Mega-corporations and conglomerates have been reaping enormous returns on the suffering of seniors, working families and small businesses. For example, while gasoline prices soared to over $5 per gallon, Exxon/Mobil reported second-quarter 2022 net earnings of $17.9 billion, more than three times those of the previous year. Chevron profits likewise more than tripled to $11.6 billion.
THE INFLATION REDUCTION ACT OF 2022
The Inflation Reduction Act of 2022 addresses such issues. Among other things, the IRA imposes a corporate minimum tax of 15%, introduces a 1% fee on corporate stock buybacks, increases Internal Revenue Service enforcement capabilities, extends the tax limitation on excess losses for pass-through businesses, and reforms prescription drug pricing. The nonpartisan Congressional Budget Office estimates that the IRA will result
in a net deficit decrease, after adjustment for additional revenue, of around $300 billion through 2031.
Meanwhile, the task of attempting to reduce inflation continues to fall largely on the Federal Reserve Systaem. The Fed has already this year raised interest rates four times by a total of 2.25 basis points (2.25%), with another hike expected in September. Such rapid escalation hits working people much harder than corporate behemoths and the
super-rich, leading to increases in such things as interest on credit card debt, mortgages and car loans.
THE INFLATION DEBATE
While the Fed makes autonomous decisions, that does not preclude any additional role for Congress to address inflation. Some members have introduced legislation to institute strategic price controls in targeted industries like energy, pharmaceuticals and food. Such controls could buy time for IRA and other supply-side measures to kick in,
but suppressing prices can lead to shortages, inefficiencies and other undesirable consequences. Others have introduced bills to impose a windfall profits tax on the largest oil companies and to use the revenues for rebates back to overstressed consumers. While not now prepared to support such bills, I am keeping an open mind,
particularly as to the latter.
Finally, the inflation debate recently further heated up with the announcement by President Joe Biden of student loan debt forgiveness of up to $20,000. Rep. Vern Buchanan (R-FL16), immediately condemned Biden’s action as “reckless”. I too have reservations about the program. But from the fourth richest member of Congress – who
helped muscle through the Trump Tax Cuts for the wealthy and who just received more than $2.3 million of Paycheck Protection Program loan forgiveness -- this criticism seems ludicrous.