Lawmakers spar over IRA credits in budget hearings

• As Republicans work to advance budget legislation that would make deep cuts to the Inflation Reduction Act, members of the House are debating the issue in committee markup hearings, with Democrats arguing that early phaseouts of IRA credits would harm developers and raise energy bills.
• The IRA is anticipated to cost taxpayers between $780 billion and $2 trillion over its first ten years, making it an appealing target for Republicans looking to reduce federal spending.
• However, a large portion of IRA spending has so far benefited Republican districts, and some Republicans have advocated for careful cuts to the legislation – including Rep. Claudia Tenney, R-N.Y., who warned against a wind down of the 45U nuclear production tax credit during the House Ways and Means Committee markup Tuesday.

“Nuclear power represents nearly a quarter of New York’s electrical supply, and my district in Western and Central New York is home to all four of New York’s reactors,” Tenney said. “Those reactors are critical to the baseload power of our region and our state and should be considered separately from our conversations on renewable energy.”

In the House Energy and Commerce Committee markup on Tuesday, Rep. Kathy Castor, D-Fla., proposed an amendment to the committee’s budget that would “delay any provisions in this bill from taking effect until the Energy Information Administration studies the impact of the bill and the actions taken so far by the Trump administration.”

“People need to know about this,” she said. “You can't rush a bill like this, with such a large impact, through without people understanding.”

Rep. Bob Latta, R-Ohio, opposed the amendment, saying the “best way to lower energy prices is to expand use of America's abundant energy resources — gas, oil, coal, hydropower — that provide affordable reliable power and fuels, and not limit those resources in a forced transition to expensive renewable energy as the IRA sought to do.”

Several Democrats spoke in support of the amendment, including Rep. Alexandria Ocasio-Cortez, D-N.Y., who called it a “common sense” proposal and expressed concern that the bill’s proposal to fast-track gas exports would mean “that there's going to be less gas available for Americans because we're shipping it abroad.”

“If the Republican claim is that it's going to lower monthly energy costs, wouldn't we want to know that?” Ocasio-Cortez said. “I suspect that this study would show that energy costs would actually spike under this Republican proposal and perhaps that's the source of some of the opposition and heartburn around finding out what impact this is going to have on people.”

Castor’s amendment ultimately failed 30 to 24.

Rep. Buddy Carter, R-Ga., alleged that the IRA itself was a source of “waste, fraud, and abuse,” and said, “the only thing worse than the IRA itself was the Biden administration's implementation of it.”

“The IRA provided the EPA with approximately a hundred billion dollars in supplemental appropriations,” Carter said. “For comparison, over the past ten years, EPA's annual budget ranged from about $8.2 billion to $10.1 billion.”

Rep. Rob Menendez, D-N.J., noted that Republican states had seen an influx of new jobs as a result of the IRA, but his Republican colleagues “have shared their view, consistently, that the IRA's investments in American workers are a slush fund … a travesty.”

“To any of my colleagues across the aisle who represent districts that have received IRA funding, if those funds were wasteful, tell me why your districts accepted them,” Menendez said. “If those funds were wasteful, why not just give them back?”

Ways and Means

In the House Ways and Means Committee markup Tuesday, Rep. Lloyd Doggett, D-Texas, told Thomas Barthold, chief of staff of the Joint Committee on Taxation, that he believed House Republicans had intentionally obscured the severity of the cuts they intended to make to the IRA when they offered a 28-page preview of their tax package on Friday evening.

That preview “seemed designed to minimize scrutiny of what you were doing,” Doggett said. “You repeal all the renewable energy credits – that was not in [there] Friday night – which have been generating so many new jobs, especially in Republican districts.”

Doggett then asked Barthold about how the bill’s proposed changes to the eligibility deadlines for IRA’s investment and production tax credits would impact developers. The proposed legislation would require facilities be “placed in service” to qualify for the credit, while the IRA originally based that eligibility on the year projects began construction.

In an environment of macroeconomic uncertainty, “no project developer worth his salt can actually guarantee when his facility will be placed in service, can they?” Doggett asked.

“There is more substantial uncertainty, yes sir,” Barthold said.

“If the proposal today was amended to maintain the 15-year precedent that these credits are based on, when construction begins, but Republicans still chose to phase the credit out in, say, 2028, would the taxpayer still be eligible [to claim it]?” Doggett said.

“Yes,” Barthold said.

“Instead, under the tax before us today, the value of the credit they’ll be entitled to by changing that is zero, right?”

“Yes.”

“They get no benefit, and we reject a 15-year way of handling these important facilities, many of which may already be under construction,” Doggett said. “They're doing their due diligence, but suddenly this bill will wipe them out.”