We have featured Sen. Joe Manchin of West Virginia in our editorial pages numerous times. We have admired his wisdom and political insight.
But this week, Sen. Manchin decided to support liberal Democrats in the most-serious case of betrayal in recent memory for reasons that are hard to understand. If both chambers ultimately pass the deal, it will mean $369 billion in additional money for climate and energy programs and raising $451 billion in new taxes.
The proposal is full of the usual Congressional accounting gimmicks. If we have seen/learned one thing over the years, it is that Washington will dutifully fulfill its obligations, nearly instantly, on the spending side, with future Congresses authorizing additional funds. The green energy industry and K-Street lobbyists, supported by environmental organizations, are lusting for the free cash to spend on "emergency" pie-in-the-sky climate measures. If you think Solyndra was bad, the new proposal sets aside $30 billion in production tax credits for solar panels, wind turbines, and batteries. Why does the industry need cash incentives to build clean technology manufacturing facilities? Isn't it in their best interest to do so independently and avoid EPA penalties?
Some of the provisions amount to classic pork. Reminiscent of the "Cash for Clunkers" boondoggle during the Obama administration, when the government paid car owners generous incentives to buy new cars when these citizens had planned to buy them anyway, the Manchin deal on Electric Vehicles is a terrible waste of federal money.
"Means-tested" families who earn up to $300,000 a year will become eligible to receive a whopping $7,500 tax credit to buy new electric vehicles when the prices of such cars have already come down due to intense competition, despite chip shortages. Today, there's not a single major automobile manufacturer that does not sell EVs. General Motors lowered the Chevy Bolt's MSRP from $31,500 to $25,600, making the model cheaper than many gasoline models. Are we to believe that families need additional cash incentives to buy EVs when the administration's energy policies have raised gas prices at the pump to record levels and are driving customers to EV lots anyway?
The deal's revenue side will likely fall woefully short as the big companies, the main target of this proposal, will devise ingenious ways to avoid the 15% minimum taxation threshold. So much for the senator's claim that the deal will lower the budget deficit by $300 billion.
Were it not for the senator's opposition to Build Back Better in December, which argued for nearly $6 trillion in additional spending over the next ten years to address liberal priorities, our economy today would have been significantly worse off. The genius in his foresight then was not knowing if Russia would invade Ukraine - and the astounding consequences of the war, tilting parts of the world closer to famine and disease. Little did he know then that the West would unleash the toughest economic sanctions on Russia or ban Russian energy, both of which have played havoc on financial markets, not to mention entire countries. Sri Lanka has practically declared bankruptcy. Peru is fighting to stay relevant as a democracy as street protests consume the nation.
Sen. Manchin knew in December that too much spending would exacerbate the economy and took a principled stand to save the country. But, alas, he fell for the usual Washington high-stakes maneuvering when President Biden, Chuck Schumer, and Nancy Pelosi baited him with money for West Virginia, Robert Byrd style. For years, Sen. Manchin has advocated for the Mountain Valley Pipeline, which would transport Appalachian shale gas from West Virginia to Virginia. His wish was granted, and he caved.
We noted last week that Sen. Manchin did Americans a huge favor when he walked away from tax proposals championed by Treasury secretary Janet Yellen to create a global minimum tax of 15%. It looks like his opposition to the global minimum tax remains, and the proposal is dead. But, with Sen. Manchin, who knows? If another piece of candy is promised to West Virginia, would he also agree to that terrible idea?
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