This week, after passing the United States Senate, President Biden signed the Inflation Reduction Act (IRA), a complex bill that adopted a wide variety of anti-inflation measures and did so by addressing some structural issues. In other words, the fight against the pandemic crisis and the great imbalance triggered by the war in Ukraine is achieved by future decisions moving towards greater equality in American society and a much more active fight against climate change.
Nobel laureate Joseph A. Stiglitz, professor at Columbia and chairman of the White House Council of Advisors, reminds us that there is a theoretical problem with the causes of current inflation, which, according to some, is the result of a crisis. demand and supply for others. The new rule applies in all cases: «For those concerned about excessive demand, there is over $300,000 million in deficit reduction. On the supply side, the bill will mobilize 369,000 million investments in energy security and decarbonisation. This will help lower the cost of energy, one of the main drivers of current price growth, and set the US on track to reduce carbon dioxide emissions by 40% (relative to 2005 levels) by 2030. The effects of climate change are devastating for everyone, especially fires, hurricanes, floods, etc. It is becoming more and more burdensome for the poorest strata of the population, who are more heavily damaged by its effects. Also, after such unfortunate memories emerged during the previous legislature, it is time for the US to take the lead in this matter.
All of these actions fit into a puzzle that could possibly be adapted like a glove to other countries (Spain?) because deficit reduction is intended to be addressed, first and foremost, through fiscal reform that addresses the inequality that is evident in the US: “Companies and the wealthiest households, Stiglitz says. They don’t pay their fair share of taxes. Not only does this erode trust in democracy, it is also economically inefficient. Tax revenues are necessary to finance basic public expenditures without creating inflationary deficits.
The stellar measure of the reform is the establishment of a minimum corporate tax of 15 percent, a measure in which the United States is participating in the mobilization of the international community on this issue, trying to prevent the winners of the competitive race from multinational corporations. As a result, “a minimum corporate tax of 15% will not only increase much-needed income; It will also help stop this inefficient global race.” It should be noted that this minimum tax recommended by the OECD has been accepted by 140 countries and has been suspended in the EU for the time being due to the blockade of Poland.
Biden, like a good democrat, wants to return the US to staunch multilateralism: “From climate change and food insecurity to the fight for democracy in Ukraine, there are many issues on which we need global cooperation. Like climate action, America’s minimum corporate tax is an important step in demonstrating that we can be good global citizens.”
First of all, in the current situation where we are faced with Russian blackmail, the West’s guide should be the dual prescription of reducing the public deficit and energy security (which will make energy cheaper). If an agreement is truly signed with Iran to reconcile this country with the international community, hydrocarbons may be necessary to mitigate Moscow’s gimmick and accelerate energy self-sufficiency under better conditions, even on the brink of recession.
It can be said that the USA has returned together with Biden in the face of policies rising on the whole global fabric, moving in the right direction and pointing to a common direction.
Barbara Dickson is a seasoned writer for “Social Bites”. She keeps readers informed on the latest news and trends, providing in-depth coverage and analysis on a variety of topics.