Commentary: Big Tent Ideas

BONNER COHEN: Inflation Reduction Act Is Taking America Down The Road To Ruin

In her speech at the Democratic National Convention on Thursday night, Vice President Kamala Harris vowed to “pass a middle-class tax cut that will benefit more than 100 million Americans.” In fact, while serving as vice president, Harris played a key role in enacting legislation that increased the cost of living for all Americans.

When President Joe Biden signed the Inflation Reduction Act (IRA) on Aug. 16, 2022, he said that it was “one of the most significant laws in our history.”

That was no exaggeration.

Contrary to its label, the law had nothing to do with reducing inflation. In fact, it would soon drive-up prices for such essentials as food, electricity and transportation. The IRA is the administration’s signature energy-transition initiative, with a few provisions strengthening the government’s role in healthcare and an expansion in the number of IRS employees thrown in for good measure. Passage was a close call, with Harris casting the deciding vote in a Senate that was deadlocked 50-50.

Sold to the American public as a vehicle to combat the “climate crisis,” the IRA’s backers put the price tag at $750 billion. But by April 2023, Goldman Sachs calculated the costs of the statute’s subsidies and other handouts at $1.2 trillion over ten years. In truth, the IRA’s costs cannot be measured in dollars and cents, because the law’s effect on the lives of ordinary citizens, the viability of the U.S. economy and American national security are so profound as to defy quantification.

At the core of the IRA are lavish handouts to politically favored industries and organizations, paid for by taxpayers, most of whom will see their quality-of-life decline as the law tightens its grip on the nation’s energy sector. In its push to rid the country of fossil fuels, for example, the law expands subsidies for notoriously inefficient offshore wind turbines at a time of high-profile cancellation of several ocean-borne wind projects off the Atlantic Coast due to rising costs and resistance from coastal residents.

Rigging the game against gasoline-powered cars, the IRA extends the $7,500 tax credit for purchases of new electric vehicles (EVs) to include point-of-sale discounts, provided the EVs and their batteries have been assembled within the United States and the minerals in the batteries are sourced from the United States or from countries with free-trade agreements in place.

Yet, despite the favorable treatment lavished on EVs by the IRA, sales of the vehicles have stalled, an ominous sign for U.S. autoworkers, who are being transitioned to make cars the driving public continues to shun and whose assembly already requires a smaller workforce. EVs currently make up 6.8 percent of new sales, meaning that over 93 percent of buyers are sticking with gas-powered cars. People purchasing traditional vehicles, however, are nevertheless subsidizing the sale of EVs through the federal taxes they pay.

America’s already shaky power grid will also be at the not-so-tender mercies of the IRA. In a publication titled “Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act’s Investments in Clean Energy and Climate Action,” updated in January 2023, the White House boasted that the IRA “invests nearly $3 billion in the U.S. transmission system to help overcome the financial and permitting challenges that hinder the build-out of high-capacity lines. These investments will not only address critical vulnerabilities but also connect Americans to cleaner and cheaper power, advancing the Biden-Harris Administration’s ambitious goal of 100 percent carbon-free electricity by 2035.”

But therein lies the problem. The power sources the IRA favors — wind and solar — are neither clean nor cheap, nor are they in any way reliable. Dead wind turbines and solar panels, laden with toxic chemicals, are destined for landfills across the country, transforming each dump into a potential mini-Superfund site. They are “cheap” only because they are propped up by taxpayers, and even with the handouts, wind and solar cannot compete with natural gas, which is at its lowest price in years.

Feeding the electric grid a steady diet of intermittent power will only increase its vulnerability. In an Aug. 16 coalition letter to Congress, 55 free-market and conservative organizations urged lawmakers to eliminate the IRA’s subsidies and noted the threat the law poses to the electric grid.

“The very threats to grid reliability warned about by such entities as PJM and the North American Electric Reliability Corporation are the ones actively encouraged under the statute,” the coalition wrote. “Thanks to the IRA, the American people face a greater likelihood of future blackouts – and are being made to pay for the privilege.”

The energy chaos the IRA and like-minded “climate-friendly” Biden administration regulations are unleashing on the country may temporarily benefit recipients of the IRA’s giveaways. But the law’s real beneficiary resides in Beijing. China can only marvel at how the United States is unilaterally disarming itself by abandoning its global leadership in fossil-fuel production and embracing energy sources controlled by Beijing. China has a stranglehold on the global supply chain for cobalt, lithium, graphite, nickel, copper and rare-earth elements that are the centerpiece of the energy transition the IRA is meant to promote.

Decades before the IRA was enacted, economist Friedrich Hayek captured the spirit of central planners’ “fatal conceit,” who demonstrate “how little they know about what they imagine they can design.”

Bonner Russell Cohen, Ph. D., is a senior policy analyst with the Committee for a Constructive Tomorrow (CFACT).

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.