Last August, with great fanfare, Congress passed the Inflation Reduction Act. Apparently, the geniuses in Washington thought they could spend $700 billion of money we really don’t have (apart from printing it) and reduce the rate of increasing prices.
Year over year the inflation rate is 8.3 percent, although it slowed significantly in August. This had more to do with the actions of the Federal Reserve than it did the Inflation Reduction Act. By raising interest rates and slowing down the economy this will reduce demand. Reducing demand will lower prices. In other words, creating a recession will reduce inflation. Of course, the Fed would never have to do this if Congress just quit their deficit spending ways . . . like that will ever happen.
To get Sen. Kyrsten Sinema’s vote and gain passage of the Inflation Reduction Act (HB5376), the senator needed two things in the bill. One had to do with keeping the carried interest loophole which provides favorable tax treatment for private equity and hedge fund managers. Why Sinema insisted $4 billion for drought relief be added to Inflation Reduction Act (yahoo.com) More importantly for Arizona, she advocated for and received $4 billion in funding for drought relief. In other words, for one-half of one percent of the total spending package she voted for the bill. Text - H.R.5376 - 117th Congress (2021-2022): Inflation Reduction Act of 2022 | Congress.gov | Library of Congress
Sen. Kyrsten Sinema
Photo from US Senate website
Ok, “fabulous,” you say . . . except for one important point. The four billion in question goes to the Reclamation Fund. In addition to Arizona, the recipients of the Reclamation Fund include Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, Wyoming, Texas and, of course, California. Oh, and I almost forgot American Samoa, Guam, the Northern Mariana Islands and the Virgin Islands.
This $4 billion could conceivably be split up between 17 states and four territories! 43 USC 391: Establishment of "reclamation fund" (house.gov) Now I’m not sure the tropical locales of American Samoa, Guam, the Northern Mariana Island and the Virgin Islands need this money, or will get any of it, then again, never underestimate the ability of Congress to screw things up.
US Drought Monitor Map for week of September 27th: University of Nevada Las Vegas
Obviously, large sections of the country remain in drought. In addition to California, does that mean Texas, Oklahoma, Kansas, Nebraska and the rest of the wheat belt will come begging to Congress for part of that $4 billion? None of these states have had to give up the 800,000 acre-feet of water that Arizona has had to offer up and that 800,000 acre-foot offering is just the beginning!
For the first time farmers in California’s Imperial Valley along with a joint effort from Arizona’s Yuma County farmers have offered to reduce water consumption on 925,000 acres. By reducing water consumption by one acre-foot per acre this plan would provide about half of the minimum cutback proposed by the US Bureau of Reclamation. It would also allow farmers to keep farming while investing in creative conservation techniques. As of yet no other offer with hard numbers is on the table. This plan would cost $1.4 billion to pay farmers to fallow fields and fund conservation technologies. This amounts to slightly over one-third of the money the bill allocates. Congress could, however, simply fritter away the money with pork barrel projects spread out over several states and accomplish nothing in the process. Par for the course.
Spending $696 billion to get an additional $4 billion is the way our nation’s capitol works. Long ago, the dollar became the silage that feeds the pigs at the trough. Oink! Oink!
Nothing left in the trough!
Photo by Richard Humphrey