The Inflation Reduction Act—Another Case of Public Utilities Gone Private

Let me tell you a story about Chicago and its experience with a public utility gone private.

It was December 1, 2008, the first time the Chicago City Council heard that Mayor Richard Daley had struck a deal with Morgan Stanley to lease all of Chicago's parking meters for seventy-five years. A little over $1 billion was paid in a lump sum to the city of Chicago for seventy-five years' worth of parking meter revenue. A typical back-alley Daley move. Chicago is (and was) a grifter city and the mayor needed cash, as mayors always need cash.

One thousand million dollars. The Middle East nation of Abu Dhabi controlled the lease, Morgan Stanley controlled the commission. The commission of a crime, but that was nothing new to Chicago politics.

Before the sale, most Chicago parking was a relatively reasonable 25 cents per hour, no matter where in town you were. Within a week after the sale, parking at Chicago’s 36,000 meters jumped to at least $2 an hour, an eightfold increase. In some busier areas that jumps to $4.50, and the downtown Loop area can run as high as $7. The meters still feed on quarters. Try keeping 42 quarters in your pocket for a morning business meeting.

But that’s just Chicago. Let’s boondoggle our way nationwide

After pseudo-Democrat Joe Manchin destroyed Biden’s Build Back Better Act in December, 2021, one of the scraps left on the floor turned out to be the Inflation Reduction Act. We’ll get to that in a moment, but there are two things that can sserve up bad political outcomes, big-dictator leaders like Richard J. Daley in Chicago and small-dictator opportunists like Senator Joe Manchin.

The Joe Manchins in Congress play their self-serving games when neither party enjoys a solid majority and small minds dominate outcomes. Such was the case in the Senate prior to the 2022 mid-term elections, Manchin has a very small mind and his wealth is entirely tied to the coal industry. Anything remotely limiting coal stirs Joe’s glowing coals and Build Back Better depends upon renewables.

There is a method of negotiation that has become known as ‘the Chicago way.’ The Chicago way would have had Joe Manchin dragged off into an alley, broken both his legs with a baseball bat and propped him against a wall to re-negotiate. It’s an amazingly successful technique, but we no longer do things that way, even in Chicago.

So a robust Build Back Better became a limping, crippled Inflation Reduction Act

Even the name has the stench of compromise. Instead of creating jobs, building middle class wealth and saving our all-but-dead environment, we’re going to hang our heads and try to reduce inflation. Now there’s a flag no troops will march behind. $13 trillion to build suddenly became $738 billion to reduce. 1/17^th of what was needed and not a dime against West Virginia coal.

So, here’s where the money (supposedly) comes from

Over a period of 10 years, the law is estimated to raise revenue from the following sources:
$281 billion from negotiating down prescription drug prices (good luck with that).
$222 billion from a corporate minimum tax on companies earning more than one billion a year.
$181 billion from increased tax enforcement.
$74 billion from an excise tax on stock buybacks.
$53 billion from a 2-year extension of the limitation on excess business losses.

And here (drum-roll, please) is where it will go, during the same ten years

$391 billion to address domestic energy security and climate change, including funding for drought resiliency in western states (one wobbly step for man, one dereliction of hope for mankind).
$238 billion for deficit reduction (a meaningless shot in the dark to placate Manchin).
$64 billion to continue three more years expansion of the Affordable Care Act.
$80 billion increased funding for IRS modernization and increased tax enforcement.

$270 billion of the law's climate action investments are embedded in the federal tax code (whatever that means). As part of the overall $158 billion investment into clean energy, the law extended the solar investment tax credit for 10 years and invests $30 billion in nuclear power (some clean, some not so clean). It also invests $13 billion in electric vehicle incentives (which the market ought to take care of, without incentives). There’s $14 billion in home energy efficiency upgrades, $22 billion in home energy supply improvements, and $37 billion in advanced manufacturing. $20 billion goes to investments in climate-smart agriculture, more than $5 billion goes to revising remediation programs for those affected by discriminatory USDA lending practices, $5 billion goes to forest protection and urban heat island reductions, and nearly $3 billion goes to coastal habitat protection (?).

If you open the window, you can actually smell all that pork on the Webber

Companies will be incorporated, Senators will be called, dinners held, wine will flow, contracts negotiated, extras to those contracts approved, non-union wages offered and second homes in exotic locations purchased. A statue to Joe Manchin will no doubt be built in whatever and wherever the capitol of West Virginia is. Charleston, that’s it. I just looked it up.

Take just one item

Can you imagine in the wildest corners of your creative mind how thirty-seven thousand million dollars will be divvied up in the cumulative wet-dream that is ‘advanced manufacturing?’ Thirty-seven thousand million dollars will advance a whole lot of things (yachts and vacation homes come to mind), but advanced manufacturing is not likely to be one of them.

Oh hell, let’s take another one just for fun

Twenty thousand million dollars is earmarked for ‘climate smart agriculture.’
“Lookee here, Edna. Damned if this don’t beat all. The feds are gonna pay us to get this place climate smart.”
“They’re already payin’ us not to plant five hundred acres, ain’t they Wilt?”
“Yep, an’ the best way to go ‘climate smart’ would be to leave the whole three thousand acres fallow. They pay the same as when we were growin’ soybeans an’ now we can get paid for 2500 extra acres and move to Florida.”
“Can I have a swimmin’ pool. Wilt?”
“Honey, you can have a swimmin’ pool and a new Buick.”

The Congressional Budget Office estimated that the bill would have no statistically significant effect on inflation

But the late Mayor Richard J. Daley of Chicago would have loved it.