Repeal the Inflation Reduction Act

National Review Online

Thursday, November 14, 2024

 

With the Republican House majority officially secured, Republicans will have a trifecta come January 20. They need to use their newfound power to repeal the so-called Inflation Reduction Act in its entirety.

 

Democrats passed the IRA without a single Republican vote through budget reconciliation. Republicans can repeal it without a single Democratic vote through budget reconciliation.

 

The law never had anything to do with inflation. Immediately after Congress passed it, the media called it what it always was: a climate and health-care law. Joe Biden himself has said more than once that the law wasn’t about reducing inflation.

 

Democrats gleefully enriched the National Treasury Employees Union, which represents IRS employees, with $80 billion in additional IRS funding, and the NTEU has been sure to send them a thank-you note each year since, along with the normal 95+ percent of its PAC donations. Extra revenue raised from tax enforcement is nowhere near what was promised, but for Democrats it’s about the spending, not the results.

 

The IRA implemented price controls that have reduced clinical trials of drugs. That was a foreseeable consequence. University of Chicago economist Casey Mulligan predicted it in this piece for National Review from 2022, but Democrats didn’t care.

 

Medicare Part D plans have been disappearing or increasing in price as a result of the changes the IRA made to the program. The Biden administration has been quietly trying to bail out insurers to paper over the law’s failure.

 

The Biden administration has interpreted the IRA in such a way that many of its energy tax credits are more expansive than what the Congressional Budget Office scored when the law was being debated. Because some of the provisions don’t have time limits, the law’s cost is theoretically infinite, but if it is allowed to continue, it will likely cost more than three times what the American people were told when it became law.

 

The good news is that most of that spending is still in the future. Democrats have run into the paradox that comes with being the party of government, which is that their big ideas about the role of government are implemented at the speed of government.

 

Remember all the hype about how Biden had reinvigorated manufacturing investment? Two out of every five of those government-backed projects have been delayed or paused.

 

Many of those projects are taking place in Republican states and congressional districts, and 18 House Republicans begged Speaker Mike Johnson in August to keep the energy tax credits flowing. Three of them lost reelection, one was elected to the Senate, and five are in safe seats. The remainder won, and they aren’t successful politicians because Democrats passed green tax credits. The law is unpopular in battleground states.

 

In the new year, Republicans should not reward the previous administration’s cynicism in placing the projects in their districts, nor should they acquiesce to Democrats’ governmentalized view of the economy. IRA supporters claim it would be destabilizing to remove the tax credits, but they didn’t complain it was destabilizing when Uncle Sam dumped billions of dollars into a tight labor market to start these projects, pulling workers off of more valuable private efforts. The jobs “created” by IRA battery-plant grants, for example, are likely costing taxpayers millions of dollars each and are paying average or below-average wages.

 

Democrats’ fetish for “shovel-ready jobs” was nonsensical during the Obama years, and it’s even more so now with unemployment around 4 percent. Republican governors back then refused government funding for passenger-rail projects, and the Obama administration gloated it would give the money to California Democrats instead. The GOP governors who turned back the money won reelection, and over a decade later, California’s high-speed rail still hasn’t carried a single passenger.

 

Republicans made hay out of Barack Obama’s Solyndra disaster, when the solar-energy company went bankrupt after his administration gave it hundreds of millions of dollars of government loans. Rather than waiting for these projects to fail so comprehensively, Republicans should prevent more Solyndras by repealing the IRA now.

 

The extension of the Tax Cuts and Jobs Act will be Republicans’ top priority this year in Congress. While keeping taxes low, they should also cut spending. Gutting the IRA should be a gimme. No Republicans voted for it, it was never necessary in the first place, and the constituencies it has created are still new and fragile. Now is the time to repeal it before they become entrenched.

 

Republicans won in no small part because the American people were sick of being lied to about the border, about Afghanistan, about democracy, and about the economy. The Inflation Reduction Act is a $1 trillion-plus lie at the center of Biden’s legacy. Republicans must repeal it. All of it.