The Inflation Reduction Act is partisan legislation packed with what could amount to more than one trillion dollars in “green” subsidies meant to centrally plan how Americans produce and use energy.
Not a single House or Senate Republican voted for the IRA. And to their credit, House Republicans have passed important legislation this Congress, such as the Limit, Save, Grow Act (H.R. 2811), which attempts to repeal many of the IRA’s “green” subsidies.
Unfortunately, these legislative efforts have not sought to repeal all of the subsidies. And recently, a small number of Republicans revealed they may be backing off going after these subsidies, at least to some extent.
The wobble comes at a time when conservatives may well find themselves in a political position to dismantle the IRA subsidies altogether. It is critical, therefore, that Republicans do not waver because these subsidies are extremely damaging.
The cost of the subsidies is jaw-dropping. The Congressional Budget Office originally projected the total cost to be $391 billion. Goldman Sachs has a newer price tag of $1.2 trillion. Given the uncapped nature of many of the subsidies, these estimations could be low.
The costs are not even the biggest concern. More troubling is how the money is being spent. The IRA seeks to make radical changes, such as shifting the country from reliable electricity sources (e.g., natural gas and coal) to unreliable electricity sources (e.g., wind and solar).
When Americans flip on the switch, they rightfully expect the lights to come on. They should expect this in a developed country such as the United States. But if some policymakers continue to undermine the grid, which is what it is doing through the IRA, people may find themselves in the dark.
Grid operators were already warning about problems meeting electricity demand due to the shift to renewables. The IRA takes this shift to new levels. And the problems will only be exacerbated by increased electricity demand.
The IRA also reflects the arrogance that the government knows better than Americans what appliances they should use and what cars they should drive.
Regarding cars, the IRA includes policies to help put an end to gas-powered vehicles. If someone, even five years ago, had argued that the far Left would try and use the government to kill off our cars, they likely would have been labeled a scaremonger. Well, here we are.
And yet even with all of the subsidies, Americans are not flocking to buy electric vehicles. This is understandable given that they are more expensive than gas-powered cars and less reliable. According to Consumer Reports, electric vehicles have 79% more problems than conventional cars. Automakers may be taking the hint and, reportedly, are scaling back their electric vehicle plans.
The IRA also created the Environmental Protection Agency’s Greenhouse Gas Reduction Fund. This is a $27 billion program that is effectively a slush fund for the EPA, given its wide discretion for the agency.
Actually, it’s worse. It’s an EPA slush fund to create slush funds for nonprofit organizations.
In April, the EPA selected eight nonprofit organizations and awarded them a whopping $20 billion to distribute. Five of the eight selected nonprofit organizations will have about $2 billion or more to distribute. One organization has $7 billion and another $5 billion.
This fund is rife with abuse and cronyism. And worse, it completely ignores the fact that Congress has the spending power, not federal bureaucrats or the favored private nonprofit organizations of the bureaucrats. There may not be much that conservatives can do to get back that $27 billion, but it can ensure that this program is killed off.
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Conservative legislators need to ramp up their fight against the IRA’s “green” subsidies. This should start right now with Republicans making it perfectly clear that they do, in fact, plan to dismantle the subsidies.
The nation’s future can be a bright one with low-cost and reliable energy and respect for individual consumer choices. Or it can be a future with alarming levels of governmental control that threatens grid reliability, drives up prices, and ignores consumer freedom. Allowing the IRA “green” subsidies to stand would only lead us that much closer to the latter.
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Daren Bakst is director of the Competitive Enterprise Institute’s Center for Energy and Environment.
