The Indefensible Republican Defense of the 2022 Inflation Reduction Act

By Paul H. Tice

As President Trump works with the Republican-controlled Congress to pass his big, beautiful tax bill, it is exposing some ugly truths about the policy conviction of certain GOP members.

Extending the lower tax brackets of the 2017 Tax Cuts and Jobs Act (TCJA) was already a challenge due to the razor-thin GOP margin in the House and the federal government’s unique budget math, which mandates spending cuts to offset the estimated $4.5 trillion “cost” of not raising tax rates over the next decade.

Complicating matters, several Republican Congressman from high-tax states have been publicly agitating since election day for the repeal of the state and local tax (SALT) deduction cap included in the TCJA, which would mean additional pay-fors must be found.

Now, a new fault line has developed with many of these same SALT Republicans over the 2022 Inflation Reduction Act (IRA), the deceptively named and structured climate legislation signed into law by President Biden.

In a public letter sent to the Chairman of the House Ways & Means Committee on March 9th, 21 Republican House members warned against repealing or reforming “current energy tax credits” as part of the reconciliation process. The letter does not mention the IRA by name, which is not surprising since no Republican—including the gang of 21 now defending it—voted in favor of the partisan climate law back in 2022.

In fact, Andrew Garbarino (NY-02), the ringleader of the breakaway Republican group, stated at the time of the IRA’s passage: “This bill is bad for Long Islanders and bad for the American people. Shame on Congressional Democrats for forcing through this irresponsible legislation to score a political win at the expense of American taxpayers.”

But that was before the free federal money started flowing.

Based on data compiled by E2, a climate advocacy group, approximately 62% of the $131 billion of clean energy projects announced since the passage of the IRA in August 2022 are located in Republican districts, along with the lion’s share of IRA energy tax credits and other subsidies dispensed to date. This is why 21 GOP members are now circling the wagons to protect the law ex post.  

Making matters worse, many of the clean energy projects now being defended by these Republican guards have not moved past the approval phase or even broken ground on construction, including many greenlighted prior to the passage of the IRA. Moreover, the list of corporate sponsors includes large public U.S. companies (such as Dominion Resources and General Motors) and foreign owners, neither of which need or deserve U.S. government handouts.

In the latter case, Representative Nick LaLota (NY-01) is now going to the mattresses for a $3.8 billion offshore Long Island wind project backed by Orsted, the Danish developer that recently walked away from two offshore New Jersey wind farms after not receiving all the financial subsidies that it demanded from the Garden State.

From a spending perspective, any latter-day Republican support for the IRA is wholly indefensible given what we now know about the workings of the controversial climate law. The headline number of $369 billion in IRA clean energy spending over ten years was highly misleading. The actual figure is much higher because of the national emissions test used to sunset the law’s myriad tax credits, which effectively creates an open-ended liability for the federal government.

Recent studies by both the Breakthrough Institute and the Cato Institute have estimated the true budgetary cost of the IRA at close to $1 trillion in its first decade and upwards of $4.7 trillion by the year 2050. Basically, the IRA is a ticking fiscal time bomb for the U.S. government.

Apart from being fiscally irresponsible, promoting the continued subsidization of wind, solar and battery storage projects only abets bad energy policy at the state level. Contrary to the Republican group’s claim, cutting clean energy tax credits will not “increase utility bills the very next day.” Rather, it will do the opposite. It will help to lower energy and electricity costs for American consumers by reversing ill-conceived net-zero grid targets in blue states such as California, New Jersey and New York.

And for all the rationalization that these Republican dissenters represent swing districts and, therefore, must strike a bipartisan pose, the majority of the 21 won their current seats by five percentage points or more in November 2024. This fact should help to steel up their collective spine for making the right legislative call to repeal all the IRA’s energy tax credits with immediate effect.

The sausage-making aspect of making law is never a pretty sight, especially when unprincipled Republicans try to use green pork to clog up the machinery works.

Mr. Tice is a senior fellow at the National Center for Energy Analytics and author of “The Race to Zero: How ESG Investing Will Crater the Global Financial System.”

This article was originally published by RealClearPolicy and made available via RealClearWire.