Doing the Math on the Inflation Reduction Act

Inflation Control Law Calculation

Shortly after entering the White House, President Biden announced a $4 trillion domestic spending plan. More than a year later, the part of that plan that seems most likely to pass — last week, Sen. Chuck Schumer of New York, the majority leader, and centrist Democrat West Virginia. As a result of the agreement made with state Senator Joe Manchin — it’s going to be pretty small.

The bill, the Inflation Reduction Act of 2022, includes spending at least $260 billion. That would be $326 billion in tax increases over 10 years. This is according to an analysis by the Joint Taxation Commission, a bipartisan parliamentary committee. Analyzed separately, release on friday According to the Wharton School, the bill will have little impact on GDP and will increase inflation slightly over the next two years, but will lead to lower prices after that.

Republicans have denounced the bill as a huge tax increase and a significant increase in government spending. But new estimates suggest it’s neither, reports Jim Tankersley of The Times.

Here’s what the bill says (All figures are over 10 years old, mostly from Joint Commission research):

• Tax credits for increasing electricity production from renewable or non-carbon sources. price: $98 billion.

• New and expanded tax credits for purchasing electric vehicles and improving home energy efficiency. price: $51 billion.

• Incentives and tax credits for companies developing biofuels and other renewable fuels for cars and aircraft. price: $19 billion.

• New and expanded subsidies to lower the cost of purchasing health insurance under the Affordable Medical Care Act. price: $70 billionaccording to Wharton’s analysis.

How to Raise Taxes and Lower Costs:

• In addition to the IRS tax increase, it imposes a new federal minimum income tax of 15% based on the profits companies report to investors. $313 billion.

• It closes the so-called carry interest tax loophole that allows private equity and hedge fund managers to pay less tax on some of their compensation. Tax increase: $13 billion.

• Allows the government to negotiate and in some cases set prices for prescription drugs for people enrolled in Medicare. Estimated Savings: $266 billionaccording to Wharton’s analysis.

Democrats had to make some concessions to secure the deal Likely to offend environmental activists, reports Brad Plummer and Lisa Friedman of The Times.

• The bill would require the Department of the Interior to sell leases for oil and gas exploration in the Gulf of Mexico and Alaska’s Cook Sound.

• Expand tax credits for carbon capture technologies that allow coal- or gas-fired power plants to continue to operate with lower emissions.

• Manchin also received promises from Democratic leaders to vote on another measure to speed up the energy infrastructure permitting process, which could smooth the way for projects like the West Virginia gas pipeline. has been secured.

“We just made a deal with Joe Manchin,” said Hawaii Democratic Senator Brian Schatz, who had called for a broader climate clause. “I don’t think anyone could have expected this to be the bill I would have written.”

this is what is happening

US warns China against hostile reaction to House Speaker Nancy Pelosi’s visit to Taiwan. American officials have become convinced that China could respond militarily in some way, but not an outright attack on Taiwan or an attempt to intercept Pelosi’s plane.Singapore yesterday Pelosi has not officially confirmed her plans to stay in Taiwan, but it is reported that she may arrive late Tuesday.

Stephen King testifies in Justice Department case today To prevent the acquisition of Simon & Schuster by Penguin Random House. In opening arguments in the lawsuit yesterday, government attorney John Reed argued that the deal would minimize competition for big advances on the long-awaited book. said the government’s focus on these advances was misplaced.

Uber reports record revenue and says more drivers than ever are using the Uber platform. The company exceeded analyst expectations, with revenue of $8 billion, up 105% year-over-year. In other earnings news, BP reported his $8.5 billion profit.

Wells Fargo revives hiring practices that led to fake interviews. Earlier this year, the policy was suspended after a former employee revealed his manager was interviewing non-white candidates for jobs that were already taken. We are making improvements such as increasing training for managers.

Twitter subpoena tea leaves

Days after Elon Musk filed a response to Twitter’s lawsuit aimed at forcing the completion of the company’s acquisition, Twitter sent numerous subpoenas to banks backing bids. . As well as people in the mask inner circle. The subpoena offers some hints about Twitter’s legal strategy and provides clues about Musk’s response to the lawsuit.

Here’s a summary of what happened on Musk’s side: Musk filed a response to Twitter’s lawsuit on Friday. It will be temporarily available to the public while he and Twitter work out which parts to edit. However, we do know that his claims center on the company’s public information about bots and fake accounts. (Twitter’s lawyers are asking what exactly is misleading.)

Now Twitter has sent out subpoenas to a long list of banks working with Musk., Morgan Stanley, Bank of America and Barclays. Banks are important players in trading. This means that his Twitter authority to sue Musk to force him to terminate the acquisition (under the deal’s “specific performance clause”) will be void if his debt financing fails. It’s for But that only works if the banks that signed the commitment letter walk away independently, not if Musk extorts them.

Twitter wants to know more about what banks think about bots. In particular, I would like to know the analysis the bank has done on Twitter’s bot stats and the research the bank has conducted at Musk’s direction. Twitter may be trying to figure out how much banks actually care about bots and whether Musk is encouraging them to do so.

And they want to know what happened to Bob Swan. Former Intel CEO Swan played a key role in closing the deal. To back up claims that Musk appeared to have stopped trying to complete the fundraising, Twitter claimed that Musk had fired Swan. His replacement on Musk’s team was Antonio Gracias, a longtime friend of Musk’s. Twitter is now seeking the bank to provide detailed documentation regarding Swan’s dismissal, as well as briefing materials provided to Gracias. Twitter may be trying to prove that Musk’s personnel move was another attempt to void the deal and that Gracias wasn’t actually involved.

“If she were to visit Taiwan this week against President Biden’s wishes, she would be doing something completely reckless, dangerous and irresponsible.”

— Thomas Friedman, Times Op-Ed columnist, On the risks of Pelosi visiting Taiwan.

cryptic hidden bomb

A grenade was embedded inside the $300 million SEC Ponzi bust unveiled yesterday. Alongside an international cast of apparent scammers lurked the existential threat that agencies might view crypto assets as securities and regulate them into oblivion.

A classic con in a futuristic package. According to the SEC, Forsurge, a company that ostensibly sells investors’ shares in crypto exchanges known as “smart contracts,” is actually a pyramid scheme that relies on constant recruitment for new inflows. did. The founder, who was last known to be in Russia, Indonesia and elsewhere, along with some members of a group called “Crypto Crusaders” and several US-based promoters. , we cannot circumvent federal securities laws by centralizing our schemes in smart contracts,” said Carolyn Welshhands of the institution’s crypto department. in a statement.

A question almost as old as cryptography. Offering Forsage is also against the law. Applicable to securities, the SEC claims: ” This allows of The big crypto question: What does the name contain … or rather, what is an investment contract? Legally speaking, the answer lies in the test articulated by the Supreme Court. A mid-20th century case involving Florida’s orange groveswhich many industry insiders say is outdated.

Coinbase petitioned for new rulesIts policy chief Faryar Shirzad argued last month: blog post On petitioning the SEC that past rule drafters failed to anticipate cryptocurrencies and that “securities laws are therefore ill-suited to govern digital assets.” That same day, coincidentally, Coinbase claims, the SEC and DOJ indicted a former Coinbase employee for misusing confidential information to profit from an exchange listing. The SEC has characterized some of the assets as securities, but Coinbase’s chief legal officer has refuted this notion. post “Coinbase does not list any securities. Reportedly facing SEC investigation About how to characterize some asset listings.

Elsewhere in crypto: Meet Bitcoin Maxis. They are hardcore bitcoin evangelists who believe the original cryptocurrency is different from the volatile crypto projects that have plunged the market. David Yaffe-Bellany of The Times reports:.

speed lead

bargain

policy

• Amazon Hired Senate Officials Key to Technology Draft antitrust law. (politics)

• The FTC has settled a $62 million false advertising lawsuit with property listing site Opendoor. (NYT)

best of the rest

David F. Gallagher Contributed to today’s dealbook.

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