRS and further expand the already gargantuan federal government. Obviously, more taxes is the last thing 58% of Americans who are currently struggling to live paycheck to paycheck need, but it's also the last thing small businesses can stand right now. According to the National Association of Manufacturers, in 2023 alone, the bill would kill over 218,000 jobs, shrink the economy by $68 billion, and reduce workers' wages by over $17 billion. Crushing American manufacturing during a Democrat-created recession is a bad idea. Instead, our country needs to be building out our made-in-America infrastructure and creating jobs, not hollowing them out, he continued. The very title Democrats gave the bill, Inflation Reduction Act of 2022,

is a bold-faced lie and should be reason enough to view the bill as a scam. According to the Penn Wharton budget model, the bill would have no impact on inflation. In fact, it would very slightly increase inflation until 2024. The methane tax in the bill, for instance, would increase natural gas costs by 17 percent or $100 a year for the average American family. The Wall Street Journal editorial board said the bill would make drugs more expensive. Democrats who passed the Schumer-Mansion bill on Sunday voted to raise drug costs and health premiums for 220 million privately insured Americans, the board wrote. That isn't hyperbole. It's the inevitable economic result of Medicare drug price controls after the Senate parliamentarian this weekend struck the bill's inflation rebates.

Democrats know their Medicare take-it-or-leave-it drug negotiations, i.e. price controls, could have spillover effects on the commercial market. This was one argument they made to the Senate parliamentarian for keeping the bill's requirement that drug makers pay Medicare rebates if they raise prices in the commercial market higher than the rate of inflation. If drug makers must give Medicare steep discounts on certain drugs, they will compensate by increasing prices in the commercial market. As Connecticut Senator Chris Murphy told Politico, you can't untangle the private sector from the public sector. One doesn't work without the other. This is what has happened in healthcare more broadly, it added. Medicare has long paid hospitals and physicians below the cost of treating patients. To compensate, hospitals and physicians charge private insurance plans more. Private insurers, on average, pay about twice as much as Medicare for hospital services and 43% more to physicians.

It's worth noting that overall prescription drug prices have increased a mere 2.5% over the past year and have been flat over the past four thanks to generic competition. In National Review, Philip Klein criticized the bill for how long its benefits will take to be seen. A closer look at a fresh analysis of the bill from the Congressional Budget Office shows that over 90% of the promised deficit reduction in the bill would come after 2026, meaning it would do absolutely nothing to help reduce the current inflation problem, Klein wrote. The basic mechanics of Manchin-Schumer is that it spends hundreds of billions of dollars on green energy initiatives and Obamacare expansion, which is then offset by tax hikes, claim savings from having

Medicare fix drug prices, and increase IRS enforcement. Taken together, the CBO expects these measures will reduce deficits by about $305 billion, of which $204 billion would come through the expected boost in revenue from the enforcement provisions. But the way the bill is structured, the spending increases occur immediately while the claims savings take time to take effect, exactly the sort of shell games Manchin warned about last year when he blasted Democrats for not considering the permanent cost of expanding government programs, as this bill does with Obamacare, Klein said. Of the $305 billion in promised deficit savings over the next decade, CBO says just $21 billion will be coming over the next five years when we're in the midst of a historic inflation crisis, while the remaining 93% of the claims savings won't come until after 2026. Whatever else may be said about the bill, the idea that it will help address the current inflation problem is absurd.

Alright, that is it for what the right is saying, which brings us to what the left is saying. Based on Charles Yu's award-winning book, Interior Chinatown follows the story of Willis Wu, a background character trapped in a police procedural who dreams about a world beyond Chinatown. When he inadvertently becomes a witness to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases.

What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages 6 months and older, and it may be available for free in your province. Side effects and allergic reactions can occur, and 100% protection is not guaranteed. Learn more at FluCellVax.ca. 100% protection is not guaranteed. Learn more at flucellvax.ca. The left is supportive of the bill, though they criticize some last-minute changes and concede it may not reduce inflation. Others call out the direct help consumers will get

on top of long-standing climate change benefits. Some claim the bill will immediately help reduce health care costs in lower-income communities. E.J. Dion, Jr. said Senate Democrats and Biden struck a blow against cynicism and hopelessness. On a straight partisan vote, Democrats approved the largest investment in history to fight climate change, married to the first steps toward controlling prescription drug costs and helping Americans buy health insurance, Dion, Jr. wrote. The bill also raised corporate taxes and increased tax enforcement to begin what should be a sustained effort to reform the tax code by way of bringing revenue closer to long-term alignment with spending. Pause for a moment to consider what the world would look like if this bill, expected to pass the House later this week and go to

President Biden for his signature, had failed. Of course, a lot of good was negotiated away, including, to get Sinema's vote, a much-needed reform in how hedge fund millionaires and billionaires are taxed, he said. Senator Bernie Sanders was entirely right in insisting that this bill falls short of the hopes Biden and his party once had of constructing a sturdier platform of public support for families, children, and Americans without health coverage. The measure would have been better had it extended the poverty-fighting child tax credit, built a robust child care and paid leave system, and included money for the 2.2 million mostly low-income Americans who lack health coverage because they live in states that refuse to expand Medicaid under the Affordable

Care Act. But Senate rules are what they are, Democrats have only 50 votes to work with, and Republicans put up a solid wall of resistance. In CNN, Van Jones and Jesse Buendia wrote about the five ways the bill will help Americans. The bill includes tax credits for consumers to buy energy-efficient appliances, switch to clean vehicles, install rooftop solar panels, and improve their home's efficiency, all of which add up to lower utility costs. Government research has shown that energy efficiency improvements alone can reduce energy costs by $670 per year for the average household. It is well documented that low-income black and brown communities are impacted the most by the negative effects of pollution and climate change. That's why this bill drives $60 billion in investments to disadvantaged communities with grants and tax credits. To help more working families cut down on transportation costs, this legislation provides a $4,000 tax credit specifically for lower and middle-income

individuals to buy a used clean vehicle, and up to $7,500 in tax credits to get a new one off the lot. And there's also $1 billion for communities to invest in clean versions of heavy-duty vehicles like buses and garbage trucks. Even better, with up to $20 billion earmarked for building clean vehicle manufacturing facilities, this bill will create new, high-paying jobs that help even more working families, they said. Smart investments in new technologies also bring new jobs and opportunities, and we want to see those jobs in the communities that need them most. That's precisely what this bill will do by including $27 billion for a clean energy technology accelerator to turn new ideas into thriving businesses with a focus on disadvantaged communities.

In Vox, Ellen Ionese wrote about what the bill means for you. means for you. The IRA may not immediately push prices down to pre-COVID levels, and it's a far cry from Democrats' initial Build Back Better plan, but it represents some significant step forward for dealing with crushing health care costs and the existential threat of climate change, she said. In addition to cementing Medicare's new negotiating power, the bill also holds insurance subsidies for the Affordable Care Act through 2025, making health insurance more affordable for the millions of people who are insured through the health care marketplace. The initial subsidies were supposed to end this year, which would have meant increased premiums for the millions of people who qualified for free health insurance when Congress eliminated the income cap to qualify

for federal assistance-paying premiums. While much of the financial incentives for pursuing clean energy and climate change mitigation are geared toward companies, there are rebates and tax credits available for people buying clean energy sources like heat pumps and rooftop solar panels, Ionese added. These measures are aimed at making clean energy more available to more people, although solar panels, for example, cost about $11,000 in 2021 for a household setup. The legislation also offers a four thousand dollar tax credit for low and middle income drivers to buy used electric vehicles and up to seventy five hundred dollars for a new electric vehicle. Additionally, a study from the Rhodium Group

estimates that the bill's provisions will save households an average of one thousand twenty five dollars per year by 2030. The legislation sets out about one billion dollars in grants to improve energy efficiency and affordable housing. It also provides at least $60 billion in grants for projects like improving air quality monitoring, improving transportation, and deploying clean energy in poor and vulnerable communities, as well as enhancing climate resilience in public housing and for tribal and Native Hawaiian communities. All right, so that is it for the left and the right are saying, which brings us to my take. It's a remarkable turn of events for President Biden.

Of course, roughly half the country doesn't support Biden or Democrats, and his approval ratings are still below 40%. But if you're a member of the Democratic base, the last six weeks have been a pretty stunning turn of events. Biden signed a bipartisan $280 billion semiconductor chips bill to compete with China, a bipartisan expansion of veterans' benefits, the largest in 20 years, and a bipartisan gun control bill. In Kansas, Democrats got encouraging signs about the midterms with huge turnout and the rejection of an attempt to remove abortion rights from the state

constitution. Gas prices are down for 51 straight days, 86 cents off their record high. Friday's jobs report smashed expectations. Al-Qaeda leader Ayman al-Zawahiri was killed in Afghanistan, and there was a near-unanimous Senate vote to welcome Sweden and Finland to NATO, and now the Inflation Reduction Act is almost law. On top of all of that, there are some positive signs on inflation easing. Will this help Biden's approval rating? I have no idea. I think that depends largely on how effectively the administration can promote this run, and so far they've been pretty inept at it. But there is no doubt he is getting tangible wins on the agenda he campaigned on. The politics aside, the bill is decidedly a mixed bag to me. First, it is horribly named. The reality is that Democrats are passing a massive spending bill to

address climate change and health insurance, and they've proposed reasonable ways to cover the cost of it. It's expansive and yet fiscally responsible. That does not mean it will reduce inflation, and it definitely doesn't mean the deficit is coming down in the near term. Even liberal-friendly economists are skeptical or measured. I said last week that the jury was still out on the inflation measures, but now we've got basically all of the independent analysis that we're going to get, and each estimates that the inflation benefits will be negligible, either a little bit positive or a little bit negative, both in the near term and the long run. My biggest concern about the bill is that a huge chunk of the revenue raised, about $124 billion,

is purportedly going to come from increased IRS enforcement, enforcement that requires $80 billion of investment. But the image of a super IRS going after wealthy corporations and rich billionaires who skirt tax laws is not the reality. Instead, the IRS usually spends its money where it is most efficient, auditing the middle class and the most economically vulnerable taxpayers who can't afford teams of lawyers. According to the Washington Post, more than 4 in 10 of its audits in 2021 targeted recipients of the Earned Income Tax Credit, one of the country's main anti-poverty measures. The good news is that the CBO estimates the revenue from the IRS funding could be as high as $203 billion, far more than what Democrats initially thought, which is an

unusual occurrence in Congress. That's how they got to the $124 billion in revenue from $80 billion invested. We'll see how it plays out, but a big chunk of the plan relies on this revenue tool. Last week, I made the case for the climate change measures, and I stand by that case. If anything, it's even stronger now that several of the largest research groups who look at climate policy say it will drastically reduce emissions and lower costs in the long term. There will be hiccups and short-term adjustments, but climate change is an issue to me I feel strong enough about that addressing it, I support these short-term bumps. The healthcare measures are tougher to parse. You can find fairly convincing arguments that Medicare price caps will lower or raise costs. Perhaps the simple answer is that they will lower

costs for people on Medicare and raise them for everyone else. What may have been the biggest win, the insulin price cap, which would have applied across the board, was stripped from the bill by Republicans. That means we'll continue to operate in this absurdity, which leaves 4 out of 5 diabetics in the U.S. who rely on insulin going into debt. In the end, though, the bill was truly a compromised bill, at least among Democrats. Reporter Sahil Kapur helpfully annotated everything that hit the chopping block from this bill. It includes universal pre-K, child care money, elder care money, child tax credit money, housing money, community college, the EITC expansion, closing the Medicaid gap,

immigration, tax rate hikes, millionaire surtax, and ending the carried interest. It's impossible to see into the future, but what I feel confident in saying is that calling this bill the Inflation Reduction Act is silly. So is claiming that it is reckless spending and a tax hike on every American. None of those claims are true from leaders of either party. My best attempt at an honest, straightforward description? The bill is a climate change and healthcare bill with very clear, direct tax hikes on profitable corporations to offset the spending. It will almost certainly reduce emissions and, in the long term, bring more green energy onto the grid. Health insurance and drug prices for Medicare recipients and people on the Affordable Care Act will probably come down. They may go up for others depending on how private insurers react.

Some of the new revenue will come from increased IRS enforcement, which could hit middle and lower income people hardest. And of course, corporations are liable to pass on tax hikes with increased prices or layoffs, along with stock shares falling. All right, that is it for my take. We are skipping today's reader question because this podcast got very long due to the complexity of our main story. So we're going to jump to a story that matters. In Washington, D.C., city residents are facing a problem that other major cities may soon have to grapple with. Salt in the water. Paved streets, sidewalks, and parking lots that need de-icing require salt. Washing machines drain sodium-containing detergents into wastewater systems. Industrial firms discharge sodium-laden water. All of these sources contribute to what environmental

scientists call freshwater salinization syndrome, where local waterways and drinking water gain higher concentrations of sodium and chloride. This can impact both wildlife and the humans who consume the water, and urban areas like D.C. are particularly susceptible to its compounding effects. The Washington Post has the story, and there's a link to it in today's newsletter. All right, next up is our numbers section. The percentage of Americans who say they are currently living paycheck to paycheck is 58%. The percentage of people earning more than $250,000 per year who say they are living paycheck to paycheck is 30%. The estimated number of jobs lost due to the 15% minimum corporate book income tax, according to the Tax Foundation, is $23,000. The average cost

of setting up solar panels on a residential home is $16,000 to $21,000 as of 2021. The tax credit for installing residential solar panels under the IRA will be 30%. And last but not least, our have a nice day section. Australia's Great Barrier Reef is showing the highest coral cover it has seen in 36 years, according to a new report. The Australian Institute of Marine Sciences, AIMS, said coral cover in the northern region of the reef rose 36% in 2022, from 27% in 2021. In the central region, it rose from 33% in 2022, from 27% in 2021. After decades of damage, the report is an encouraging sign that preservation efforts might be working. While cover in the southern region of the reef is decreased and future bleaching events could reverse the growth, there was an encouraging sign for some environmentalists.

The Guardian has the story and there is a link to it in today's newsletter. All right everybody, that is it for today's podcast as always if you want to support our work please go to retangle.com membership and become a member that is the best way to help us keep this podcast going thank you we'll be back here same time tomorrow peace our newsletter is written by isaac saul Bailey Saul, Sean Brady, Ari Weitzman, and produced in conjunction with Tangle's social media manager, Magdalena Bokova, who also helped create our logo. The podcast is edited by Trevor Eichhorn, and music for the podcast was produced by Diet75. For more from Tangle, subscribe to our newsletter or check out our content archives at www.readtangle.com. We'll see you next time. to a crime, Willis begins to unravel a criminal web, his family's buried history, and what it

feels like to be in the spotlight. Interior Chinatown is streaming November 19th, only on Disney+. The flu remains a serious disease. Last season, over 102,000 influenza cases have been reported across Canada, which is nearly double the historic average of 52,000 cases. What can you do this flu season? Talk to your pharmacist or doctor about getting a flu shot. Consider FluCellVax Quad and help protect yourself from the flu. It's the first cell-based flu vaccine authorized in Canada for ages six months and older and it may be available for free in your province. Side effects and allergic reactions can occur and 100%