Democrats will exacerbate already out of control inflation if they succeed in passing their trillion dollar tax-and-spend plan. Democrats are seeking to impose numerous inflationary policies like reckless spending, corporate tax hikes, and energy tax hikes.
Reports indicate that Senator Joe Manchin (D-W.V.) and Senate Majority Leader Chuck Schumer (D-NY) have resumed negotiations to pass trillions in taxes and spending, arguing it will help inflation. In fact, White House Council of Economic Advisers Chair Cecilia Rouse, said this week that “Build Back Better” is “smart economic policy right now.”
This could not be further from the truth.
The consumer price index increased by 8.6 percent on an annualized basis in May, according to the Bureau of Labor Statistics (BLS), setting yet another 40-year high for the sixth time under President Biden. In May alone, inflation increased by one percent. Inflation is now costing American households an extra $635 a month.
In January 2021, before Joe Biden took over the presidency, annual inflation was at a stable 1.4 percent. Just one year into Biden’s presidency, inflation has increased by more than six times. This was largely caused by the Administration’s cruel treatment towards American oil and gas companies and the Administration’s $1.9 trillion spending bill that paid people not to work and handed out cash to Americans who had never even lost their jobs.
Now, Biden and Congressional Democrats are looking to double down on their failed policies.
Democrats’ plan would spend recklessly, thus worsening inflation.
Democrats want to spend massive amounts of taxpayer dollars on climate initiatives, welfare programs, and supersizing the IRS.
The Left has proposed countless, lavish tax credits as part of their climate change agenda, including a $12,500 electric vehicle tax credit, a 30% refundable tax credit for electric bikes, and multi-billion-dollar grants and credits for the promotion of “environmental justice,” and the “green workforce.”
They have also proposed a radical expansion of welfare programs like “free” childcare, federal paid family leave, and converting the child tax credit (CTC) into a monthly refundable payment that goes to people regardless of whether they work.
Democrats are pushing to give the IRS $80 billion more in funding, enough to hire a whopping 87,000 new IRS agents. The funding included in this plan would lead to 1.2 million more annual IRS audits, about half of which would hit households making less than $75k.
These proposals could cost taxpayers trillions of dollars over the next decade.
The national debt and federal spending are already out of control. In 2020, the U.S. government spent over $6 trillion, while in 2021, the U.S. spent $6.82 trillion, or 30 percent of the economy. The U.S. now holds about $243,000 of debt per taxpayer and the CBO projects that U.S. interest costs will triple within the next decade, accounting for 12 percent of the entire federal budget.
In 2021, U.S. interest payments on its debt alone costed roughly $2,600 per household.
Out of control spending has contributed to inflation, with the federal government flooding the economy with so much money that demand is growing too fast for production to keep up. Democrats want to double down on these failed policies and enact progressive policies that further expand the size of the federal government.
Democrats’ corporate tax hikes will be passed on to consumers, making prices worse.
Democrats are pushing numerous tax increases on corporations that will only make inflation worse. President Biden has proposed raising the corporate income tax to 28 percent, a rate higher than Communist China. Democrats’ “Build Back Better” framework, which they now seek to revive, would also imposes a 15 percent domestic corporate minimum tax on “book income” as well as a 15 percent global minimum tax on American businesses operating overseas.
These tax hikes will be passed on to consumers through higher prices, as if rampant inflation wasn’t painful enough. According to a 2020 National Bureau of Economic Research paper, 31 percent of the corporate tax rate is borne by consumers through higher prices of goods and services.
By an 81 to 19 margin, voters believe raising taxes on corporations will increase the cost of goods and services, according to a new poll conducted by HarrisX.
Energy tax hikes will exacerbate inflation, as energy prices are already a primary driver of rising costs.
The price of energy is out of control – the national average gas price is $4.955, twice the amount it was when Biden took office. Energy prices have increased by 34.6 percent in the past 12 months while gasoline has increased by 48.7 percent in the past 12 months.
Virtually every economic sector is affected by high energy prices, while families are seeing tighter budgets.
President Biden came into office and immediately canceled vital energy projects, prevented new drilling leases, and threatened new tax hikes on American energy.
Still, Democrats would cripple American energy further, thus crippling the U.S. economy further in the process. Their BBB plan includes an $8 billion energy tax on natural gas production and a $13 billion energy tax on crude oil. Other Democrats’ have proposed countless other taxes on American energy. Sen. Elizabeth Warren (D-Mass.) along with Sen. Sheldon Whitehouse (D-R.I.) have proposed a “windfall profits” tax on American oil production. This would require oil companies that produce or import at least 300,000 barrels of oil per day to pay a per-barrel tax equal to 50% of the difference between the current price of a barrel and the average price from the years 2015 to 2019. Biden’s fiscal year 2023 budget proposal included 11 tax hikes on the oil and gas industry.
These taxes will be passed on to consumers in the form of higher energy prices, but also higher prices for all consumer goods.