The Inflation "Reduction" Act
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The Real Cost of the Inflation Reduction Act Subsidies: $1.2 Trillion
The Inflation Reduction Act may go down as one of the greatest confidence tricks on taxpayers in history. Democrats used accounting gimmicks to claim the partisan law would reduce the budget deficit. But now a Goldman Sachs report projects its myriad green subsidies will cost $1.2 trillion—more than three times what the law’s supporters claimed.
The Congressional Budget Office forecast that the IRA’s energy and climate provisions would cost $391 billion between 2022 and 2031, but this appears to be a huge under-estimate. One reason is companies are rushing to cash in on tax credits that aren’t capped. The Biden Administration is also loosely interpreting conditions for the credits.
By Goldman’s estimate, the IRA tax credits will cost tens to hundreds of billions more than CBO estimated over 10 years. The forecast misses include electric vehicles (difference: $379 billion), green energy manufacturing ($156 billion), renewable electricity production ($82 billion), energy efficiency ($42 billion), hydrogen ($36 billion), biofuels ($34 billion) and carbon capture ($31 billion).
Goldman says the difference in the EV credit estimates owes to its projection that more vehicles will meet the law’s “self-sufficiency” mineral and battery material conditions for the partial $3,750 consumer credit and full $7,500 credit. But even Goldman’s estimate for the EV credit could be low if Treasury loosely interprets the credit conditions, which is what auto makers are lobbying for.
Auto makers are also racing to take advantage of a tax credit for locally manufactured battery cells and modules by setting up plants in the U.S. Similar to Goldman’s estimate, an analysis last month by Mercatus Center fellow Christine McDaniel projected that the tax credit for battery production could cost up to $196.5 billion.
Democrats have created an enormous new corporate entitlement whose costs will increase on autopilot and blow up the deficit while raising energy prices for average Americans. Congratulations, Sen. Manchin.
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The Real Cost of the Inflation Reduction Act Subsidies: $1.2 Trillion
The Inflation Reduction Act may go down as one of the greatest confidence tricks on taxpayers in history. Democrats used accounting gimmicks to claim the partisan law would reduce the budget deficit. But now a Goldman Sachs report projects its myriad green subsidies will cost $1.2 trillion—more than three times what the law’s supporters claimed.
The Congressional Budget Office forecast that the IRA’s energy and climate provisions would cost $391 billion between 2022 and 2031, but this appears to be a huge under-estimate. One reason is companies are rushing to cash in on tax credits that aren’t capped. The Biden Administration is also loosely interpreting conditions for the credits.
By Goldman’s estimate, the IRA tax credits will cost tens to hundreds of billions more than CBO estimated over 10 years. The forecast misses include electric vehicles (difference: $379 billion), green energy manufacturing ($156 billion), renewable electricity production ($82 billion), energy efficiency ($42 billion), hydrogen ($36 billion), biofuels ($34 billion) and carbon capture ($31 billion).
Goldman says the difference in the EV credit estimates owes to its projection that more vehicles will meet the law’s “self-sufficiency” mineral and battery material conditions for the partial $3,750 consumer credit and full $7,500 credit. But even Goldman’s estimate for the EV credit could be low if Treasury loosely interprets the credit conditions, which is what auto makers are lobbying for.
Auto makers are also racing to take advantage of a tax credit for locally manufactured battery cells and modules by setting up plants in the U.S. Similar to Goldman’s estimate, an analysis last month by Mercatus Center fellow Christine McDaniel projected that the tax credit for battery production could cost up to $196.5 billion.
Democrats have created an enormous new corporate entitlement whose costs will increase on autopilot and blow up the deficit while raising energy prices for average Americans. Congratulations, Sen. Manchin.
@George-K said in The Inflation "Reduction" Act:
The Real Cost of the Inflation Reduction Act Subsidies: $1.2 Trillion
The Inflation Reduction Act may go down as one of the greatest confidence tricks on taxpayers in history. Democrats used accounting gimmicks to claim the partisan law would reduce the budget deficit. But now a Goldman Sachs report projects its myriad green subsidies will cost $1.2 trillion—more than three times what the law’s supporters claimed.
The Congressional Budget Office forecast that the IRA’s energy and climate provisions would cost $391 billion between 2022 and 2031, but this appears to be a huge under-estimate. One reason is companies are rushing to cash in on tax credits that aren’t capped. The Biden Administration is also loosely interpreting conditions for the credits.
By Goldman’s estimate, the IRA tax credits will cost tens to hundreds of billions more than CBO estimated over 10 years. The forecast misses include electric vehicles (difference: $379 billion), green energy manufacturing ($156 billion), renewable electricity production ($82 billion), energy efficiency ($42 billion), hydrogen ($36 billion), biofuels ($34 billion) and carbon capture ($31 billion).
Goldman says the difference in the EV credit estimates owes to its projection that more vehicles will meet the law’s “self-sufficiency” mineral and battery material conditions for the partial $3,750 consumer credit and full $7,500 credit. But even Goldman’s estimate for the EV credit could be low if Treasury loosely interprets the credit conditions, which is what auto makers are lobbying for.
Auto makers are also racing to take advantage of a tax credit for locally manufactured battery cells and modules by setting up plants in the U.S. Similar to Goldman’s estimate, an analysis last month by Mercatus Center fellow Christine McDaniel projected that the tax credit for battery production could cost up to $196.5 billion.
Democrats have created an enormous new corporate entitlement whose costs will increase on autopilot and blow up the deficit while raising energy prices for average Americans. Congratulations, Sen. Manchin.
Don’t worry! I’m sure there’s a $5 Trillion solution that will be passed.
