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Speaker of the House Nancy Pelosi (D., Calif.) talks to reporters on Friday ahead of the vote on the so-called Inflation Reduction Act of 2022.
Photo:
Chip Somodevilla/Getty Images
An impending sudden shift of wealth from the productive economy into the political economy has Washingtonians giddy with anticipation. “Democrats pushed their flagship climate change and health care bill toward House passage Friday,” reports Alan Fram of the Associated Press. He adds:
Democrats were thirsty to declare victory on top-tier goals such as providing Congress’ largest ever investment in curbing carbon emissions,reining in pharmaceutical costs and taxing large companies and show they can wring accomplishments out of a frequently gridlocked Washington that disillusions many voters.
Rep.
Hakeem Jeffries,
D-N.Y., called the measure “another transformative bill brought to you by your friendly neighborhood Democratic Party.” Rep.
Pramila Jayapal,
D-Wash., a leading progressive, said Democrats would further bolster child care, housing and Medicare if they win larger majorities in Congress, but that “today, let’s celebrate this massive investment for the people.”
The taxpayers being forced to make this massive “investment” may be in no mood to celebrate. What’s troubling is not just the large amount of money that will be surging into Washington but the way some of it will be pried out of the hands of Americans. Recently a Journal editorial noted:
The pact between Sen. Joe Manchin and Majority Leader
Chuck Schumer
includes $80 billion in new funding for the tax man. Democrats claim this “investment” will yield more than $200 billion in revenue. That estimate is highly speculative, but if it’s anywhere close to right IRS auditors will soon be coming after tens of millions of Americans…
The bill earmarks $45.6 billion for “enforcement,” including “litigation,” “criminal investigations,” “investigative technology,” “digital asset monitoring” and a new fleet of tax-collector cars. The result will be far more audits, civil suits and criminal referrals.
The main targets will by necessity be the middle- and upper-middle class because that’s where the money is. The Joint Committee on Taxation, Congress’s official tax scorekeeper, says that from 78% to 90% of the money raised from under-reported income would likely come from those making less than $200,000 a year. Only 4% to 9% would come from those making more than $500,000.
The harm will go beyond the money the new tax collectors will be able to extract in settlements over tax disputes. Chris Edwards of the Cato Institute writes:
All those new IRS employees would undermine GDP rather than producing it. But that would be only part of the waste. Another cost would be the increased time and energy needed by taxpayers, lawyers, and accountants to defend against a more aggressive IRS.
The Inflation Reduction Act adds or expands a slew of special interest tax breaks and creates a parallel corporate tax structure based on financial statement income. Those misguided changes would also increase tax compliance costs on the private sector.
Citing a National Taxpayers Union estimate drawing on data from the federal Office of Management and Budget, Mr. Edwards reports that individuals and businesses currently spend 6.5 billion hours per year on federal tax paperwork—“equivalent to 3.6 million people working full‐time on this unproductive activity.” He adds that this “Tax Army” is 2½ times as large as our active-duty military. “Congress has created a tax code at war with growth and efficiency,” concludes Mr. Edwards.
Is destroying productivity really a cure for inflation?
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The Historic Raid for Documents
Alex Leary, Aruna Viswanatha and Sadie Gurman report:
FBI agents who searched former President
Donald Trump’s
Mar-a-Lago home Monday removed 11 sets of classified documents, including some marked as top secret and meant to be only available in special government facilities, according to documents reviewed by The Wall Street Journal.
The Federal Bureau of Investigation agents took around 20 boxes of items, binders of photos, a handwritten note and the executive grant of clemency for Mr. Trump’s ally
Roger Stone,
a list of items removed from the property shows. Also included in the list was information about the “President of France,” according to the three-page list. The list is contained in a seven-page document that also includes the warrant to search the premises which was granted by a federal magistrate judge in Florida.
The list includes references to one set of documents marked as “Various classified/TS/SCI documents,” an abbreviation that refers to top-secret/sensitive compartmented information. It also says agents collected four sets of top secret documents, three sets of secret documents, and three sets of confidential documents. The list didn’t provide any more details about the substance of the documents.
Mr. Trump’s lawyers argue that the former president used his authority to declassify the material before he left office.
As this column has been noting, presidential authority in this area is robust.
***
Changing Times
Last week investors learned more about the
New York Times Co.
’s exciting transition from a news organization into a lifestyle brand. But perhaps some investors would like the transition to occur even more quickly.
The Journal’s Stephen Nakrosis and Patience Haggin report:
Activist investor ValueAct Capital Partners LP has taken a 6.7% stake in New York Times Co. and intends to push the media company to more aggressively market subscriber-only content…
Among ValueAct’s plans for New York Times is convincing more readers to pay for content from new acquisitions such as sports-media company the Athletic, as well as subscriber favorites such as crosswords, games and recipes, a person familiar with the matter said…
Subscriptions to its non-news products have grown rapidly.
No precise data is available for non-subscriptions to its news products.
***
Obama and the Park
Conservationists in Chicago have waged a valiant campaign to try to prevent former President
Barack Obama
from building his presidential center in a historic park. And while Mr. Obama seems to have finally triumphed over his local opponents, the controversy may have dented the center’s financial potential. “Obama Foundation revenues down in 2021 amid pandemic, delays in approval for construction,” says a headline in the Chicago Tribune. A.D. Quig reports:
Former President Barack Obama’s foundation set a goal last summer of raising $1.6 billion between 2021 and 2026 to pay for construction of his presidential center and an endowment to sustain it for years to come.
The foundation’s total revenue for 2021 of $160 million, almost all of it from fundraising, only gets it 10% of the way there, according to the foundation’s annual report, which is traditionally released each August…
Fundraising in recent years was hindered both by the COVID-19 pandemic and the long delays in approvals for the presidential center’s construction. After a long court battle, the official groundbreaking for the three-building, 19-acre campus in Jackson Park, took place in September.
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Mr. Freeman will host “WSJ at Large” Friday at 7:30 p.m. EDT on the Fox Business Network. The program repeats at 9:30 a.m. and 11:00 a.m. EDT on Saturday and Sunday.
***
James Freeman is the co-author of “The Cost: Trump, China and American Revival.”
***
Follow James Freeman on Twitter.
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(Teresa Vozzo helps compile Best of the Web. Thanks to Wes Van Fleet.)
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