Stealing From the Future

“If you think healthcare is expensive now, just wait till it’s free.”
–P.J. O’Rourke

September 1, 2022

Last week we talked a little about the Inflation Reduction Act. Specifically how it’s not likely to actually reduce inflation because it makes a huge push towards the green energy industry via some hefty subsidies (giveaways). Among other things…

The bill, dubbed the Inflation Reduction Act by its authors, proposes $369 billion over the next decade in energy and climate spending, including tax credits expected to make it much less expensive to deploy wind and solar farms…  

In other words, right now it’s much too expensive to deploy wind and solar farms. “Too expensive” — in economic terms — basically means the product in question doesn’t create an acceptable value level yet — i.e if it actually made people’s lives that much better, there’d be a market beating a path to the door of everything green.

But economics has never stopped the government. They keep finding new ways to hand out free money to further devalue our economic future.

It’s All They Know How To Do…

There are all kinds of reasons the government’s giveaway addiction is a bad thing.

It’s definitely inflationary — that’s a given.

It distorts markets. You can see that for yourself looking at the cost of higher education over the past 40 years. The government’s goal in extending “financial support” was to make college affordable. Now nobody can afford it! 

College Tuition and Fees

Source: US Bureau of Labor Statistics

And, no matter what they say, they always… ALWAYS sink our economy further into debt.

Now the folks who have authored the IRA swear that’s not true. That this inflation fighting bill is actually going to reduce the deficit…

The initial measure, according to numbers released by Senate Democrats, would raise a total of $739 billion in revenue, and spend a total of $433 billion. It would reduce the budget deficit by roughly $300 billion over a decade.

I don’t mean to be cynical, but let me ask you…

When was the last time Congress passed some legislation that didn’t promise to pay for itself? Either with some kind of additional fund raising (i.e. taxes) in the bill or on the back of some growth based payoff down the road?

If you said, “NEVER!” congratulations… you win.

Decades of “Paid For” Spending Has Brought Us Here…

Take a look at a couple charts…

US Government Spending

Source: Tradingeconomics.com

US Budget Deficit (Billions of Dollars)

Source: Tradingeconomics.com

US Public Debt

Source: Tradingeconomics.com

All the payback promises in all the legislation they’ve passed over all the years… And yet somehow our government has STILL managed to amass a $30 trillion tab. 

Which, of course, keeps draining real growth potential from our future. 

But Here’s the Kicker

This latest scam legislation by the government is one that promises to slay inflation while also reducing greenhouse gasses.

A preliminary analysis by Rhodium Group, an independent research firm, shows the proposal could put the U.S. on track to reduce greenhouse-gas emissions 31% to 44% below 2005 levels by 2030. That is an improvement from current policy that puts the country on track to reduce emissions by only 24% to 35%, the firm says.

CO2 Emissions

Source: Tradingeconomics.com

Not a bad result — even without the Inflation Reduction Act.

Will the extra 8% we realize actually be worth the economic costs? 

Somehow I doubt it…

Make the trend your friend,

Bob Byrne
Editor, Streetlight Daily