Congress takes a big step on the climate

Coloradans are probably wondering what to make of the Inflation Reduction Act. Is it a reckless tax and spend scheme that includes teeth in the form of 86,000 new IRS agents or is it a fiscally responsible way to save us from the worsening global warming crisis?

First, yes, the title is ridiculous — it isn’t likely to reduce inflation by any significant measure, although it will reduce health insurance costs for those buying their plans on the ACA marketplace with a continuation of increased subsidies.

A far more accurate title would be the Renewable Energy Incentives and Tax Reform Bill.

The bottom line is that the legislation will do some demonstrable good in helping the U. S. transition away from fossil fuels, and we don’t think you have to worry too much about the additional funding to the IRS … unless there’s something big in your tax record that you’d rather the IRS not know about, you scofflaws.

Also, the bill is paid for with a muchneeded 15% minimum corporate tax on companies with more than $ 1 billion in profit. What that means is even if some of America’s largest corporations have found ways to reduce their tax bill far below the 21% rate, they will still pay a minimum of 15% ( with a few caveats and deductions).

The bill net reduces the annual deficit by around $ 300 billion. A good chunk of that reduction comes from Medicare finally being empowered to negotiate drug prices.

Compare that reduction to the 2017 reconciliation bill, Trump’s Tax Cuts and Jobs Act, which cut the corporate tax rate from 35% to 21% and almost immediately caused a huge increase – from 3% of GDP in 2016 to 4.6% in 2019 — in the federal deficit.

The bill attempts to reduce carbon emissions to slow global warming with a threepronged approach: incentives for manufacturers of solar panels, wind turbines, and other green technologies; incentives for families to reduce their carbon footprints; and an excise tax ( read penalty or fine) on methane emissions.

U. S. Sen. John Hickenlooper, who helped keep the lines of negotiation open with the needed Democrat hold- out vote, Sen. Joe Manchin, says the bill will be a turning point.

“The goal of this bill was to use the power of the market to drive a transition. We are going to call this someday the great transition, and we are going to look back on 20212022 as the tipping point,” Hickenlooper said while he was in Denver Wednesday. “We are going to scale when you look at $ 100 billion as incentives for wind and solar. We’re going to attract large investment companies. We’re talking about huge amounts of clean energy at a lower cost.”

Hickenlooper’s optimism is contagious. He talks about a revival of bipartisanship in the Senate with such hope.

However, while we would like to trust that the $ 100 billion offered to green energy manufacturing efforts will be put to effective use by corporate America, we’ve seen too much fraud and graft with incentives to celebrate too enthusiastically. We still remember Obama’s $ 80 billion green energy investment, which suffered many failures, including the Solyndra scandal.

Whether or not the bill is a colossal waste of taxpayer money or if it ushers in a new green economy will depend in large part on who gets the incentives, how honest they are, and how successful their enterprise is in bringing down the cost and improving the technology of green energy.

In the end, we hope Coloradans view the bill as a fiscally responsible step in the right direction for a government that hasn’t been able to take a step in many years.