The Inflation Reduction Act Is a Disastrous Policy That Must Be Repealed

The Orwellian-named bill is an economic and grid destabilizing disaster.

Grock 3 artwork

The Inflation Reduction Act (IRA), signed into law in August 2022, has been touted by its proponents as a landmark achievement in addressing climate change and reducing inflation. A closer examination reveals that the IRA’s heavy subsidies for so-called renewable energy sources (more accurately called alternative energy or alt-energy) like wind and solar, coupled with its punitive measures against oil and natural gas, make it one of the most flawed and economically disastrous pieces of legislation in US history.

I have made fun of the IRA so many times that I can’t even count them, calling it “Orwellian,” “ridiculously named,” and worse. The bill's title had nothing to do with its contents. A more descriptive title would have been the “Inflation Creation Act” because the virtually unlimited subsidies it established for wind and solar are being funded by deficit spending.

One of the IRA’s most egregious flaws is its provision of massive, open-ended subsidies for alternative energy or alt-energy, particularly wind and solar. The bill extends and expands the Production Tax Credit (PTC) for wind and the Investment Tax Credit (ITC) for solar, with no precise expiration date. Unlike previous iterations of these credits, which had sunset provisions, the IRA’s subsidies are effectively perpetual, locking in government support for these industries indefinitely.

Here is why the tax credits are perpetual. The IRA’s major clean energy tax credits, PTC for wind and the IITC for solar, are structured to continue beyond their initial 10-year window starting from 2022 unless the US power sector achieves a 75% or greater reduction in greenhouse gas emissions compared to a baseline. These credits are set to expire in 10 years only if the power sector has reduced emissions by 75% or more—if not, they are extended. Unlike previous energy subsidies with fixed funding caps, the IRA’s tax credits for clean energy are uncapped, meaning there is no limit on the total amount of subsidies that can be claimed as long as projects meet eligibility criteria. The Cato Institute notes that the IRA’s cost, initially estimated at $369 billion by the Congressional Budget Office, could exceed $1 trillion due to this uncapped structure, as "there is essentially no cap on the freebies awarded to green energy."

This approach distorts energy markets in several harmful ways. First, it artificially inflates the competitiveness of wind and solar, which, despite technological advancements, remain intermittent and unreliable. Subsidizing renewables at such a scale diverts resources from more dependable energy sources.

Second, perpetual subsidies stifle innovation. When industries are guaranteed government handouts, they have less incentive to reduce costs or improve efficiency. The wind and solar sectors, already heavily subsidized for decades, have yet to achieve true cost-competitiveness without government intervention. Wind and solar are destabilizing power grids worldwide, the latest example being the near grid collapse in Spain and Portugal.

It gets even worse. This demand-driven model creates a self-reinforcing cycle: generous subsidies spur more wind and solar projects, which justifies continued funding. The lack of a fiscal cap makes it harder for Congress to justify terminating the credits, as doing so would disrupt what has become a significant industry. In the Fortran days, we called this an “infinite do-loop.”

With all the billions and billions of dollars the IRA bill wastes, it is sad to note that some of our largest and most prominent oil and gas companies support the IRA because they are now beneficiaries of it. ExxonMobil, Occidental, and others are receiving millions of dollars from the bill for projects related to carbon capture and other technologies. They have openly said they do not want President Trump to kill those components of the IRA because they are now benefiting from it.

The good news is that a group of 38 US House of Representatives members understand how flawed and dangerous the IRA is and recently signed a letter supporting its full repeal. The full text of the letter follows:

Dear Chairman Smith:

As fellow Members of the House Republican Conference, we write to underscore the urgent need to fully repeal the Inflation Reduction Act (IRA) and its green energy subsidies, which will cost taxpayers approximately $1 trillion over the next decade. We are deeply concerned that President Trump’s commitment to restoring American energy dominance and ending what he calls the “green new scam” is being undermined by parochial interests and short-sighted political calculations.

The IRA contains eight major energy subsidies, each of which burdens taxpayers, inflates energy costs, and threatens the reliability of our power grid. Each of these subsidies props up unreliable energy sources while displacing dependable, proven energy like coal and natural gas.

Republicans ran—and won—on a promise to completely dismantle the IRA and end the left’s green welfare agenda. The first chapter of our 2024 platform reaffirms our commitment to “terminating the Socialist Green New Deal.” Despite our previously unified stance, some Members of our conference now feel compelled to defend wind and biofuel credits, advocate for carbon capture and hydrogen subsidies, or protect solar and electric vehicle giveaways. Keeping even one of these subsidies opens the door to retaining all eight. How do we retain some of these credits and not operate in hypocrisy? The longstanding Republican position has been to allow the market to determine energy production. 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.

Leaving IRA subsidies intact will actively undermine America’s return to energy dominance and national security. In 2024 alone, solar represented 61% of all new electricity generation in our nation, with more expected this year. By the end of this year, wind generation in the U.S. is expected to increase 11% from 2023 because of these subsidies. These numbers do not reflect a natural market shift. They are the result of government subsidies that distort the U.S. energy sector, displace reliable coal and natural gas and the domestic jobs they produce, and put the stability and independence of our electric grid in jeopardy.

To see the consequences of this path, we need only to look at Europe’s over-reliance on renewables, which has left them vulnerable and reliant on Russian oil and gas. Meanwhile, China gladly sells us solar panels and electric vehicle components while expanding its own coal capacity to maintain grid stability and economic advantage. If we do not course correct, we will trade American energy dominance for dependence on hostile regimes.

Our path forward is clear. We must fully repeal the IRA’s green subsidies. Doing so will:

• Save Taxpayers $1 trillion. Estimates project the Inflation Reduction Act will cost between $825 billion—according to the Congressional Budget Office as of January 2025—and over $1 trillion, per analysts at Goldman Sachs, over the next decade. Eliminating these subsidies will allow us to rein in the debt and reallocate funds to genuine national priorities.

• Ease inflation and spur economic growth. IRA subsidies exacerbate inflation and push up interest rates, making it harder for Americans to buy homes and cars and start businesses. Repealing them will provide immediate financial relief and create a stronger economic environment.

• Restore energy affordability and security. IRA subsidies force utilities to overbuild solar and wind capacity, weakening grid reliability and increasing energy costs. Ending these subsidies will restore affordability and stability to our energy supply.

This is our only opportunity for an IRA repeal. Without effectively fully repealing all IRA subsidies, as envisioned under the House reconciliation framework, we would jeopardize America’s return to energy dominance and passage of an extension of the expiring Tax Cuts and Jobs Act (TCJA) provisions, as well as the President’s other tax priorities. Failure to act undermines the mandate given to us by the American people.

We urge our colleagues to stand firm in the upcoming reconciliation process. We must reject half-measures and deliver a full repeal of the IRA’s energy subsidies for the sake of American taxpayers and for the future of American energy.

The list of the 38 members of the House of Representatives who signed the letter can be found here. Hopefully, this letter will start the process of Congress repealing the law before it causes more damage to our grids and the country.

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