The hype around the Inflation Reduction Act of 2022, also known as the Manchin-Schumer bill, has been extraordinary. On Aug. 8, New York Times opinion columnist Paul Krugman published a piece headlined “Did Democrats Just Save Civilization?” in which he declared that “experts on energy and the environment are giddy over what has been accomplished” and the “world is a more hopeful place than it was just a few weeks ago.”
Five former Treasury secretaries declared that the measure will “help increase American competitiveness, address our climate crisis, lower costs for families, and fight inflation.” Meanwhile, Leah Stokes, an associate professor of political science at the University of California, Santa Barbara, claims the bill will “create manufacturing all across this country.”
Amid all the hosannas, precious little media attention has focused on exactly how the $370 billion in energy-related spending will be divvied up. But a look at the numbers published on Aug. 5 by the Congressional Budget Office (CBO) shows that this bill is not the vaunted “silver buckshot” that activists say will save us from catastrophic climate change. Instead, Manchin-Schumer is a 20 carat-gold blunderbuss that rewards, well, everybody. Electric vehicles (EVs), “climate justice,” hydrogen, carbon capture — a total of 68 energy- or climate-related line items are listed in the CBO report — and, yes, I counted them.
The handouts in the bill show, once again, the power of the NGO-industrial-corporate-Congress-media complex. But the CBO report also makes it abundantly clear that the cost to taxpayers of the federal handouts to the wind and solar sectors are about to absolutely explode.
According to the CBO, Big Wind and Big Solar could collect as much as $126.9 billion in new federal tax credits between now and 2031. If that occurs, the total cost of federal giveaways for wind and solar will more than double — and could total nearly $240 billion by 2031.
Before diving into the particulars in the CBO report, let’s back up to recall what the latest Treasury Department data on tax expenditures (published last December) reveal about existing energy-related tax breaks. The Treasury numbers show that between 2022 and 2031, the tax credits for solar and wind will cost the federal treasury $112.9 billion. The investment tax credit (ITC), used by the solar industry, will cost federal taxpayers about $60 billion. The production tax credit (PTC), which expired at the beginning of this year and is used by the wind industry, will cost nearly $52.9 billion. For comparison, the oil and gas sector will get about $29 billion in tax credits and the nuclear sector will get a paltry $3.4 billion.
The 35-page CBO report on Manchin-Schumer contains dozens of line items. It includes estimated outlays on numerous programs, including subsidies under the Affordable Care Act and Medicare. But the big costs in the bill are spelled out in the sections pertaining to energy.
Let’s look at the PTC-related provisions first. For those of you scoring at home, they are listed in the CBO report as Sections 13101 and 13701, which will cost roughly $51 billion and $11.2 billion, respectively. Thus, the cost of the new wind energy-related tax credits in Manchin-Schumer will total about $62.2 billion between now and 2031.
Now, the ITC-related provisions. They are listed as Sections 13102 and 13702 and will cost $13.9 billion, and $50.8 billion, respectively. Thus, the new solar-related tax credits in Manchin-Schumer will cost federal taxpayers about $64.7 billion between now and 2031. A bit of addition shows that the total cost of the new wind and solar tax credits will be about $126.9 billion.
That $126.9 billion in tax credits for wind and solar spelled out in the CBO report will be added on top of the $112.9 billion that was enumerated by the Treasury Department in its December tax expenditure report. Thus, under Manchin-Schumer, the subsidies for wind and solar will total a staggering $239.8 billion between now and 2031. That amounts to some $26.6 billion per year. Put another way, when this measure becomes law, solar and wind will get nearly as much in tax credits every year as the oil and gas industry will get over a decade.
Why should you care? First and foremost, you should care because these tax credits are just another form of corporate welfare. For years, advocates for renewable energy sectors have claimed that wind and solar are cheaper than traditional forms of electricity generation. To cite just one example, John Kerry, the Biden administration’s climate envoy, recently claimed that “Solar and wind are less expensive than coal or oil or gas. They just are less expensive.” If that were true, the wind and solar sectors wouldn’t need tax credits.
Furthermore, these tax credits are fueling land-use conflicts across America as rural communities fight back against the landscape-blighting sprawl of wind and solar projects. The Renewable Rejection Database shows that since 2013, more than 340 communities across the country have rejected or restricted wind projects. Communities are also rejecting solar projects. In March, NBC News reported that “at least 40” towns and counties have enacted moratoriums on solar projects since last year. Although NBC did not publish a list, the Renewable Rejection Database shows that 41 solar projects have been rejected in the U.S. since 2019. The latest example: Greensville County, Va., where the Board of Supervisors rejected a 123-megawatt solar project on Aug. 8 because it was not in “alignment with the county’s Comprehensive Plan.”
The punchline here is clear: Climate change is a concern, but it is not our only concern. Congress must be fiscally responsible. The CBO report shows that Manchin-Schumer contains unconscionable giveaways to the wind and solar sectors. If wind and solar are cheaper than conventional energy production, it’s time for them to prove it — without another $127 billion in taxpayer dollars.