Joe Biden signed it this week, the ‘Inflation Reduction Act‘. A milestone in his presidency, but one with a misleading name. Because the legislation is hardly about reducing the high inflation, which was 8.5 percent in July. According to the Congressional Budget Office, which makes economic estimates for Congress, the bill will have a negligible effect on currency depreciation.
In practice, this is a climate law (although it also contains other topics, such as reducing the government deficit and lower health care expenditure because Medicare can now negotiate the price of medicines). Congress is allocating an unprecedented $430 billion for climate investments. According to researchers the law can avoid 24 tons of emissions for every new ton it creates.
So why does the law refer to inflation in name? Simple: that is politically easier to sell, especially in an election year. American voters see their purchasing power eroded by high prices, and they blame their policymakers for it. It is therefore important for politicians to show decisiveness, or at least to suggest. Biden realizes this all too well. “I want every American to know that I take inflation very seriously,” the president said in May. “It’s my top domestic priority.”
De Volkskrant highlighted how difficult commander in chiefs have had in the past effectively combating high inflation (with a special mention to former President Gerald Ford’s Whip Inflation Now buttons, which were part of a grandly failed plan that economist Alan Greenspan found to be “unbelievable stupidity”).
Joe Manchin
In practice, that powerlessness makes little difference. High inflation affects all Americans, so as a politician you have to communicate with that. Now you can say that climate change also affects the entire population, but then you lose sight of the political reality that a significant part of Americans do not believe in it. Moreover, loss of purchasing power is a concern about the end of the month, while climate is about the end of the world. The latter takes longer to materialize, which makes it politically less interesting.
This was especially opportunistic for Joe Manchin. The West Virginia Democratic Senator (portrayed earlier in this paper by longtime America correspondent Michael Persson) refused to give his crucial support to a bill that was too reminiscent of climate policy. When Manchin talks about the Inflation Reduction Act, it is to emphasize that ‘reducing our national debt will lead to lower energy costs and less health care expenditure’. He does not want to know anything about the term ‘green deal’.
The reason for this is not far to seek. No senator has received more donations from the oil and coal sector than Manchin, which explains his longstanding opposition to curtailing coal-fired power plants and subsidies for electric cars. He must therefore not be pleased that the ‘inflation law’ includes incentives to phase out coal as an energy source, and that Americans will now receive $7,500 if they buy an electric car, or $4,000 for a second-hand one. According to Bloomberg, none other than Bill Gates behind Manchin’s twist, which is bound to be Fressen’s foundation for conspiracy theorists.
Now Manchin has sold his skin dearly. After all, he obtained quite a bit for his supporters, such as new permits for oil and gas exploration, and a bag of money for CO2 storage projects. For his effort he got from Biden the pen that the president had used to sign the legislation.
Dutch Participation Act
There are multiple examples in American history of legislation that disguises true intentions, sometimes in Orwellian proportions. The Clear Skies Act of 2002, for example, which is said to have watered down the Clean Air Act of 1970 (although the law was never passed). Or the Healthy Forest Initiative from 2003, which allowed timber companies to cut down more trees. In a study In 2003, lawyers Brian Christopher Jones and Randal Shareen concluded that some US legislation qualifies as misleading advertising, at least if competition watchdog FTC had something to say about it.
This kind of cosmetic is not reserved for the United States. The Netherlands can also benefit from it, a quick phone call with The Hague reporter Frank Hendrickx learns. He should not think long about examples. ‘A textbook example is the Participation Act of 2015. It was supposed to lead to a more participative society, which only sounds positive. But in practice it involved all kinds of cutbacks, such as in sheltered workshops for people at a distance from the labor market. Similarly, ‘more informal care’ was simply a saving on home care.’
Then there is the Higher Education Study Advance Act from 2014. An advance payment sounds nice, as if you already receive part of an amount that you will receive later. In reality, it was this law whereby the basic grant gave way to a loan system. ‘The cabinet has long tried to make the euphemistic ‘advance’ popular, but everyone was still talking about the loan system,’ says Hendrickx. “The law has resulted in many more indebted students graduating.”
A final example is the Nitrogen Approach Program (PAS) of the then CDA State Secretary Henk Bleker from 2015. With this ‘policy’, the government could promise to emit less nitrogen in the future, so that activities with nitrogen tax at the time of granting permits. could be compensated. Nitrogen on the bill − there was not much ‘approach’ to the nitrogen problem.
That had to take revenge, which it also did in 2019 when the Council of State drew a line through PAS. As a result, many housing and road projects had to be shut down. In that sense, the climate law-that-that-may-not-be-named also has to prove itself. As colleague Sterre Lindhout headlined in her analysis ‘Is the US climate plan going to turn the tide, or is it ‘a climate suicide package’? According to critics, the catch-up movement that the US has initiated is still too little, too late.