House Republicans are clashing over the fate of Inflation Reduction Act tax credits, which have led to over $130 billion in private investment announcements.
A letter signed by 38 Republican House of Representatives members voiced “the urgent need to fully repeal the Inflation Reduction Act.”
Passed in 2022, the Inflation Reduction Act (IRA) contains supply and demand-side tax credits for clean energy projects and manufacturing. Since its passage, over $130 billion in private investment has been announced, according to E2, which tracks clean energy manufacturing and project investment related to the IRA.
The letter refers to the IRA as the “green new scam.” It said the law burdens taxpayers, inflates energy costs and threatens the reliability of the U.S. power grid.
Economists estimate the IRA will cost about $1 trillion over the next 10 years, but economic benefits through 2050 are expected to exceed $5 trillion, said the Department of Treasury. Analysis by NERA Economic Consulting found that repeal of the IRA would drive home electricity bills 7% higher by 2026 and small business electricity bills by 10%.
The letter said other Republican members have voiced support for retaining wind and biofuel credits, carbon capture, and hydrogen subsidies or “protect solar and electric vehicle giveaways.”
“The longstanding Republican position has been to allow the market to determine energy production,” said the letter. “If every faction continues to defend their favored subsidies, we risk preserving the entire IRA because no clearly defined principle will dictate what is kept and what is culled.”
About $110 billion in IRA-related investment has been announced in Republican districts, leading to an estimated 83,000 jobs, said E2. This dwarfs the investment in Democratic districts with about $19 billion in investment leading to about 28,000 jobs. All this economic activity is expected to keep the IRA stickier as Republicans see its success unfold in their districts.
In March, a letter signed by 21 Republican House members asked for a light hand on IRA cuts.
“We request that any proposed changes to the tax code be conducted in a targeted and pragmatic fashion that promotes conference priorities without undoing current and future private sector investments,” said the letter.
The fate of the IRA is expected to be resolved during the budget reconciliation process, which requires 51 Senate votes to pass.
