Federal EV tax credit: unnecessary, inefficient, unpopular, costly, and unfair

In April, Senator Debbie Stabenow (D-MI) introduced the Drive America Forward Act, a bill that would expand the tax credit for new plug-in electric vehicles (EVs) by allowing an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000. Currently, the tax credit is worth up to$7,500 until a manufacturer sells more than 200,000 vehicles. In late September, groups that stand to benefit from the extension of the federal tax credits wrote to Senator McConnell and other leaders in Congress, encouraging them to support on the Drive America Forward Act. As IER has documented in the past, lawmakers should not extend the EV tax credit as the policy is unnecessary, inefficient, unpopular, costly, and unfair.

Unnecessary and inefficient

The EV tax credit is not necessary to support an electric vehicle market in the U.S. as one group estimates that 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is reasonable seeing as 78 percent of credits go to households making more than $100,000 a year.  Furthermore, the federal tax credit overlaps with a number of other government privileges for EVs, including:

  • State rebates and/or other favors (reduced registration fees, carpool-lane access, etc.) in California, as well as in 44 other states and the District of Columbia.
  • Tax credits for infrastructure investment, a federal program that began in 2005 and, after six extensions, expired in 2017.
  • Federal R&D for “sustainable transportation,” mainly to reduce battery costs, averaging almost $700 million per year.
  • Credit for EV sales for automakers to meet their corporate fuel economy (CAFE) obligations.
  • Mandates in California and a dozen other states for automakers to sell Zero-Emission Vehicles—a quota in addition to subsidies.

Even if the federal tax credits were needed to support demand for EVs, the extension of the tax credit would be an absurdly inefficient means of achieving the stated goal of the policy, which is ostensibly to lower carbon emissions. The Manhattan Institute found that electric vehicles will reduce energy-related U.S. carbon dioxide emissions by less than 1 percent by 2050.

Unpopular

Lawmakers should be aware that the vast majority of people do not support subsidizing electric vehicle purchases. The American Energy Alliance recently released the results of surveys that examine the sentiments of likely voters about tax credits for electric vehicles. The surveys were administered to 800 likely voters statewide in each of three states (ME, MI and ND). The margin of error for the results in each state is 3.5 percent.

The findings include:

  • Voters don’t think they should pay for other people’s car purchases. In every state, overwhelming majorities (70 percent or more) said that while electric cars might be a good choice for some, those purchases should not be paid for by other consumers.
  • As always, few voters (less than 1/5 in all three states) trust the federal government to make decisions about what kinds of cars should be subsidized or mandated.
  • Voters’ sentiments about paying for others’ electric vehicles are especially sharp when they learn that those who purchase electric vehicles are, for the most part, wealthy and/or from California.
  • There is almost no willingness to pay for electric vehicle car purchases. When asked how much they would be willing to pay each year to support the purchase of electric vehicles by other consumers, the most popular answer in each state (by 70 percent or more) was “nothing.”

The full details of the survey can be found here.

Costly and unfair

Most importantly, an extension of the federal EV tax credit is unfair as the policy concentrates and directs benefits to wealthy individuals that are predominantly located in one geographic area, namely California. A breakdown of each state’s share of the EV tax credit is displayed in the map below:

In 2018, over 46 percent of new electric vehicle sales were made in California alone. Given that California represents only about 12 percent of the U.S. car market, this disparity means that the other 49 states are subsidizing expensive cars for Californians.  However, in order to understand the full extent of the benefits that people in California are receiving, some further explanation is in order.

When governments enact tax credit programs that favor special businesses without reducing spending, the overall impact is parallel to a direct subsidy as the costs of covering the tax liability shift to the American taxpayer or are subsumed in the national debt (future taxpayers). California offers a number of additional incentives on top of the federal tax credit for electric vehicles that are also driving demand for EVs in the state. These incentives include an additional purchase rebate of up to $7,000 through the Clean Vehicle Rebate Project, privileged access to high-occupancy vehicle lanes, and significant public spending on the infrastructure needed to support EVs. Therefore, the additional incentives that California (and other states) offer to promote EVs have broader impacts as these policies incentivize more people to make use of the federal tax credit, passing their costs on to American taxpayers. In other words, you’re not avoiding the costs of California’s EV policies by not living in California.

This problem is made even worse when we consider the impact of zero-emission vehicle (ZEV) regulations, which require manufacturers to offer for sale specific numbers of zero-emission vehicles. As recently as 2017, auto producers have been producing EVs at a loss in order to meet these standards, and they have been passing the costs on to their other consumers. This was made apparent in 2015 by Bob Lutz, the former Executive Vice President of Chrysler and former Vice-Chairman of GM, said:

“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65,000 now. Yukons are in the $70,000. The Escalade comfortably hits $100,000. Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”

Fiat Chrysler paid $600 million for ZEV compliance credits in 2015 (plus an unknown amount of losses on their EV sales), and sold 2.2 million vehicles, indicating Fiat Chrysler internal combustion engine (ICE) buyers paid a hidden tax of approximately $272 per vehicle to subsidize wealthy EV byers. ICE buyers were 99.3 percent of U.S. vehicle purchases in 2015. So, even if half the credits purchased were for hybrids, each EV sold in 2015 was subsidized by more than $13,000 in ZEV credit sales, in addition to all of the other federal, state, and local subsidies.

As is typical with most policies that benefit a politically privileged group, the plan to extend the federal tax credit program comes with tremendous costs, which are likely being compounded by people abusing the policy.  One estimate found that the overall costs of the Drive America Forward Act would be roughly $15.7 billion over 10 years and would range from $23,000 to $33,900 for each additional EV purchase under the expanded tax credit. Seeing as the costs of monitoring and enforcing the eligibility requirements of the EV tax credit program are not zero, it should surprise no one that the program has been abused as it has recently come to light that thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in EVs. Finally, additional concerns arise over the equity of the federal EV tax credit due to the fact that half of EV tax credits are claimed by corporations, not individuals

End this charade

When the tax credit was first adopted, politicians assured us that the purpose of the program was to help launch the EV market in the U.S. and that the tax credit would remain capped at the current limit of 200,000 vehicles. At that time, we warned that once this program was in place, politicians would continue to extend the cap in order to appease the demands of manufacturers and other political constituencies that were created by the program. A decade later, we find ourselves in that exact situation. At this point, it should be clear that Congress should not expand the federal EV tax credit as the program is nothing more than an extension of special privileges to wealthy individuals and corporations that are mostly located in California. If Congress can’t find the courage to put an end to such an unfair and inefficient policy, President Trump should not hesitate to veto any legislation that extends the federal EV tax credit, as doing so would be consistent with his approach to other energy issues such as CAFE reform.


AEA to Senate: Highway Bill is Highway Robbery

WASHINGTON DC (July 30, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued a letter to Senate Environment and Public Works Committee Chairman John Barrasso highlighting concerns about the recently introduced America’s Transportation Infrastructure Act. Included in the legislation is an unjustified, $1 billion handout to special interests in the form of charging stations for electric vehicles.  AEA maintains that provisions like this are nearly impossible to reverse in the future and create a regressive, unnecessary, and duplicative giveaway program to the wealthiest vehicle owners in the United States. 
 
Read the text of the letter below:
 

Chairman Barrasso,

The Senate Committee on Environment and Public Works is scheduled to consider the reauthorization of the highway bill and the Highway Trust Fund today.  At least some part of this consideration will include provisions that provide for $1 billion in federal grants for electric vehicle charging infrastructure.  This is among $10 billion in new spending included in a “climate change” subtitle.  All of this new spending is to be siphoned away from the Highway Trust Fund (HTF), meant to provide funding for the construction and maintenance of our nation’s roads and bridges.  The HTF already consistently runs out of money, a situation that will only be exacerbated by these new spending programs.

We oppose this new federal program for EV infrastructure for a number of reasons, including, but not limited to the following:

  • The grant program, once established in the HTF, will never be removed.  Our experience with other, non-highway spending in the trust fund (transit, bicycles, etc.) is that once it is given access to the trust fund, the access is never revoked.  Our nation’s highway infrastructure already rates poorly in significant part due to the diversion of highway funds to non-highway spending.
  • As we have noted elsewhere, federal support for electric vehicles provides economic advantages to upper income individuals at the expense of those in middle and lower income quintiles.  This grant program would exacerbate that problem.
  • This program will result in taxpayers in States with few electric vehicles or little desire for electric vehicles having their tax dollars redirected from the roads they actually use to subsidize electric vehicle owners in States like California and New York.
  • This program is duplicative.  There is already a loan program within DOE that allows companies and States to get taxpayer dollars to subsidize wealthy electric vehicle owners.

For these and other reasons, we oppose the provisions that would create a regressive, unnecessary, and duplicative giveaway program to wealthy, mostly coastal electric vehicle owners.  This giveaway not only redirects taxpayer money from the many States to the few, in looting the Highway Trust Fund it also leaves those many States, including Wyoming, with less money to maintain their own extensive road networks.


Sincerely,

Thomas J. Pyle

House Passes “Big, Beautiful” Budget Bill to Dismantle Costly Green Subsidies

WASHINGTON DC (05/23/25) – This week, the House passed the “Big, Beautiful” budget reconciliation bill. This bill advances key elements of President Trump’s agenda to unleash America’s energy potential. 

The House bill prioritizes energy security and affordability by eliminating costly green energy subsidies and wasteful green grants to outside organizations. While it falls short of full repeal of the egregious IRA green subsidies, it does dismantle numerous Biden-era climate and energy programs. These programs are projected to cost taxpayers between $936 billion and $1.97 trillion over the next decade, with potential liabilities reaching up to $4.7 trillion by 2050. The rapid conclusion of the House bill is a major win for taxpayers.

American Energy Alliance President Thomas Pyle issued the following statement:

“By targeting the IRA green energy provisions, Speaker Johnson and House Leadership have taken an important step in dismantling what President Trump has called the ‘Green New Scam.’ An especially large thanks goes to Representative Chip Roy and members of the House Freedom Caucus who tirelessly championed these measures.

“We look forward to the Senate taking up this bill, where the debate among Republicans should be over what more should be cut, not what spending they may want to retain. The immediate end to these tax credits must be included in any bill sent to President Trump’s desk so he can fulfill his campaign promise of saving American families from the costly IRA.”

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Rolling Back the IRA: House Bill Marks Key Victory on Energy Policy

Early Thursday morning, the House passed its version of the Republican reconciliation legislation package. The two main goals of the legislation are extending the 2017 Tax Cuts and Jobs Act and rolling back the 2022 Inflation Reduction Act (IRA). Republicans made a lot of changes over the past week, with conservative members of the House achieving important changes to the bill.  Late changes accelerated some of the energy subsidy phase-outs, leaving a package that, while far from perfect, strikes a major blow against the destructive distortions the IRA imposed on the US energy industry.

The two most welcome components of the package are a termination of the expensive and unnecessary electric vehicle tax credit at the end of 2025, with a limited one year extension for companies that have sold fewer than 200,000 electric vehicles, and a rapid phase out of the production tax credit for wind and solar electricity generation. 

The cost of the EV tax credit had ballooned from the original IRA estimate as the Biden administration bent rules to increase eligibility and circumvent domestic mineral sourcing requirements. The subsidy was one element of the Biden administration’s de facto electric vehicle mandate, which sought to force Americans into cars chosen by the government rather than consumers. Its termination is welcome and needed.

The second major success of the reconciliation package almost didn’t happen. In the initial draft legislation, wind and solar subsidies were not to begin phasing out until 2029 or later. This distant phase-out was a dodge, letting legislators today pretend they were taking action, but with the expectation that a future Congress would quietly revive and extend the subsidies, as has happened so many times before. On this point, however, some House members took a stand against these destructive subsidies, which increase electricity prices and destabilize the electric grid. The final House legislation ensures that only projects that begin construction within 60 days of the passage of the reconciliation package will be eligible for the credit phase-out. Ensuring that the credits terminate under this Congress and this president is crucial, increasing the likelihood that the credits may actually stay dead.

The legislation is far from perfect. Some subsidy programs from the IRA, for example, for biodiesel and nuclear, are still set to continue. And the legislation fails to rescind billions of dollars in unspent funds from the IRA. Some members of the Senate have also claimed that they are going to fight to extend the wasteful and destructive IRA subsidies that the House has targeted for elimination. This would be a mistake; the only way to ensure that these subsidies terminate is to make sure that they terminate quickly. The longer the phase-out period, the more likely that the “temporary” program becomes permanent. The IRA subsidies are harmful and should all be repealed immediately. The House reconciliation package gets close to that goal in many ways, the Senate should not move its version in the wrong direction.

Senate Vote Ends California Car Ban

WASHINGTON DC (5/22/25) – Today, the U.S. Senate passed H.J. Res 88, providing for congressional disapproval of the Clean Air Act waiver for California’s Advanced Clean Cars II regulation, which would have banned the sale of gas-powered cars and trucks and greatly increased the cost of all new vehicles. The vote was 51-44. This vote will be included in our American Energy Scorecard.

American Energy Alliance President Thomas Pyle issued the following statement:

“This vote isn’t just about cars — it’s about preserving freedom, mobility, and convenience for American families. California’s terrible approach to energy and transportation policy should not become the country’s burden to bear. 

“Ending – once and for all – California’s gas-powered car ban is a necessary step in restoring and protecting Americans’ freedom to choose the types of cars and trucks that best suit their needs, and it starts the process of making vehicles affordable again. 

“Unelected people in California and the Biden administration abused the Clean Air Act waiver process to try and force a backdoor EV mandate. With President Trump’s anticipated signature, he and the Republicans in Congress will finally put an end to a decades-long quest by the fringe left to force people out of their cars.”

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Key Votes: Senate Consideration of California Waiver CRAs

The American Energy Alliance supports H.J. Res. 87 providing for congressional disapproval of the Clean Air Act waiver for California’s Advance Clean Trucks regulation; H.J. Res. 88 providing for congressional disapproval of the CAA waiver for California’s Advanced Clean Cars II regulation; and H.J. Res. 89 providing for congressional disapproval of the CAA waiver for California’s regulations on medium to heavy duty trucks and other engines.

California’s special waiver from certain Clean Air Act provisions was created to give the state the ability to address specific state level atmosphere issues. It was not authority to make the California Air Resources Board into a super regulator who can set regulatory policy for the entire country in defiance of Congress and the Constitution. These three regulations are about imposing California’s policy preferences on all Americans. Congress should emphatically reject this unwarranted and unconstitutional overreach.

YES votes on H.J. Res. 87, 88 and 89 are votes in support of free markets and affordable energy. AEA will include these votes in its American Energy Scorecard.

All Eyes on Curtis

WASHINGTON DC (5/16/25) – Today, the American Energy Alliance launched a five-figure advocacy initiative in Utah. The ads encourage Senator John Curtis (R-UT) to support the effort to overturn the Environmental Protection Agency’s approval of the Clean Air Act waiver for California’s Advanced Clean Cars (ACC II) rule. The Senate is expected to take up the measure before the Memorial Day recess.

AEA President Thomas Pyle issued the following statement: 

“The Congressional Review Act is clear: once an agency submits an action to Congress, only Congress has the authority to approve or reject it. California’s waiver, which is a crucial element behind a nationwide electric vehicle mandate, illustrates exactly why the CRA exists—to give lawmakers a say in major regulatory decisions.

“We want voters in Utah to know that Senator Curtis is the weak link here. In spite of expressing his support for giving voters a choice in the types of cars and trucks that best suit their needs, Senator Curtis is wavering in his support to end the backdoor EV mandate. Without his support, the waiver may remain in place, ensuring former President Biden’s electric vehicle mandate will live on, in spite of President Trump’s promise to end it. Senator Curtis must protect consumer choice for Utahns and stop unelected agencies from controlling the future of American transportation.”

Background:

The waiver allows California to ban the sale of gas-powered cars by 2035 and permits 18 other states to adopt the same policy. A central issue is whether such EPA waivers fall under the Congressional Review Act (CRA), which gives Congress the authority to review and potentially overturn agency rules. Both the Government Accountability Office and the Senate Parliamentarian have challenged this, arguing that California’s waiver is not a rule subject to CRA oversight.

However, these waivers meet the CRA’s definition of a rule, as they have broad applicability across multiple states and significantly impact the national auto industry. Their sweeping regulatory effects and precedent-setting implications support this classification. The Trump administration also treated waivers this way, submitting them for congressional review.

On May 1, 2025, the House passed a CRA resolution to overturn the waiver. The measure now heads to the Senate, where a vote is expected this week. Senator John Curtis remains undecided—his vote could determine whether Washington bureaucrats succeed in their effort to cement former President Biden’s electric vehicle mandate.

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The Unregulated Podcast #228: Fighting the Oligarchy

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the fallout of recent Biden admin revelations, the battle over the “Big, Beautiful Bill,” and the future of the Inflation Reduction Act.

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What They Were Saying About The IRA

The Republican controlled Congress is now considering a plan to fully repeal President Biden’s poorly named Inflation Reduction Act (IRA) of 2022. There are many reasons to fully repeal the IRA; however, the “Green New Deal” elements are especially troubling.

The IRA’s energy subsidies are projected to cost taxpayers between $936 billion and $1.97 trillion over the next decade, with potential liabilities reaching up to $4.7 trillion by 2050. This enormous price tag makes a promising target for the Trump administration in its efforts to stop runaway spending.

Despite this being a slam-dunk for the Republicans, a group of GOP Representatives and Senators recently signed letters asking to protect the IRA’s fiscally irresponsible tax credits.

“We request that any proposed changes to the tax code be conducted in a targeted and pragmatic fashion that promotes conference priorities without undoing current and future private sector investments which will continue to increase domestic manufacturing, promote energy innovation, and keep utility costs down. We believe we can work together so that all these goals are achievable.” -Republican Letter-Signers (Full list below), March 9, 2025

  • Sen. Lisa Murkowski (AK)
  • Sen. John Curtis (UT)
  • Rep. Andrew Garbarino (NY-02)
  • Rep. Mark Amodei (NV-02)
  • Rep. Don Bacon (NE-02)
  • Rep. Rob Bresnahan (PA)
  • Rep. Earl Carter (GA-01)
  • Rep. Juan Ciscomani (AZ-06)
  • Rep. Gabe Evans (CO-08)
  • Rep. Vince Fong (CA-20)
  • Rep. Erin Houchin (IN-09)
  • Rep. Jeff Hurd (CO-03)
  • Rep. John James (MI-10)
  • Sen. Thom Tillis (NC)
  • Sen. Jerry Moran (KS)
  • Rep. Dave Joyce (OH-14)
  • Rep. Tom Kean Jr. (NJ-07)
  • Rep. Jennifer Kiggans (VA-02)
  • Rep. Young Kim (CA-40)
  • Rep. Nick LaLota (NY-01)
  • Rep. Michael Lawler (NY-17)
  • Rep. Ryan Mackenzie (PA-07)
  • Rep. Mariannette Miller-Meeks (IA-01)
  • Rep. Dan Newhouse (WA-04)
  • Rep. David Valadao (CA-2)

Many of the signers were openly calling for the full repeal just a few short years ago. Here’s what they were saying before they had a chance to actually make a difference:

Sen. Lisa Murkowski (AK)

It contains hundreds of billions of dollars in new spending, and hundreds of billions more in new taxes that will burden the American people and American businesses for years to come. Even floor debate – with amendment votes starting just before midnight on Saturday, and continuing through Sunday afternoon – was designed to avoid public awareness and scrutiny…There is no doubt in my mind, based on both substance and process, that the Senate should not have passed it.”The Center Square, August 8, 2022

Sen. John Curtis (UT) 

This bill, the Inflation Reduction Act (despite multiple studies showing it won’t reduce inflation) is not transformational. The only transformational thing about the Democrats’ tax and spending spree is how it will raise taxes and give the federal government massive command and control over our economy and in people’s lives. In a twist of irony, the bill will tax and audit the middle class to give money to the Democrat’s preferred large corporations to invest in decarbonization. We should be protecting the middle class from increased energy costs, not using them to subsidize corporate tax credits.Congressional Western Caucus, August 15, 2022

 

Sen. Thom Tillis (NC)

“It’s an insult to the intelligence of North Carolinians when politicians like President Biden and Governor Cooper claim that raising taxes and spending $740 billion on their far-left priorities will actually reduce inflation and stop the Biden recession.”

-The News & Observer, August 8, 2022

Sen. Jerry Moran (KS)

“The idea that spending more money and increasing taxes will be helpful in combating inflation is false and confirmed by the Congressional Budget Office. Rather than taking steps to curb spending and expand energy production, the so-called Inflation Reduction Act will raise taxes on small businesses and working families, including by hiring 87,000 more IRS agents to target more Americans with tax audits. Instead, the Senate should be focused on pro-job, pro-growth policies to reduce the cost of gas, goods and services for Kansans.” -Office of Senator Jerry Moran, August 7, 2022

Rep. Andrew Garbarino (NY-02)

“This bill means $745 billion in new spending, including over $400 billion for the ‘Green New Deal’ and $80 billion in new funding for the IRS to hire 87,000 new agents to go after the middle class and small businesses…This bill is bad for Long Islanders and bad for the American people. Shame on Congressional Democrats for forcing through this irresponsible legislation to score a political win at the expense of American taxpayers.” -Office of Congressman Andrew R. Garbarino, August 12, 2022

Rep. Mark Amodei (NV-02)

“When you look at the overall policy, let’s just say for Nevada, these two pieces of funding do not make up for the damage these two pieces of legislation can do or are threatening to do.”

-E&E News, April 21, 2023

Rep. Don Bacon (NE-02)

“This reckless and partisan bill is bad for Nebraska families, bad for Nebraska businesses, and bad for America’s energy sector. Democrats have been misinforming the American people on what’s really in this bill, and even President Biden’s favorite economist, Mark Zandi, says it won’t reduce inflation. We can’t keep asking the American taxpayers to shoulder the burden for the Democrats’ reckless spending.” -Office of Congressman Don Bacon, August 12, 2022

Rep. Dave Joyce (OH-14)

“The Majority just created hundreds of billions of dollars in new spending and implemented hundreds of billions of dollars in tax hikes. Those of us who live in the real world know that Washington can’t tax and spend its way out of this inflation crisis. That’s why I voted no.” -Congressman David Joyce, August 12, 2022

Rep. Tom Kean Jr. (NJ-07)

“Fiscal policy should be guided by what economists are saying, not Nancy Pelosi. Tom Malinowski just voted YES on a Liberal Spending Spree that will raise your taxes and hire 87k new IRS agents that will target New Jersey’s families.”

-Congressman (then-candidate) Tom Kean, August 30, 2022

Rep. Buddy Carter (GA-01)

“The Inflation ‘Reduction’ Act is full of empty promises that harm some of Georgia’s flagship companies. In an ironic and careless twist, this legislation punishes one of Georgia’s largest employers and local providers of electric vehicles (EV), Kia Motors.” -The Atlanta Journal-Constitution, September 16, 2022

Rep. Young Kim (CA-40)

“The only thing the Inflation Reduction Act is reducing is the amount of hard-earned money in the wallets of American taxpayers.”

-Office of Congresswoman Kim Young, August 12, 2022

Rep. Mariannette Miller-Meeks (IA-01)

“This enormous spending package is bad for Iowans, bad for patients, bad for the economy and hardworking Americans, and bad for the future of American innovation.”

-Office of Congresswoman Mariannette Miller-Meeks, August 12, 2022.

Rep. Dan Newhouse (WA-04)

“President Biden’s policies have placed America’s food, energy, economic, and national security at risk and this bill will do nothing to reverse any of that. Instead this legislation will make our situation even worse.”

-Congressman Dan Newhouse, August 12, 2022

Rep. David Valadao (CA-2)

“The so-called ‘inflation reduction act’ is being paid for on the backs of hardworking, middle-class valley families struggling to put food on the table and gas in their cars. the law did nothing to lower prices, offshored our critical supply chains and jobs to China, and supercharged the IRS to audit more small businesses and working families.”

-Bakersfield Now, September 5, 2023

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Repeal the IRA in the Reconciliation Bill

In 2022, President Biden and a Democratic Congress passed the Inflation Reduction Act (IRA). No Republican voted for it in the House or the Senate. The IRA should be repealed because: 

Excessive Fiscal Burden

  • The IRA’s energy subsidies are projected to cost taxpayers between $936 billion and $1.97 trillion over the next decade, with potential liabilities reaching up to $4.7 trillion by 2050. 
  • This is far more than the CBO’s initial projections. The CBO’s initial score for the entire bill erroneously estimated a deficit reduction of $300 billion for the IRA.
  • A new analysis by EY concluded that repealing the EV credits alone will save taxpayers $300 billion from FY 2026 – 2035. 
  • A major problem is that many of the IRA’s subsidies are uncapped and tied to carbon dioxide emissions reduction targets that will never be met, leading to potentially unlimited future costs.

Inefficiency and Market Distortion

The IRA’s subsidies have led to market distortions, such as negative electricity prices, where producers continue generating power despite losses to claim subsidies. This undermines the efficiency of wholesale electricity markets, turning them into “subsidy clearinghouses” rather than platforms for cost-effective energy distribution. For years, we have fought the Wind Production Tax Credit for exactly this reason. In fact, the wind lobby agreed to phase out the Wind Production Tax Credit in 2012, but the IRA continues this and similar subsidies.   ​

Limited Job Creation at High Cost

While the IRA has led to the announcement of numerous federally subsidized projects, over 40% have been delayed or canceled. The jobs that have been created are estimated to cost taxpayers between $2 million and $7 million each, raising questions about the cost-effectiveness of these investments.​

Failing to Repeal the IRA Will Hinder President Trump’s Plan for American Energy Dominance and Break His Campaign Promise to “Terminate the Green New Deal.” 

GOP Representatives and Senators who have signed letters asking to protect the IRA’s fiscally irresponsible tax credits: 

  • Sen. Lisa Murkowski (AK)
  • Sen. John Curtis (UT)
  • Rep. Andrew Garbarino (NY-02)
  • Rep. Mark Amodei (NV-02)
  • Rep. Don Bacon (NE-02)
  • Rep. Rob Bresnahan (PA)
  • Rep. Earl Carter (GA-01)
  • Rep. Juan Ciscomani (AZ-06)
  • Rep. Gabe Evans (CO-08)
  • Rep. Vince Fong (CA-20)
  • Rep. Erin Houchin (IN-09)
  • Rep. Jeff Hurd (CO-03)
  • Rep. John James (MI-10)
  • Sen. Thom Tillis (NC)
  • Sen. Jerry Moran (KS)
  • Rep. Dave Joyce (OH-14)
  • Rep. Tom Kean Jr. (NJ-07)
  • Rep. Jennifer Kiggans (VA-02)
  • Rep. Young Kim (CA-40)
  • Rep. Nick LaLota (NY-01)
  • Rep. Michael Lawler (NY-17)
  • Rep. Ryan Mackenzie (PA-07)
  • Rep. Mariannette Miller-Meeks (IA-01)
  • Rep. Dan Newhouse (WA-04)
  • Rep. David Valadao (CA-2)

The Unregulated Podcast #227: Escalatory Escalation

Much like Columbus Day, The Unregulated Podcast is back after a brief hiatus. This week Tom Pyle and Mike McKenna review the first 100 days of the Trump administration’s work on energy issues, what to expect from the looming budget battle, and do a post-mortem of the Iberian “green” blackouts.

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House Vote Brings Us One Step Closer to Ending California’s Car Ban

WASHINGTON DC (5/1/25) – Today, the House of Representatives passed H.J. Res. 88, providing for congressional disapproval of the CAA waiver for California’s Advanced Clean Cars II regulation. The vote was 246-164. Notably, 35 Democrats joined 211 Republicans in support of the resolution, including two Democrats from California. This vote will be included in our American Energy Scorecard.

AEA President Thomas Pyle issued the following statement: 

“Imposing California’s agenda on all Americans flies in the face of the freedoms this country was built on. The California Air Resources Board is not a national regulator, but these waivers certainly grant it that power. The Biden administration’s Clean Air Act waivers must be firmly rejected to protect Americans’ right to choose the types of vehicles that best suit their needs and to prevent California’s regulatory agencies from dictating the future of American transportation.

“By invoking the Congressional Review Act to overturn California’s car ban, House Republicans are signaling their commitment to the promises they made to voters. The resolution now moves to the Senate, where elected representatives—not career bureaucrats—will determine the fate of the California waiver. Senators should follow the House’s lead to uphold consumer choice in the auto market and preserve the freedom of mobility, a cornerstone of America’s growth and vitality for over a century.”

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