Excerpt: The subsidized energy lobby used “framing” to win Republican negotiations before they even started. But it’s not too late to reframe the negotiation, starting from real IRA termination.
When the Inflation Reduction Act (IRA) passed 3 years ago, no Republicans supported it.
During the 2024 elections, President Trump ran on “terminating” the IRA’s energy subsidies, which he called “the Green New Deal” or “the Green New Scam.” “Terminating…the Green New Deal” (IRA subsidies) was the very first policy in the Republican 2024 platform.
And for good reason: The IRA subsidized inferior forms of energy to the tune of a trillion dollars per decade—which necessarily raised energy costs and, because the subsidies were largely directed toward unreliable solar and wind, made our grid less reliable.
So when Republicans won a “trifecta” victory—the Presidency, House, and Senate—many, including me, expected that at least the vast majority of the IRA subsidies would be “terminated” during the budget reconciliation process (when budget-related items like subsidies can be passed or terminated by a filibuster-proof simple majority in the Senate).
I wasn’t sure whether all the subsidies would be terminated, because there was one clear force that was going to press Republicans to keep some IRA subsidies: lobbyists for companies and industries that had existing subsidized projects that would be unviable if their subsidies were taken away. For example, a wind developer who was in year 2 of a 10-year stream of subsidies might go bust if their subsidies ended in 2026 instead of 2034.
Even though most independent observers would acknowledge it’s just and legal for subsidy-seeking companies to have their projects de-subsidized, it was highly predictable that many of those companies would lobby to keep their project subsidies.
Because I thought these lobbyists were wrong, I invested a lot of time and energy making the case for terminating IRA subsidies for existing projects. I am fortunate to have the trust of a lot of elected officials, and any chance I got I explained to them why we should have “full repeal”—termination—of the IRA.
The response I got behind closed doors was mostly, “We agree with you, but we are being pushed really hard on this”—by lobbyists and by special interests within some districts who were depending on these projects. I pushed back that the lobbyists were talking their own book, and that the actual benefits to districts were very small compared to the costs of the IRA to everyone—but I could tell at a certain point that full termination was not going to happen.
At that point, I expected the following compromise: Republicans would strike a deal to grandfather the IRA subsidies for some existing projects, but they would certainly stop any new IRA subsidies from going out the door going forward.
That would take care of the concerns of lobbyists and others worried about sabotaging existing projects—while still saving a lot of money: at least $600 billion vs. the $1 trillion you’d get for full IRA termination. I hoped that we could at least get rid of or phase down subsidies for existing solar and wind projects, since those are actively undermining our grid right now, and terminating them would save another $200 billion ($800 billion total savings).
The mystery: Why did a Republican trifecta that ran on “terminating” IRA subsidies make a deal to hand out new ones?
But on Tuesday, the House Ways and Means Committee, which oversees the IRA subsidies, announced a deal I would have thought to be impossible last November when Republicans won a trifecta pledging to “terminate” IRA subsidies.
The committee’s proposal not only grandfathered all IRA subsidies for existing projects, it gave an absolute bonanza of subsidies for new projects.
