More musings on the Inflation Reduction Act; The FBI raid on Mar-a-Lago

I owe Chuck Schumer an apology. I wrote in May that he had been a terrible leader. At the time, things looked bad. Build Back Better had fallen apart and it did not look like any deal was going to happen. To make matters worse, he had wasted an entire month trying to push for a voting rights bill with no chance of passing. His focus seemed to be entirely on pleasing activists and donors. On top of that, it was clear that he was terrified of a primary challenge from the left even though it was not remotely a possibility. He looked clueless, inept and not up to the task of being majority leader.

How times have changed. On Tuesday, Biden signed the Inflation Reduction Act (IRA) into law. It came less than three weeks after Schumer announced a deal with Joe Manchin to pass legislation addressing climate change, health care and taxes. Not only has the IRA been signed into law, but so have several other pieces of legislation within that same time period. Schumer deserves great credit for salvaging a deal as well as shepherding through the other legislation that is now law. I wrote in my piece earlier this year that I did not think he should be the Democrats’ leader next year. I no longer feel that way and that is the tastiest crow I have ever eaten.

To make matters even more sweet, he and Manchin may have played the trick of the century on Mitch McConnell. McConnell had threatened to withhold Republican support for the CHIPS Act if Democrats pursued a reconciliation package (that is how the IRA was passed). In mid-July,  Manchin announced that he was not going to support any legislation dealing with climate change. It looked like that was the end of it. McConnell then supported the CHIPS Act and the Senate passed it with more than 60 votes. Then things got, shall we say, interesting.

Within a few hours after the Senate passed the CHIPS Act on July 27, a deal was announced between Schumer and Manchin that was the IRA. The yearlong love affair Republicans had with Manchin came to a screeching halt. I have no idea whether Manchin duped McConnell and if Schumer was in on it. The timing though is almost too perfect to be entirely coincidental. If the two of them really did play an elaborate trick on McConnell, someone needs to make a movie about it.

The speed in which the IRA was passed was incredible. From the time I landed in Denver on July 27 to the day before I flew back to Houston from Montrose on August 13, the IRA was announced and passed by the Senate and House. Quick passage was a necessity given the limited amount of time left on the congressional calendar. Still, it could have been dragged on longer through the August recess, which would only have made passage harder.

While Schumer deserves credit for salvaging a deal and getting it through the Senate, others are deserving of credit, too. As always, Nancy Pelosi did a great job in getting her caucus in line. Every single Democrat in the House voted for the IRA with no drama at all. Ron Wyden, chair of the Senate Finance Committee, also did an incredible job as did the committee staff in finding every last penny to get approved to be used in reconciliation. For the Senators who helped convince Manchin to support a deal, including Chris Coons and John Hickenlooper, they deserve credit, too. Obviously, Manchin deserves plenty of credit not just for coming around, but also for ensuring that the bill focused on a few things and did them well. I have written before in his defense and I think very few of the things I have written have aged as well as those pieces.

One thing that is different about the IRA from other major legislation passed (or that failed to pass) in recent years is that there has been no grassroots movement against it. There have been no large protests in the streets or protests at town halls against it. The previous four presidents would have killed to have that when they were trying to get legislation enacted. For those who do not remember or are not familiar, there were large protests and opposition to repealing the Affordable Care Act in 2017 and to passing it in 2010. There were also large protests and opposition to Bush’s attempt to partially privatize Social Security in 2005 and Clinton’s efforts at health care reform in 1993-94.

Even Republicans in Congress, aside from voting against the IRA, have said little about it. I have heard nothing from them about the health care provisions and almost nothing about the energy provisions. The only part of the IRA they have loudly complained about is the provision giving money to the IRS to enforce existing tax laws. The party’s media and entertainment apparatus seems to have little to no interest in the IRA and prefers to argue over 2020 or fight culture war battles.

I think there are several reasons for the lack of any passionate dislike of the IRA. One is that the Republican Party is still the party of Trump. Trump does not care about the IRA. I doubt he has any idea what it is. His interest is solely in relitigating 2020 and airing personal grievances. Much of the Republican voter base, especially primary voters, is completely on board with that. Arguing over the intricacies of energy, tax and health care policy is not their idea of fun.

Another reason for the lack of intensity against the IRA is that the Republican Party that is not interested in fighting over 2020 is instead mostly interested in fighting culture war battles. The IRA is purely economic and does not fit into any right-wing narratives about cultural liberal elites. The right-wing media and entertainment complex does not have any interest in policymaking and the IRA does not have any provisions that could be labeled as woke. Fox hosts could rail against it if they wanted to, but why talk about tax policy when you can talk about gender identity? The media and entertainment wing of the party cares about ratings above all else and nobody ever got high ratings from talking about energy tax credits.

A third reason is that rank-and-file Republican voters, unlike donors, are not government-hating ideologues. Many of them want to fight against perceived liberal elites, but not by cutting Medicare and Social Security. The agenda that was pushed for by the previous high priests of the Republican Party, i.e., Paul Ryanism, was extremely unpopular and had virtually no appeal outside of party elites. Trump showed that almost nobody actually cares about big government versus small government. I think most Republican voters would like the IRA, especially the health care provisions.

Not only is allowing Medicare to negotiate lower drug prices immensely popular, but it is also something Trump had campaigned on. Biden has effectively co-opted several issues that Trump had talked about and has now signed them into law. The CHIPS Act is a major piece of industrial policy designed to boost certain US industries, something Trump had talked about. The IRA hopes to rebuild domestic manufacturing, something Trump had promised to do. Trump also talked about infrastructure while Biden has signed the biggest infrastructure bill in decades.

One big question about the IRA is what effect it will actually have on inflation. Many seem to think it will be modest and its effects will not materialize for some time. How much of an impact it has on inflation will ultimately depend on many different assumptions that may or may not pan out. If I had to guess, I would think its impact on inflation is likely to be limited. The provision most likely to have an impact that people would readily notice, Medicare negotiating lower drug prices, does not take effect for several years.

In all honesty, I do not particularly care about its overall impact on inflation. I would not want it to make things immediately worse, but that is not going to happen. The IRA takes action on climate change and will help turbocharge clean energy of all kinds and that is what I care about more than anything else. Now that the private sector has some certainty about where things are headed, I expect them to begin spending money on clean energy initiatives encouraged by the IRA. That should create a self-sustaining cycle. The IRA is there to get the ball rolling. It is up to the private sector to keep things going.

Should Trump be prosecuted?

Let’s get a few things out the way. Nobody has any idea how this will end. Nobody knows whether Trump will be prosecuted or even if he can be. Nobody knows whether he committed a crime. We will find out soon enough exactly what the FBI was looking for, what happened leading up to the raid and what the aim of it was. It is definitely not normal for a former president’s residence to be the subject of an FBI raid. Then again, no former president is even in the same galaxy as Trump when it comes to bad and potentially criminal behavior.  We know very little right now and it is irresponsible to speculate any further. There is no harm in waiting just a little bit before opining. 

My position on whether Trump should be prosecuted has been the same since 2017. It is very simple: if he committed a crime, then he should be held accountable like everyone else. If he did not commit a crime, then he should not be. He is entitled to the presumption of innocence, something he would happily deny anyone else, but he is not entitled to the benefit of the doubt. One of his lawyers has already lied about what he stashed away at Mar-a-Lago. Unless it is obviously true, my default assumption is that anything he or anyone associated with him says is a lie.

There has been a debate as to whether it would be wise to prosecute him if he did break the law. Some have argued that he should not be prosecuted even if he did. That is not because those arguing it think a president is above the law, but because of what it would do to the country. The worry is that a large slice of the country will see his being prosecuted as illegitimate and may resort to violence. There could be another January 6 or worse. There could be violence all over the country. Trump would certainly say the he is being persecuted and would probably encourage violence.

I certainly share that worry. Trump already incited an insurrection and I do not think anything is beneath him. There is no telling what he would or could do if he was potentially looking at prison time. If he was the Republican nominee for president in 2024 while also on trial that would be a nightmare and what would happen if he won? While I share those concerns and worry about what a prosecution of a former president could unleash, I could not disagree more with the idea that he should never be prosecuted.

Just think of the incentive that is creating. A precedent would be established that a president or former president can do whatever they please. In the case of Trump, it will have been established that a former president’s supporters can threaten violence and that will be rewarded. That is not rule of law, that is rule by mob. Having been given blanket immunity from accountability, future presidents could do anything they wanted. The only limit would be their imagination. With Trump, we were lucky that he was so inept that he could not even rob a lemonade stand. We will probably not be so lucky with a future president.

It is impossible to talk about the raid at Mar-a-Lago without talking about the political ramifications of it. Anyone who says with any confidence that it will re-elect or doom Trump is clueless. As I said before, we have no idea where this will end up. If the FBI really has the goods on Trump and it is clear he broke the law, that is not going to help him get re-elected. No amount of galaxy brain hot takes can get around that fact.

Just think about it for one second. Think about swing voters living in the suburbs. Most of them probably voted for Biden in 2020, maybe Trump in 2016. They almost all voted for him despite his behavior and not because of it. The FBI raid almost certainly will remind them of his behavior. It defies all rationality to think that suddenly Joe/Jane Swing Voter in the Suburbs is going to decide that they now think his behavior is great and the FBI is part of some deep state conspiracy to get him.

That said, it almost certainly helps him with Republican primary voters, at least for now. Unless something major happens, the raid makes him more likely to be nominated in 2024, but that is because he was already the most likely nominee. As far as I can tell, virtually every Republican official in any capacity has railed against the raid and defended Trump. For all of the supposed desire of many Republicans to want Trump to go away, they have had no trouble bashing the raid as being part of some kind of conspiracy and defended him as a victim. Like everyone else, they have no idea where this will end up, but much of their base demands unquestioned loyalty to Trump and that is what they are giving. How non-Trump Republicans think blindly defending him and bashing the FBI is going to make him go away is beyond me.

I have to admit it has been a pretty good plot twist seeing some Republicans now calling for the FBI to be defunded. The writers of this season are really throwing some curve balls at us. It is almost as if all the talk about law and order was in bad faith. Who knew flying blue line flags was nothing more than virtue signaling?  

From the Democrats’ standpoint, anything that puts Trump in the news is a positive. The biggest weakness Democrats have is inflation and anything that distracts from it is welcome. If Trump being in the news gets Republican candidates in swing states to embrace him further and defend him, all the better. How big of an effect the raid will actually have on the midterms is unknown. That will largely depend on how long it stays in the news, what else comes out and which other shoes drop, if any.