▶ 0:03:20Testing witness mic. One, two, three for the court reporter. Testing witness mic.
▶ 1:01:40Okay, good to see you.
▶ 1:03:57Cool. Thank you. The joint hearing of the subcommittee on economic growth, energy policy and regulatory affairs and the subcommittee on healthcare and financial services will come to order. Welcome everyone to this hearing and thank you for your patience. Turns out if when you're when the in the room with the president, you're not allowed to leave and security won't let you. So, um I want to recognize myself for the purpose of an opening statement.
▶ 1:04:25But first, I want to say without objection, the chair may declare a recess at any time. Today, we are here to provide critical oversight of the policies and subsidies instituted through the Inflation Reduction Act or the IRA signed into law under the Biden administration in 2022. This misleadingly named legislation passed with zero Republican votes.
▶ 1:04:47Three years later, the projected costs continue to balloon with rounding errors in the billions, all while creating a runway runaway subsidies and unnecessary distortions within energy and the healthcare markets. In January of this year, the director of the Congressional Budget Office estimated that the IRA's energy subsidies would increase US budget deficits by $825 billion over the next 10 years.
▶ 1:05:15That is more than three times the initial 10-year estimate, which was roughly about 270 billion that that was determined by CBO when the bill was passed. How did the CBO and the JCT get these numbers so wrong? Other estimates show an even greater a grimmer picture of the IRA's long-term economic impacts on the federal budget.
▶ 1:05:38Recent analysis by the Kato Institute shows that energy subsidies included in the IRA may cost between 936 billion and 1.9 trillion over the next 10 years and between 2 trillion and 4.7 trillion by 2050. These are chilling estimates that extend far beyond what was previously projected.
▶ 1:06:03And I would like to enter this report into the record entitled the budgetary cost of the inflation reduction acts energy subsidies from the KO Institute into the hearing record so that others may review these findings. Without objection, so ordered. These subsidies didn't just happen to create distortions in the energy markets. They distorted markets by design. The IRA funnels money to so-called clean energy organizations that would not be able to compete on their own without these subsidies.
▶ 1:06:33The Biden administration was blatantly picking winners and losers in the economy. The federal government slammed a fist on the economic scale to stifle free market competition that allows for the most reliable, cost-effective sources of compete to compete on an open playing field. All in the name of unproven hyperbolic and extreme climate alarmism.
▶ 1:06:57The kicker, these IRA subsidies coming from the party that purports to be against the oligarchy and fighting the billionaires created tax loopholes that carved out $11,000 on average for the top 1% through tax credits while failing to demonstrate tax savings of more than 100 for the bottom line quintile of the American taxpayers. The IRA paid out the rich, all under the guise of climate change.
▶ 1:07:27There are also implications for the future of our tax code and prescription drug costs. The IRA has already led to a more convoluted web of tax subsidies, creating additional burdens for compliance for health care. Under the IRA, the Biden administration's pill penalty will ultimately increase drug costs and federal expenditures on Medicare.
▶ 1:07:48We have an opportunity to take a hard look at these provisions to carefully evaluate whether these tax credits and programs are achieving their intended results and whether taxpayer dollars would be better spent elsewhere. Doing so has the potential to save taxpayers over $1 trillion, ease inflation, stimulate economic growth by allowing for free market competition, and make energy affordable again.
▶ 1:08:13This Republican majority is committed to protecting taxpayer dollars, instituting necessary health care reforms, and stopping wasteful Green New Deal energy policies that are out of touch with the everyday needs of Americans. And with that, I yield to ranking member Frost for his opening statement. Thank you so much, Chairman Burlesson, and thank you so much to the witnesses for being here this morning.
▶ 1:08:36The Inflation Reduction Act or IRA was in a historic investment in battling the climate crisis and creating good paying American jobs. And it was designed to achieve these goals by investing in our communities and in our families. The IRA provided a score of tax credits that energed uh lowered energy costs for working families by by allowing them to make their homes more energy efficient and invest in clean energy.
▶ 1:09:02Shifting to clean energy and reducing emissions means reduced air pollution for all of us, for all of our communities, which protects us from illnesses and early death. IRA tax credits include $14,000 in direct consumer rebates for families to buy heat pumps and other energy efficient home appliances, providing families with savings of at least 350,000 or $350 per year.
▶ 1:09:26These tax credits also include a 30% tax credit for solar panels that will allow 7.5 million more families to install solar panels on their roofs by saving at least $300 per year. In my district in Florida, affordable access to solar panels thanks to the IRA has helped thousands of my constituents lower their energy bills and reduce their reliance on fossil fuels. This has actually helped many folks during hurricane season.
▶ 1:09:55The IRA has not just been good for families and individuals pocketbooks. It has also created economic growth in communities across the nation. Since the passage of the IRA, we've seen a domestic manufacturing renaissance and boom with 340 major clean energy projects announced in 41 states and Puerto Rico, including many of my Republican colleagues districts. More than $522 billion dollar is planned for investments in these clean energy projects.
▶ 1:10:26In fact, the top 10 congressional districts with the highest investments in clean energy technologies during the first 10 months of the IRA, eight of them were Republican districts. This includes $ 1.9 billion in Representative Andy Bigg's district in Arizona. As of last summer, the IRA had created more than 300,000 goodaying clean energy jobs. uh many of which do not require four-year degrees.
▶ 1:10:51And projections indicate that the IRA could create nearly 850,000 jobs annually across industries. But despite the enormous economic benefit of the IRA and its various energy tax credits, many Republicans want to repeal those key provisions. We should be doing more to make sure that working families can take advantage of these opportunities to lower costs and to reduce their exposure to harmful air pollution, not eliminating these opportunities completely.
▶ 1:11:21As a part of the House Republicans big ugly bill, their budget betrayal of the middle class and working class, which would put additional costs on Americans in order to provide tax cuts to billionaires and mega Republicans on the Ways and Means Committee added language that would increase energy costs for American households as much as 7% or $290 per year by cutting tax incentives for advanced manufacturing, clean vehicles, and clean energy production.
▶ 1:11:52Gasoline prices could increase by 25 to 27 cents per gallon due to these cuts and the termination of fuel economy and tailpipe emission standards. This is all against the backdrop of President Trump's promise to cut energy prices in half within 18 months of him taking office. And as of today, he has 428 days left to make good on his promise. But it's not looking good. In fact, it seems that energy costs are increasing for Americans across the board.
▶ 1:12:21I don't know about all of you, but I know that my utility bill, my constituents utility bill, has only gone up since January 20th of this year. And this will be made worse by Republicans blanket roll backs of the key inflation reduction act provisions. Even many Republicans are not on board with the IRA roll backs uh that their colleagues are attempting to pass. I ask unanimous consent to enter into the record this statement by 14 House Republicans um talking about cuts to the NR uh IRA.
▶ 1:12:50Without objection, 14 House Republicans have argued, quote, uh, "We need to ensure certainty for current and future energy investments to meet the nation's growing power demand and protect our constituents from higher costs." End quote. And they're right when they say that. And not only that, but the Inflation Reduction Act, and we've talked a lot about this on this committee over the last several hearings.
▶ 1:13:13The IRA has been key in pushing our nation to diversify our energy mix, which is a worthwhile investment, both for our national security, um, but also to ensure that we're cutting costs for Americans across the board. And every other major country in the nation are making the same moves to diversify their energy mix as well.
▶ 1:13:32The real threat to energy costs for working families are the Republican policies that prioritize tax cuts for billionaires, huge corporations, and polluters over people, not the Inflation Reduction Act, which invests in our communities, our families, and our future to lower costs and improve our health. Thank you so much, and I yield Thank you, Ricky Member Frost. Um, I now recognize the chairman Grothman for the purpose of making his opening statement.
▶ 1:14:02you. It's a great hearing, great idea for a hearing. Thank you for bringing that up. Welcome to this joint hearing of the subcommittee on economic growth, energy policy, and economic affairs and the subcommittee on healthcare and financial services. This is a great opportunity for us to address one of the most catastrophic pieces of legislation from the Biden era, the Inflation Reduction Act or the IRA.
▶ 1:14:30Despite its name, the Inflation Reduction Act didn't curb the brutal inflation caused by President Biden and the congressional uh Democrat spending spree. It actually exacerbated the problem. The CBO was even admitting that in reality it was never about reducing inflation. It was about pushing a green agenda to the benefit of the big businesses that benefit benefit the Democrat allies.
▶ 1:14:59The IRA expanded government, which we shouldn't be for, hindered innovation, and increased costs for Americans. According to my buddies at the Kato Institute, the bill may cost the taxpayers almost $2 trillion over the next 10 years. This will increase the deficit by $300 billion by 2033. Some people may ask, why does it cost so much?
▶ 1:15:23The IRA contains billions of dollars for subsidies of so-called green energy projects uh for elites. It's corporate welfare for the elite climate radicals. The beneficiaries of tax subsidies are overwhelming Democrat donors. And you know, the press has got to point that out, do a better job of pointing it out and following where does this money come from.
▶ 1:15:45People like Al Gore who's invested in green energy businesses like those being propped up by IRA and then they turn around and make money off of it. The IRA IAS, what you got to do is you got to let the free market control, right? and the free market will promote automatically the cheaper energy uh and and and benefit money for all Americans. The the green energy tax credits don't benefit the average American.
▶ 1:16:13They go to high income earners who are already planning on and could already afford installing solar panels or buying an electric vehicle, right? We just ought to let the market the market out. Uh, plus it's only only worsens our over complicated tax system. Any tax credits, and there are other ones I don't like around here.
▶ 1:16:34Anytime you see tax credits uh sticking their nose in things, you're complicating the Internal Revenue Code and really probably up to something no good. Uh, with the additions made in the IRA, the tax code exceeded 4 million words and cost Americans $300 billion annually in compliance. I'm pleased that many of these wasteful subsidies are being eliminated or phased out in the Republican bill. As our witness, Mr.
▶ 1:17:00Lieberman, said, "These green subsidies deserve a sledgehammer, not a scalpel." Proponents of the IRA claim that it makes health care more affordable to seniors. Ah, Boulder Dash. Making Medicare Part D premiums higher for seniors is an odd way to do that. The IRA does just that. And we just heard from President Trump, by the way. He's bringing down drug prices big time.
▶ 1:17:28Uh but the IRA makes uh uh results in a more expensive Medicare plans and less plan options for seniors. The IRA also extended pandemic era Obamacare sub subsidies. Due to this extension, American taxpayers are now subsidizing a family of four making 128 grand a year. These subsidies should not exist at all, let alone for families who are well off.
▶ 1:17:55As the economist, although actually subsidies be should be the same for everybody, otherwise we wind up penalizing people for for making more money, which isn't good either. As the economist Milton Friedman said, nothing is so permanent as a temporary government program. Remember that these Obamacare subsidies are currently set to expire at the end of the year, and Congress should let that happen.
▶ 1:18:17Last November, our constituents sent us a clear message that it's high time to leave the Biden administration's reckless spending permanently in the past. Today's hearing is an opportunity to dissect the harm done by the Inflation Reduction Act and understand why many of its provisions should be repealed. And with that, I lead to my good buddy, ranking member, my good friend. Uh, we just got done listening to President Trump, right?
▶ 1:18:48So, my good friend, you feel like saying my good friend all the time. Uh, with that, I yield to ranking member and my good friend Christa Mory for his opening statement. Thank you, Mr. Chair, and thank you to all of you for attending. Uh, before I begin, I must address DOJ's announcement of charges against our colleague, Congresswoman Macyver, rel related to her recent visit to an immigration detention center in Newark. I've watched the video of her multiple times.
▶ 1:19:15The charges of assault and impeding law enforcement are outrageous on their face and appear to be designed to silence criticism and to deter congressional oversight of the Trump White House. That will not happen. And we will stand with the congresswoman as she confronts these absurd charges from the Trump DOJ. Now to the topic at hand.
▶ 1:19:40And while I appreciate the opportunity to discuss the Inflation Reduction Act, I must express concern with the framing of today's hearing. Rather than taking a balanced look at a law that has already helped lower prescription drug prices and sparked major investments in American clean energy, we are once again returning to overly simplistic narratives that do not reflect the full The IRA finally allowed the government to negotiate high drug
▶ 1:20:10prices with drug companies, something that should have happened decades ago. The IRA enabled investment in American clean energy, not foreign oil. And it's already helping working families in blue and red states alike. That's why even Republicans like much of the IRA.
▶ 1:20:29As evidence, Republicans as part of the rec reconciliation package have kept very influential pieces of the drug pricing provisions intact, such as the $35 monthly cap on insulin for seniors and a $2,000 annual cap on costs at the pharmacy for Medicare beneficiaries. They also kept the Medicare drug price negotiation authority for high cost drugs.
▶ 1:20:55Additionally, in early March, 21 Republicans sent a letter expressing support for IRA's energy tax credits. One couldn't be criticized for thinking that outrage about the IRA appears performative. The title of this hearing, mandates, meddling, and mismanagement, is an illiterative distraction from what's really being threatened today. Let me be clear.
▶ 1:21:19This has nothing to do with energy or medicine and everything to do with the special interests that have been getting a free ride for too long. For the past few months, House Republicans have been debating within their caucus how deeply they can slash critical services for working people in order to fund their tax plan for the wealthiest among us.
▶ 1:21:39If their reconciliation bill is allowed to go into effect, CBO estimates that almost nine million people, nine million people, folks, will be thrown off Medicaid, all in order to help fund tax cuts. To illustrate a real life consequence of this proposal, cutting Medicaid specifically, I'd like to share Julia's story. Julia happens to be one of our constituents, and I'm I want to tell you what her mother, Joan, said.
▶ 1:22:08quote, "Because of funding from Medicaid, our 43-year-old daughter, Julia, has had the opportunity to live a life of independence and happiness. Her job training program funded through Medicaid gave her the ability to learn the tasks she is expected to perform at work." Joan then shares, quote, "My biggest fear about cuts in Medicaid is the very real possibility that Julia will not have anyone
▶ 1:22:38to care for her after her father and I are gone." Julia's experience is not unique. Pregnant women, children, seniors, and individuals with disabilities will lose their livelihoods if Medicaid is cut by the hundreds of billions. Adding to the cruelty, one in four families will lose their SNAP benefits. That is literally taking food out of the mouths of babies.
▶ 1:23:02And I know a lot about SNAP because its predecessor program, food stamps, was critical to my family when my parents fell on hard times and we needed help to get back on our feet. Food stamps sustained us until my parents were able to get good quality jobs. My parents realized the American dream and they never took it for granted. And neither have I. From destroying the safety net to polluting our air and water, this administration is jeopardizing every single community in America.
▶ 1:23:33Red states and blue states, large cities and small towns, manufacturers and farmers. No one will be left unharmed. These cuts aren't about reducing waste, fraud, or abuse. They're about making room for tax breaks for the wealthy at the expense of hardworking Americans. The Inflation Reduction Act has strengthened the the health care system of our country while also expanding opportunity and boosting our economy in the process. That's what government should be about.
▶ 1:24:02I won't stand idly by while House Republicans dismantle the IRA safety net programs and other initiatives their donors dislike. I yield back. Thank you. Before we begin, I want to enter into the record a letter dated May 1st, 2025 to Chairman Smith and to the speaker and to the president signed by 38 members requesting for a full repeal of the IRA.
▶ 1:24:29And with that, I'm pleased to welcome our expert panel of witnesses. Um, I'm supposed to without objection to myself, right? So ruled. And with that, I'm pleased to welcome our expert panel of witnesses. I'd first like to welcome Doc, Mr. Ben Lieberman, who is a senior fellow at the Competitive Enterprise Institute. Next, we have Dr. Erin Trish, who is the co-director of the USC Schaefer Center and an associate professor at the U.
▶ 1:24:58USC Man School ofy's Department of Pharmaceutical and Health Economics. That's a lot. That's a lot. Next, we have Dr. William McBride, who is the chief economist and Stephen J. Eton fellow in economics at the tax foundation. And lastly, we have Dr. Emily G. Is that correct? Okay. Who is the senior vice president for inclusive growth at the Center for American Progress. I thank each of you today. And with that, uh, I look forward to hearing your your testimonies.
▶ 1:25:29Pursuant to Committee Rule 9G, the witnesses will please stand and raise their right hand. If you want to raise your right hand. Do you solemnly swear or affirm that the testimony that you're about to give is the truth, the whole truth, and nothing but the truth? So, help you God. Let the record show that the witnesses answered in the affirmative. We appreciate you being here today. You you may be seated.
▶ 1:25:59Um, let me remind the witnesses that we have read your written statements and they will appear in full in the in our hearing record. Uh we please limit your your remarks to five minutes and as a reminder please press the button and please speak directly into the microphone so that we can hear what you have to say. I now recognize Mr.
▶ 1:26:19Lee Lieberman for his opening Chair Berles Rothman ranking members Frost and Christ Morphy and members of this committee. Thank you for the opportunity to testify today. My name is Ben Lieberman and I'm a senior fellow at the Competitive Enterprise Institute, a nonpartisan public policy organization dedicated to advancing the principles of free markets and limited government.
▶ 1:26:45CI has been critical of the Green New Deal since it was first advanced in 2019. We were particularly concerned about the burdens its many climate related measures would placed on the American people in the form of costlier energy, transportation, and housing. Unfortunately, our concerns are being realized now that the these Green New Deal style provisions have been incorporated into the badly misnamed Inflation Reduction Act, which was enacted into law in 2022.
▶ 1:27:16When the IRA was under consideration by Congress, the Congressional Budget Office and Joint Committee on Taxation released cost projections of its energy related tax credits and other subsidies. At the time, the price tag for the energy provisions in the IRA was estimated at about 3 70 billion for the 10-year period from 2022 to 2032. And this was a score that informed the debate over the bill.
▶ 1:27:41Only two years after passage, CBO and JCT more than doubled this estimate. Other projections see costs potentially reaching into the trillion dollar range, including Goldman Sachs, the University of Pennsylvania, and the KO Institute. The KA report notes that the upper bound of these estimates is complicated by the fact that several provisions do not set dollar limits or deadlines.
▶ 1:28:06Most notably, the clean electricity tax credits for wind and solar can be used by as many project developers that want to claim them. and they do not sunset until US greenhouse gas emissions have been reduced to 25% of baseline 2022 levels, a target unlikely to be met for many decades and possibly never. The high and rising costs of the inflation reduction act are all the more objectionable given the deceptive title of this bill.
▶ 1:28:35The American people were not informed that this was a massive climate bill and they never agreed to any such thing. The fact that the price tag is likely north of $1 trillion makes this perhaps the costiest example ever of congressional bait and switch. But the costs don't end there. Nearly every alternative energy source and technology favored under the inflation reduction act has shortcomings that are not likely to go away no matter how many subsidies are given to them.
▶ 1:29:04First and foremost, in contrast to the electricity generated from coal, natural gas, nuclear or hydroelectric, intermittent renewable electricity sources like wind and solar are not reliably available 247. Experts at organizations like the North American Electric Reliability Corporation, NERK, are warning of an increased risk of blackouts this summer, and the report specifically mentions the risk from periods of low wind and solar output.
▶ 1:29:32Note also that we're adding to electric reliability risks. At the same time, electricity demand is on the rise due in part to other provisions in the IRA uh favoring electric vehicles over gasoline powered ones as well as electric appliance over natural gas versions. Thus, we face the double whammy of provisions in the IRA reducing the reliability of the grid while other provisions seek to make Americans less energy diverse and more dependent on electricity.
▶ 1:30:01In other words, we're trying to put more of our eggs in one basket while switching to a flimsier basket. Subsidies beget subsidies, and the buildout of wind energy, for example, uh will likely necessitate major investments in transmission lines, by some estimates, into the trillions of dollars. We will likely to see more lobbying for subsidies to do so. The American people don't want yet another potential trillion dollar climate bill anymore than they wanted the first one.
▶ 1:30:30The provision for consumers such as the CRA tax credits for EVs and certain appliances may make costly alternatives somewhat less so, but they are not for the things most of us want. And these provisions are highly regressive as they simply don't make economic sense for most lower inome households even with the subsidies.
▶ 1:30:50In conclusion, the tax credits and other subsidies for alternative energy sources and technologies in the inflation reduction act will likely exceed one trillion dollars in costs to the American people. The distortions to energy markets will impose further burdens. Consumers were will bear the brunt of these impacts and disproportionately lower income ones. For these reasons, all of these provisions should be repealed. Thank Thank you. I now recognize Dr. Trish for her opening statement.
▶ 1:31:21Thank you. Chairman Berles and Grathman, ranking members Frost and Krishna Mory, and distinguished members of the subcommittees. Thank you for the opportunity to testify today. My name is Aaron Trish, and I co-direct the Leonard D. Schaefer Center for Health Policy and Economics at the University of Southern California. The opinions I offer today are my own. Biomedical innovation is an American success story.
▶ 1:31:47We have seen incredible progress in our ability to treat diseases that used to be death sentences. I have seen this firsthand lab where we modeled human disease and screened potential therapies. The science was remarkable. But it was there that I realized that policy decisions were going to be the difference between whether patients ultimately got these therapies or not. Why? Because biomedical innovation is inherently costly and risky.
▶ 1:32:15So we need to get the policy incentives right. Innovators and investors need stable and transparent markets if they are going to keep making investments. Unfortunately the inflation reduction act is act is a step in the direction. One of the marquee provisions in the IRA tasked CMS with negotiating prices for certain drugs covered in Medicare each year. So far one round of these negotiations has taken place.
▶ 1:32:45A recent GAO report found that CMS is spending about $3 billion on this effort. And for what? The prices they settled on for those first 10 drugs were basically the same as the net prices that Part D plans were already negotiating with drug manufacturers in this program. But what did we get? We got an opaque process. We got uncertainty. Two things that send investors running in the other direction. But let's consider the alternative.
▶ 1:33:15What if this year or next year or under some administration in the future CMS does actually dramatically reduce drug prices? There is no doubt that we are going to lose out on innovation. My Schaefer colleagues have shown that a 10% reduction in expected US pharmaceutical revenues leads to a 2 and a half to 15% decline in pharmaceutical innovation. The evidence is clear. we are going to miss out on new drugs, including clinically meaningful ones.
▶ 1:33:44The consequences of this lost innovation are real. For example, one estimate shows that widespread drug price negotiation could reduce life expectancy by two years for 35-year-olds. The IRA sends the wrong signals to the market. We are telling companies to think twice before bringing drugs that could treat orphan diseases to market quickly. We are telling companies to turn investment away from small molecule drugs like the pills you pick up at the pharmacy counter.
▶ 1:34:13These are steps in the wrong direction that will have real consequences for the patients of tomorrow. Another key provision in the IRA was a significant redesign of the Medicare Part D benefit. Medicare Part D provides drug coverage to 53 million Americans. Since its inception in 2006, the program has operated on the premise of delivering value to patients and taxpayers by harnessing competition between private insurers.
▶ 1:34:42But the program and its benefit design had become outdated. Plans had too little skin in the game. And in principle, the types of reforms included in the IRA were a step in the right direction to restore competition in the market. But the abruptness of the change and its implementation has created market instability and considerably increased federal spending. First, party D plans are exiting the market.
▶ 1:35:08There is a 35% reduction in the number of plans offered this year. Today, beneficiaries have the fewest options ever in the program's history. Second, taxpayers are paying more. Historically, taxpayers have subsidized about 75% of premiums in this market. But thanks to provisions in the IRA, as market instability grows, so too does the bill. This year, taxpayers are picking up 83% of the tab.
▶ 1:35:38And that doesn't even count an estimated $5 billion in additional subsidies that CMS unexpectedly added. Third, what's worse is that many beneficiaries are actually seeing their prices go up at the pharmacy counter. Now, it is true that the IRA added a cap on patient out-of-pocket costs for each year, and this is a really important insurance protection, but most beneficiaries don't reach that cap.
▶ 1:36:03My colleagues and I are finding that Part D plans are responding to the IRA's changes by increasing patient costs earlier in the year. For example, among Medicare Advantage plans, the average drug drug drug deductible increased 273% this year. Imagine the frustration your constituents must feel when they see news headlines that CMS is lowering drug prices and yet they find their costs are going up. Clearly, this is not working. It takes me back to what I learned in the lab.
▶ 1:36:34Making this work for the patients and taxpayers of today and tomorrow is going to come down to getting the policy incentives right. Thank you. Thank you. I now recognize Dr. McBride for five minutes. Thank you, Chairman Burlesen and Rothman, Ranking Members Frost, Christian Murthy, and distinguished members of the subcommittees. I appreciate the opportunity to speak with you.
▶ 1:36:59My testimony will lay out how and why the budgetary cost of the inflation reduction acts tax credits has grown, who benefits from the tax credits and options for reform. The IRA's green energy tax credits may be the most egregious, but certainly not the only example of a budget estimate that did not match reality.
▶ 1:37:19In this case, it is mainly the result of rushed legislation containing complicated novel features targeting new and evolving technologies with an uncertain future. Fundamentally, even industry experts have a difficult time forecasting sales of electric vehicles or the development of other niche technologies targeted by the credits even from one year to the next, much less 10 years into the future as required by the budget process.
▶ 1:37:46The uncertainty is compounded by complicated features of the credits including bonus credits for meeting various conditions such as domestic content, prevailing wage and apprenticeship requirements and transferability and the direct pay option. Lastly, the statute granted significant authority to the Treasury Department to fill in many of the details with more than 400 pages of guidance issued in the first year alone, changing the law over time, often in ways that increase the cost.
▶ 1:38:15The initial budget estimate from the Joint Committee on Taxation, JCT, indicated the IRA credits would cost about 271 billion over the period 2023 2031. Soon after the IRA was enacted, several outside groups, including Goldman Sachs and scholars at the Brookings Institution, began providing estimates indicating the cost of the credits would be much more than originally expected, roughly $1 trillion over a decade. JCT provided an updated estimate in May 2023.
▶ 1:38:44That's nine months after enactment, indicating the cost of the credits had roughly doubled over the original estimate for the same years. And the cost of some credits more than quadrupled, such as those for EVs, advanced manufacturing, and carbon JCT attributed the cost growth to several factors, including increases in anticipated production capacity for batteries and renewable energy, as well as expansive guidance from the Treasury Department, which allowed taxpayers to avoid
▶ 1:39:14income restrictions and domestic content requirements for EVs and other JCT's analysis had not factored in regulatory efforts by the Biden administration that would further increase the cost of the credits, such as the tailpipe emissions rule that was scheduled to go into effect in 2027.
▶ 1:39:32The latest tax expenditure estimates from the Treasury Department and JCT indicate the cost of the credits has grown to about $1.2 trillion over the next decade, including IRA additions and pre-existing renewable energy A recent study by the Kato Institute finds the cost of the credits ranges considerably depending on assumptions about the underlying technologies from about $900 billion to $2 trillion over the next decade and about $2 trillion to almost 5 trillion through
▶ 1:40:022050. The primary beneficiaries of the credits are businesses that specialize in renewable energy and higher income consumers with preferences for EVs, solar panels, and other green technologies. For example, a recent study finds that the top 20% of individual taxpayers by income receive more than 80% of the a of the EV credits. JCT found that the largest corporations receive more than half of the investment and production tax credits, two of the largest business credits that were extended as part of the IRA.
▶ 1:40:33Economist Jason Ferman estimated the IRA credits will provide a benefit of more than $11,000 for the top 1% of earners in 2027 versus a benefit of less than $100 for the bottom 20% of Regarding broader economic benefits, the IRA credits reduce the cost of investment in the targeted technologies, but the investment impacts are reduced by high compliance costs, permitting, and other constraints, and the degree to which the credits
▶ 1:41:04subsidize activities that would have occurred anyway. Furthermore, because the targeted areas are a small portion of the economy, we should not expect nor do we find in the latest data any measurable increase in investment overall. In general, the IRA credits should be repealed or at a minimum substantially curtailed to bring their cost down closer to the original estimates. This could be done by streamlining and shrinking the credits or potentially capping their annual costs. Currently, only one of the credits is capped.
▶ 1:41:35My written testimony provides our analysis of a few options for reform that would generate hundreds of billions of dollars savings. Policymakers should pursue neutral policy to boost energy production. that is treating all investment equally, which is best achieved by allowing a full and immediate write off for all investment, a policy known as full expensing. Thank you for your time and attention. I'm happy to answer any questions you may have. Thank you. I now recognize Dr. G for her opening statement.
▶ 1:42:06Thank you, Chairman Berles, and to you and uh Chairman Rothman, ranking members Christian Mory and Frost. Thank you very much for inviting me here today to talk to you about the Inflation Reduction Act. Today I want to talk about how the IRA has made historic investments in clean energy and took aim at high health care costs. The law's landmark health care provisions have lowered prescription drug costs for seniors and others on Medicare.
▶ 1:42:30It included multiple measures to protect Medicare beneficiaries from high out-of- pocket costs, notably the new limit on out-of- pocket drug spending, which took full effect this year. That $2,000 limit is estimated to save $600 on average for for the 11 million beneficiaries who would have otherwise had spending above that level. The law capped cost sharing for insulin at $35 per month and it made recommended vaccines available at no cost.
▶ 1:42:58The law expanded the low-income subsidy program for part D and it made other changes to enable beneficiaries to spread costs out over time instead of facing high upfront costs at the beginning of the year. The IRA is generating savings by requiring that drug companies rebate for price hikes above the level of inflation. For example, in the first quarter of this year, there were 64 PartB rebatable drugs with co insurance amounts uh per day up to $10,000 lower due to rebates.
▶ 1:43:26And lastly, the law empowers the federal government for the first time to negotiate lower drug prices for Medicare. This year, the list of 15 drugs under negotiation includes medications to treat asthma, breast cancer, and prostate cancer, and diabetes. The IRA expanded insurance coverage by enhancing financial assistance available to people who purchase insurance on their own, helping drive uninsurance rates to a historic low.
▶ 1:43:51However, absent action by Congress, the enhanced subsidies uh for the health insurance marketplaces will expire at the end of this year, meaning that consumers will see higher premiums for 26 2026 coverage when they shop for plans this fall. The Inflation Reduction Act has also put America on track to be a leader in clean manufacturing, energy, and technologies.
▶ 1:44:13To date, $321 billion of private investment has already been invested and over 2,300 new facilities have opened up across the United States. But another 522 billion of clean energy investment commitments has not yet gone out the door and is at risk of being cancelled depending on whether this Congress allows the IRA tax credits and programs to continue.
▶ 1:44:35The projects that have been completed to date have already created over 300,000 jobs, but there are another 600,000 potential jobs for projects that have been announced but are still outstanding. The budget reconciliation bill being considered by the House would roll back the progress made by the IRA. First, it would make the largest cut to Medicaid in the program's history.
▶ 1:44:57As a result of that, the expiration of the premium tax credits and other changes to marketplace rules, the Congressional Budget Office estimates that 14 million more Americans will be uninsured by 2034. To put it plainly, the bill would attract attain hundreds of billions of savings from Medicaid only by taking away health coverage from millions of people.
▶ 1:45:19Notably, the bill imposes burd burdensome work reporting requirements on enroles even though previous experience from states shows that red tapes trips up those eligible for Medicaid. Medicaid cuts would also have consequences beyond the program itself, including jobs lost in communities throughout America and strain on the nation's rural rural hospitals who already face tough financial Second, the reconciliation bill would undo IRA provisions aimed at growing clean energy.
▶ 1:45:49If the proposals from the Ways and Means Committee are passed, annual home electric bills would increase $70 on average in the next 5 years. Analysis by the Rodium Group found that gasoline prices would rise 25 cents to 37 cents per gallon by 2035 as o demand for oil increases due to the termination of the federal electric vehicle affordability programs, fuel economy standards, and tailpipe emission standards.
▶ 1:46:16Overall, the reconciliation bill would add threats to the US economy coming at a time when decades high tariffs are already driving up policy uncertainty and depressing consumer sentiment. By cutting Medicaid and SNAP, the bill makes devastating cuts to counteryclical programs that help Americans meet their basic needs during recessions.
▶ 1:46:34And over the longer run, by adding 2.7 trillion to the deficit over the next decade, the bill will drive up interest rates, driving up the cost of borrowing for businesses and consumers for things like mortgages, credit card loans, and student loans while driving down wage growth. This attack on working Americans could not be starker. The bill takes away food and health care for millions of low-income Americans while giving 1.5 trillion tax cuts to the top 5% while still driving up the debt.
▶ 1:47:03In conclusion, the IRA is making costs lower for American families and improving competitiveness and that progress should not be squandered. I look forward to your questions. Thank you. I now recognize myself for five minutes of questions. Mr. Lieberman.
▶ 1:47:18When the IRA was originally sold, um, it was sold to the American people as a legislative vehicle for inflation and for stimulating the economy and creating lots of jobs, lots of new clean energy jobs. But what is the actual result of the legislation Well, there are a lot of uh of jobs right now.
▶ 1:47:43Um, I think we're going through the sugar high phase of uh of the inflation reduction act. Uh, sure you can create a lot of jobs if you throw a lot of money uh at just about anything, especially lots of federal dollars. The question is, do these alternative energy sources have any lasting power? Um, the American people are not pounding the table demanding higher utility bills and more expensive transportation. And so these uh these alternatives need to become cost competitive to have any real future.
▶ 1:48:12And I just don't see that happening with most of the uh the alternative being being being being subsidized right now. And I would say there's a long history with this and it doesn't bode very well. Congress is not nearly as good as it thinks it is in figuring out what the next big thing in energy is. It's been trying this since the uh uh oil shocks of the of the 1970s, but there's been a lot of boondoggles on the way along the way.
▶ 1:48:38not very much in the way of alternative energy success stories that we can point to. One example I could mention from when I was a staffer 10 years ago when the next big thing was cellulosic biouels. I don't know if you remember cellulosic but there were all sorts of tax credits and other incentives adding up to dollars per gallon very similar to what you see for other things in the inflation reduction act.
▶ 1:49:01the facilities were built and it turned into a boondoggle, including a lot of communities that felt cheated because the permanent jobs never materialized. I fear that if we come back in five years, we'll be talking about a number of clean energy ghost towns as a result of the inflation reduction act. Yeah.
▶ 1:49:19In 1850, the the economist Frederick Bastiot wrote, I think, about this scenario back then and recognized that you you could make the argument that you're creating a lot of jobs by going down the street and breaking windows, right? Because somebody has to be employed to replace those windows. But there's a fallacy with that because of the destructive nature and and the wealth that's destroyed in that process. Would you agree that that this holds true with the IRA today? Yeah.
▶ 1:49:48when uh when you're um creating jobs only because of subsidies, that means that money and jobs has to be siphoned away from the rest of the economy. So there always there's always two sides of the jobs ledger when government subsidies are involved and we're talking about uh you know potentially a trillion dollars. Plus if at the end of the day you have more expensive energy that also suppresses economic activity and jobs. Thank you Dr. Mc McBride.
▶ 1:50:15um your organization, the Tax Foundation, it's not partisan, correct? There's no it's a nonpartisan organization. That is correct. Okay. So, in 2023, you co-authored a piece published by the tax foundation which included several key findings which I think are relevant to today's debates. You stated in that piece it that the IRA doesn't reduce deficits and may substantially increase deficits.
▶ 1:50:40The energy credits drive out the co out of drive the outofc control costs of the IRA and the energy credits are a boon for wealthy individuals with a preference for climate oriented luxury goods including expensive EVs and solar panels. So my question is this do th those findings that you wrote originally do they still hold true today? Yes, absolutely.
▶ 1:51:04As far as we can tell, um, we we we lack good estimates, uh, from the committees that do this and from the agencies, the the CBO and JCT. Uh, I went through the latest um, estimates we have from JCT and other other groups, outside groups indicating the cost of IRA credits u, is something like three to four times what they originally were estimated at. So that that was the, you know, that's one side of this bill.
▶ 1:51:34The other side is the the tax increases. Uh one is the drug pricing measure that that's actually the result of a tax change excise tax on on uh drug companies. Um the but the uh some of the others um are the corporate alternative minimum tax and the stock buyback tax. So these are brand new taxes that were introduced as part of the IRA. We don't know how much those are raising honestly.
▶ 1:51:59uh we we have uh done a lot of research to try to u build out our understanding of how much revenue is raised by those taxes, but they were originally estimated to raise u on the order of uh three 300 billion between those two those two tax increases.
▶ 1:52:19Um if that if that is still the case today which is questionable uh for many reasons I can go into in more detail it may be much less than 300 billion that is raised there compared to the trillion dollars that is the rough cost of the IRA credits. We can see that this is a big deficit increasing bill uh completely contrary to the way it was sold originally. Thank you. My time is expired. I did have questions for Dr. Trish, but hopefully I'll someone will yield me time.
▶ 1:52:49And with that, I turn to ranking member Frost for his questions. Thank you, Mr. Chairman. So, smart policies mean a good return on investment. And the Inflation Reduction Act is made up of the necessary investments for a cleaner, healthier future that it's paying off for our country right now. Let's talk about the IRA's returns. Dr. G, the IRA became law less than 3 years ago. Could you talk about some of the law's successes when it comes down to investments in jobs?
▶ 1:53:18Thank you for that question, uh, Ranking Member Frost. Um, the IRA was an investment in, uh, a historic investment in climate change that specifically made investments in improving American competitiveness and clean energy, in creating jobs, uh, and in allowing America to better, um, compete in jobs of the future. Um to date the projects have uh from the IRA on clean energy have created about 300,000 jobs.
▶ 1:53:44Um there are many more in the pipeline, but many of those are in jeopardy uh if the changes in the reconciliation bill go forward. These are projects that are happening all across America. As just one example, let me give you um one down in Louisiana and I parish um as an example of jobs created from the bill. Uh first solar is a solar panel panel manufacturing facility. Um, full soul first solar said that their commitment was catalyzed by the inflation reduction act and is expected to create about 700 new jobs down there.
▶ 1:54:15Thank you. I assume unanimous consent to the record NB NBC news article how the inflation reduction act sparked a manufacturing and clean energy boom in the US. Yeah, without objection. Thank you. Smart policies create supply and demand, and new solar and wind power plants can be built and operating in under two years, while natural gas power plants can take twice as long, and coal can take about four four times as long.
▶ 1:54:44Sometimes the critics of clean energy try to sidestep the positive effects of investments like those in the IRA. And then they'll grumble that the federal government is quote picking winners and losers. as if the federal government for generations haven't been giving massive subsidies to oil companies and polluters in this country but it complete crickets from them then Dr.
▶ 1:55:05G, how do the clean energy incentives of the inflation reduction act compare to the subsidies currently enjoyed by the fossil fuel industry? So, first let me just note that I I agree with you that solar and wind are much faster coming online. In fact, uh clean energy accounts for about 90% of new capacity being added right now. Um solar and wind are deployed faster than all other types of energy combined, including hydroelectric, nuclear, coal, and gas power plants.
▶ 1:55:34Um solar farms can be operational about two years compared to about four years for gas powered power plants. Um I would I would you know remind everyone here too that uh fossil fuel companies also enjoy subsidies. They enjoy about 15 billion dollars in tax breaks every year. Um and it's also a highly profitable industry. Um the five largest oil and gas companies made more than hundred billion dollars in profits uh last year in 2024. Um, and big oil also spends a lot uh to influence elections.
▶ 1:56:05I really appreciate you bringing that up because we don't hear about that from my Republican colleagues. Um, I also want to talk about the inflation reductions act uh effects on the national level to a personal level. Um, Central Floridaidians love home solar and home energy storage becers the electric bill but because it keeps us safe. Um, how will people's daily lives uh and daily costs increase if we reverse the progress made in the IRA? Dr. G.
▶ 1:56:33So, reversing the IRA's investments in clean energy um and the tax credits will increase costs for American families. American families will see higher electric bills because the United States is producing less energy. Um, American families will also face higher gas bills. Uh, by 2035, gas prices will be about 25 to 37 cents higher according to Rodeium Group. Um, and the other effect for American families, too, is a an environment that is less clean, water and air that are more polluted.
▶ 1:57:01Um, and so these are investments not just in cheaper energy, but also a better climate. I really appreciate you bringing this up. I mean what what we've heard and what will continue to hear in the basis of this hearing is to push back on a piece of legislation which has really delivered for working people for th this country and pushing us to do what we need to do to have cleaner air better communities and actually uh bring back manufacturing in a way that makes sense and you know we hear these tired talking points from my Republican colleagues
▶ 1:57:32all the time and we we heard one too do from Dr. Trish, I think it's laughable that we, you know, we've heard this tired talking point that if the government does anything to help bring down pharmaceutical costs for seniors or for anyone that far pharmaceutical companies will uh stop, you know, putting money into R&D and research and development. Not only does the CBO estimate on the inflation reduction act push back on this, uh, but big pharma pulled in about $600 billion in 2023.
▶ 1:58:02And so it doesn't sound just like a talking point. It sounds like a threat. I care more about what seniors in my district are paying for pharmaceutical drugs than what uh pharmaceutical executives are bring raking home. Uh so thank you so much. I appreciate it and I yield back. Thank you very much. I was just looking at all the birds who are killed by windmills. Just horrible. I like the little birds. Okay, we'll start with Dr.
▶ 1:58:32Um, we're told that the we were told the IRA uh inflation adjustment act was a deficit reducing bill. I think the Republicans knew all along that was questionable. It went from reducing the deficit by billions of dollars to increasing the deficit by hundreds of billions of dollars. Uh why is the CBO now reversing course on the estimated cost of the inflation reduction act?
▶ 1:58:58Well, they haven't released a complete reanalysis of the inflation reduction act. I would uh love it if they did. We've been pushing for that for ever since enactment of the bill in 2022 because there were, as I mentioned in my testimony, a lot of questions right out of the gate about the cost of the credits. And over time, we've gotten, you know, there every element of the IRA actually has a lot of uncertainty about it.
▶ 1:59:25lot of novel stuff going on in the in that legislation. Um I can talk at great length about the the uh the various things involved in the corporate alternative tax, the the buyback tax where again that's where the revenue was supposed to be raised along with the drug pricing um provision.
▶ 1:59:44Uh the best indication we have is that the the corporate alternative income tax and the buyback tax in particular are so complicated and so difficult to implement they actually just didn't implement them. The IRS allowed taxpayers to um um not pay the tax um uh for the first two years after enactment. That doesn't mean they're off the hook.
▶ 2:00:12It means that they haven't yet finalized the regulations actually to implement the uh corporate alternative minimum tax in particular. It's turned out to be so complicated uh to uh sort out. Um and so this is the big revenue raiser in the bill particularly over the first uh few years uh and in the first decade the corporate alternative minimum tax. It's not raising revenue apparently um just yet.
▶ 2:00:39Uh so what we have is very little revenue coming in the door but a tremendous amount going out the door, tremendous amount of spending going out the door in the form of these credits. Uh and that's that's been the general dynamic of this legislation ever since it was enacted. So yes, we do need a more uh a complete reanalysis of the bill. We have not gotten it from the CBO.
▶ 2:01:02We we are getting bits and pieces about it over time and as part of the uh legislation going through the house now we are getting a rescoring of the uh credits in particular and that's showing that uh yes there is a lot of money uh that is going out the door with these credits. The the current house bill rolls them back and saves about $515 billion over a decade from that measure alone. Thank you. I hate it when legislators use the tax code to try to influence public policy.
▶ 2:01:33They ought to just, you know, put appropriations out there rather than try to play around with this. Nevertheless, it does bother me over time uh that the tax code does their provisions that seem to benefit the ultra wealthy at the expense of the common man. Uh could you describe who's largely getting the benefits of these tax credits in the so-called inflation reduction and who's paying the price here?
▶ 2:02:03Who's paying the price and who's getting their taxes reduced? Mr. McBride, Dr. McBride. Sure. Well, as as we discussed in our testimonies here and um u it's very clear um in both just anecdotal evidence. You look around, you know, who's buying solar panels, who's buying electric vehicles.
▶ 2:02:26Um you know, those are those are high-income people and and you can see that with your own eyes. Um the data and the studies uh support that. Um and uh for that matter a lot of the credits uh go to businesses um and um again this is an area of uncertainty.
▶ 2:02:49We have tried to identify what types of businesses exactly um and honestly it's not very clear but that I mentioned the statistic in my testimony that um the uh largest corporations I believe that's those with more than 25 billion in uh revenues um receive more than half of the major business.
▶ 2:03:12largely this is a tax cut for the rich you think I I that's what it looks like to I think so now I got I'm mouse run time so I got to go quick to doctor to Mr. Lieberman. Um, these energy subsidies uh are responsible for enormous cost overall uh in so far as it drives up cost. Who who's going to pay the price for that?
▶ 2:03:34Is this another thing that's kind of a regressive tax on the on the average guy or how would you describe who's paying who's paying the price for this? There's almost nothing in the inflation reduction act that's geared towards lowering energy prices. So energy prices will go up. One thing I would add, for example, is that there's a lot of provisions in there geared towards discouraging use of natural gas and making homes all electric.
▶ 2:04:00Well, natural gas is three times cheaper than electricity on a perunit energy basis. So it's one example where climate policy is very much at odds with proconsumer policy. Well, if you're a well-off person, I suppose it doesn't matter. It only affects the average guy. Uh, I thank myself. Now we're calling on here Mr. Christoph. Thank you, Mr. Chair. Uh, Mr.
▶ 2:04:28Lieberman, you work for the Competitive Enterprise Institute, CEI, right? You have to audibly answer. Yes. Okay. And CI's website, we went on to the website. It says CI has been instrumental in fighting decades of climate alarmism. That's what it says, right? Yes. Okay.
▶ 2:04:49And in a 20 in a paper that you wrote, you said, quote, "Global warming is clearly not a crisis, right?" Sounds like me. That sounds like you. Yeah, because it is you. Uh, let me tell you what some other folks around here say. Republican Senator Lisa Marowski said, "Climate change is real. It is happening. It is now. Now, you don't dispute she said that, right? No.
▶ 2:05:13Senator Lindsey Graham said in a panel moderated by CNBC that quote, "Climate change is real." You don't dispute that he said that either, right? No. And even the Pope Leo from Chicago has said it's time to move from words to action. You don't dispute he said that. Same as the last pope, Mr. Lieberman, with members of both parties increasingly in agreement, worsening disasters. We had a a Grapes of Wrath dust storm in Chicago just this past weekend.
▶ 2:05:42And even the head of the Catholic Church sounding the alarm, your position and CI's position sound increasingly fringe. Let me turn to the next topic. Dr. McBride. On May 8th, NBC News reported that on a phone call with Speaker Johnson, President Trump suggested raising the tax rate for those making $2.5 million or more. You don't dispute that uh NBC reported this, right? No, I don't.
▶ 2:06:12And just this morning, and by the way, this this uh there is no tax increase in the reconciliation bill, correct? on people earning more than $2.5 million. That's correct. Okay. And just this morning, this is what Donald Trump told the GOP conference. He tells the House GOP conference not to f around with Medicaid. You don't dispute he said that, did you?
▶ 2:06:41Well, that's news to me, but u I believe you. And and Dr. G, there are cuts of hundreds of billions of dollars in the reconciliation bill to Medicaid. Correct. That is correct. This is a reverse Robin Hood bill that will give tax cuts to the rich while cutting over $600 billion from Medicaid and $300 billion. I think they are violating the House GOP conference is violating I think what Donald Trump is trying to convey in this headline.
▶ 2:07:11Look, the CBO estimates that the debt of this bill will uh total at least $4 trillion. Isn't that what the CBO has scored, Dr. That's correct. It will add trillion dollars to the debt and even more if uh temporary provisions in the bill for tax break. And at the same time that Republicans are adding trillions in debt, Moody's, the major credit rating agency, downgraded America's credit rating, citing the deficit. You don't dispute that, Dr.
▶ 2:07:40McBride McBride, do you? No, I don't. That's correct. And this is the first time all three major credit rating agencies have downgraded America's debt. Correct. That's correct. So instead of taxing the wealthiest among us, as Donald Trump has suggested, and contrary to his suggestion not to f around with Medicaid, which he just said this morning to the House GOP, the House Republicans are instead slashing Medicaid, slashing SNAP, adding trillions to
▶ 2:08:10debt, and in the process hurting America's credit. Let me turn to topic. Dr. G just to reiterate re Republicans are planning to cut at least $625 billion from Medicaid. The level of cuts will be absolutely devastating to the health care system. In fact, let me just show you a map of rural hospitals throughout the country that will be at immediate risk of closure.
▶ 2:08:40As you can see in Illinois, there are eight rural hospitals that will be immediately at risk of closure. And Mr. Growthman in Wisconsin there are five hospitals that are at immediate risk of closure and Mr. Berles there are nine in Missouri. Now when rural hospitals close because of these massive cuts to Medicaid Dr. G those uh closures will lead to layoffs. Correct. That's correct.
▶ 2:09:08Loss of healthcare jobs as well as other jobs in communities. And when those hospitals close, not only will people with Medicaid be denied access to medical care, but people with private insurance as well as Medicare will also be denied care. Correct. That is correct. And so we'll be creating medical deserts throughout the country. Right. That's correct. People will have to travel further to emergency rooms or to deliver babies um or be seen for trauma. Thank you. And I yield back. Thank you.
▶ 2:09:36And I now recognize the gentleman from Arizona, Mr. Gosar. Thank you, Mr. Chairman, today this hearing is examining the devastating e economic effects of the inflation reduction act. But let's remember the IRA was Joe Biden and the Democrat's version of a reconciliation bill. House Republicans are working diligently on one big beautiful bill because we received a mandate from the American people to learn from the mistakes of the IRA and to serve and save our nation from the crippling debt.
▶ 2:10:04American seniors should not be made victims by these policies. in the IRA. The other side of the aisle took money from Medicare and funded 21 greenhouse tax scams like electric uh vehicle credits, carbon sequestration, and clean hydrogen. And now Republicans are the bad guys for requesting repealing these green energy uh credits to reclaim the funds for the people. Dr. McBride, in your testimony, you talked about caps on IRA subsidies.
▶ 2:10:34Congress needs to enforce caps in a lot of places like immigration, Medicaid, green new scam tax credits. Generally speaking, how would you define a cap in Congress? Thank you for that question. Uh it's very important.
▶ 2:10:48I I believe what what I've observed over the years I've been doing the tax analysis for tax analysis since about 2011 is an increasing tendency uh to spend through the tax Okay, we have something that is required by uh the Treasury Department and the uh joint committee on taxation. Every year they produce estimates of tax expenditures. There's more than 200 of them now. Uh these are tax credits, deductions, uh exemptions, various uh loopholes.
▶ 2:11:18Uh not all of them are are agreed to be uh unjustified. Um they they there's some subjectivity to it. We we particularly take issue with a set of those. Uh but the point is these are pretty well uh estimated the cost of these things and they've grown over time. The IRA contributed greatly uh to the cost of these tax expenditures. They're called tax expenditures because it's spending through the tax code, right?
▶ 2:11:46And I want to point out in particular that the uh about 300 billion about a third of the cost of the trillion dollar IRA tax credits is technically scored as spending outlays. Okay. As far as we can tell that is um spending by uh received by taxexempt entities using the direct pay option. So now we have literal spending through the tax code.
▶ 2:12:11It's a way to get around the constraints on proper spending that goes through the appropriations pro process in my opinion. Well, I want to hit you I want to hit you right right with that. It's a surprise surprise. The IRA also extended COVID funding, believe it or not. Now, I want I got a big beef here because I'm one of the guy that killed the CO funding for the emergency spending, but it was terminated in April 10th of 2023.
▶ 2:12:37So 90 days after that any any outstanding money had to come back to the treasury. Okay. So we ought to be looking at the COVID spending as well. And we haven't done that yet, have we? Uh no, no, not uh not completely, that's for sure. This is unbelievable. Now, uh we're not we're not really comparing apples to apples, right? You know, so uh we just saw the the uh the poster board over here talking about cuts in Medicaid.
▶ 2:13:06Um, but the populations are very different, aren't they, Dr. Uh, I I I I think so. Okay. Well, I'll explain it. So, the traditional uh traditional Medicaid populations, women, single women, children, those kind of individuals, for every dollar the state puts in, the federal government puts $1.37 in roughly that. Okay.
▶ 2:13:28But the expansion that occurred during this COVID uh emergency, there's for every dollar the state put in, $9 was given to uh the state from the federal government. And these were uh my understanding ablebodied individuals with no children. Is that would you say that's that's my general understanding? You're getting a little bit out of my wheelhouse here. So where's the parody on this one?
▶ 2:13:52Tell tell me women and children should take a backdrop back seat to a well-abled uh a well- abled bodied person who can get those their treatment somewhere else. This is unbelievable fathoming that I can't can't seem to fathom all those problems. Um Mr. Lieberman, the previous administration used the IRA to fund NOS's with American tax dollars to promote Biden's radical environmental agenda.
▶ 2:14:19I I introduced the putting trust in and transparency act to require NOS's to who receive a penny either directly or through a pass through must bring out their big don put out their whole donor list. Is this something that you estimate could really help us out? I I very much think so. And maybe the most disturbing part of the inflation reduction act were these organizations that were set up created new just for the purpose of receiving uh multi-billion dollar grants.
▶ 2:14:47And I do think this this has relevance the the spending in the RA has spent has relevance to the climate change issue. So much of the climate uh activist argument is to protect future generations from climate harm. Well, if you genuinely cons if you're genuinely concerned about future generations, the last thing you would want to do is to saddle them with a mountain of debt which makes it harder to deal with whatever challenges the future holds, whether climate change or otherwise. most likely something we don't even see coming.
▶ 2:15:17That's why I think these free spending climate bills are especially self-defeating. It's interesting that the CO national emergency base spent between 4.8 and 7 trillion dollar. So the spending goes on. Thank you. And I now recognize the gentleman from Missouri, Mr. Bell. Thank you, Mr. Chair, ranking members and witnesses for being here today.
▶ 2:15:39Uh today we're discussing the Inflation Reduction Act, a key piece of legislation that was geared towards moving our nation forward. Legislation aimed at providing millions of jobs, increased access to affordable health care, and historic funding for clean energy infrastructure to improve the overall quality of life for Americans. And yet, my Republican colleagues have set out to reverse this legislation.
▶ 2:16:07and with it the potential improvements it was set to bring for the average person. Reversing real benefits that we already are seeing today and that we hope to benefit from in the future. Reversing investments in affordable health care and clean energy.
▶ 2:16:27In my state of Missouri alone, we have benefited from the investments streaming from the IRA with the potential to receive continued investments totaling over billions of dollars over the next 10 years. In my district, more than $35 million have been invested in assisting the improvements of over 700 mixed income units for more energy efficient living.
▶ 2:16:54These improvements range from enhancing new builds through the use of sustainable materials to replacing outdated utilities and structures on older homes to energy efficient equivalents. These enhancements work towards ensuring these homes are able to withstand the growing hazardous weather conditions they are faced with, which I would be remiss if I didn't mention this past weekend St.
▶ 2:17:23Lewis experienced one of the most devastating storms in our history. A powerful tor a powerful tornado tore through the city, damaged an estimated 5,000 buildings, leaving much of our infrastructure in shambles. The effects of this of this disaster are being felt across the entire community with countless residents displaced and tragically more than two dozen lives lost.
▶ 2:17:52The impact the impact of this storm will be felt for years to come. Many of the areas impacted are amongst our most vulnerable communities who rely on these programs offered through the IRA for affordable and sustainable housing and health care. We must ensure we are doing everything in our power to protect these individuals during these times of tragedy. The IRA is not limited in its use.
▶ 2:18:20In my district, thousands of citizens continue to benefit in health care from it as well. Through providing caps on presc prescription drugs, the IRA has allowed access to life-saving prescriptions by making them more affordable. In these times of tragedies, individuals should not also have to worry about how they will afford their medications on top of trying to survive.
▶ 2:18:47It is estimated that $348,000 Missurrians will save an average of $462 per year through the decrease in prescription drug costs, allowing individuals to receive a better quality of life because we know that access to health care saves lives.
▶ 2:19:08The IRA continues to serve as the catalyst to move this nation forward in a sustainable way and the reversal of it puts American lives at risk. Plain and simple. We need to be focused on saving lives, not harming Um, Dr. G, can you tell us how the IRA has impacted health care and the predicted impact it is set to have over the next 10 years?
▶ 2:19:39Yes, thank you for that question. Um, the IRA has lowered health care costs in a couple at least a couple different ways. One is through the prescription drug provisions of the IRA which uh create an out-of- pocket cap of $2,000 for Medicare beneficiaries, meaning that they there's now a limit for the first time on what they they owe from their own wallets for prescriptions at the pharmacy.
▶ 2:20:00Um the bill is also saving um the Medicaid program and the government money through drug negotiation um for lower prices for um by 2030 will be 80 drugs um through rebates that are paid out when drug companies hike prices above the rate of inflation.
▶ 2:20:19Um, and it also made vaccines available at no cost so that vaccines like for example the shingles vaccine which used to cost about $200 out of pocket um are now free um and those will help keep people healthier and save lives in addition to saving costs. Um the inflation reduction act extended subsidies for health insurance marketplace plans um lowering costs by about $800 per person um but that will be discontinued at the end of the year if Congress does not extend those subsidies. I think that's my time. Thank you. I yield back.
▶ 2:20:51Thank you. And I now recognize the gentleman from Virginia, Mr. Magcguire. Thank you, Mr. Chairman. Thank to our witnesses for being here today. Uh the Inflation Reduction Act uh is a bloated misnamed boondogle that anything but reduce inflation. In February, EPA administrator Lee Zeldon found $20 billion in taxpayer money that the Biden administration parked at a financial institution in an apparent effort to prevent Trump administration from cutting grants to farleft activist groups.
▶ 2:21:20They wanted that money for the far-left. Some of these groups, the power for uh communities, which uh has ties to Democrat activist Stacy Abrams Abrams, were seemingly created out of thin air just to take the money. In fact, her nonprofit brought in $100 the year before and then went to $2 billion with no explanation. They had no track record of success. In fact, they had no track record at all. Yet, Joe Biden gave them billions of taxpayer dollars.
▶ 2:21:48I'm thankful that Administrator Zeldon is working to get this money back, and I hope that the committee continues to look into this matter. In addition to the fraud, the law has created devastating policies which will our energy reliability, devastate pharmaceutical research in America, and cost taxpayer a fortune. I talked to the secretary of interior. He said, "Today in the United States, 70% of our energy comes from fossil fuels. And while China is opening up coal plants every day, we're shutting ours down. It makes no sense.
▶ 2:22:18We can't compete. And 30% of our energy comes from nuclear." So if you figure 70% fossil fuels, 30% nuclear, that leaves next to nothing for wind and um on the Green New Deal, often called the Green New Scam. You can see why because they're putting money where it doesn't make sense. Pick and picking winners and losers. Mr. Liber Lieberman, the original estimates put IRA subsidies costing the American taxpayers around $370 billion.
▶ 2:22:49However, recent estimates from Goldman Sachs and the Kato Institute suggest the total cost of IRA subsidies could be between 1.2 and $1.7 trillion over the next 10 years. How were the cost projections so wrong? Well, there's a lot of factors that go into that, including estimates of how many people would be buying electric vehicles. I'll say the one mitigating factor is that uh EV sales seem to be uh stagnating.
▶ 2:23:14So, so, so maybe the the the the outlays won't be uh uh so much uh on on that front. Um but one of the problems with it is that some of the provisions are virtually uncapped. There's no dollar limits. There's no real deadlines. So, uh I while I favor repeal, I I I don't favor phase outs because phase outs tend to be extended. Uh but I I I I I do think a big problem with that is some of the provisions, especially the provisions for clean electricity.
▶ 2:23:43uh solar and wind are are virtually uh limitless and it's hard to figure out how many companies would take advantage of them because they are very generous. What wind and solar companies would be able to survive without these subsidies. Uh it would hard to hard to imagine uh any of them and I think that's that that raises a good point. Companies can invest in wind, they can invest in solar, they can invest in EVs or all these things. I just think they should do it with their own damn money. Yeah. If you want to do it, you pay for yourself. Yeah. the taxpayer taxpayers should not be burdened.
▶ 2:24:14Yeah. Let's see. Uh Dr. Trish, uh you co-authored a white paper which concluded that without reform the IRA may result in a decline in new drug innovation as well as a decline in research on new med uh indications and evidence for long-term effectiveness and safety outcomes. Very briefly, what reforms are necessary to undo the harmful consequences consequences of the inflation reduction act?
▶ 2:24:39I mean essentially we need reforms that that realign the pricing incentives so that we are rewarding manufacturers when they produce drugs that have high value for patients in society. That's the opposite of the set of reforms that we see in the IRA. And so we need to fundamentally shift the incentives there. Right. Because what gets rewarded gets repeated. Exactly. And picking winners and losers means everyone loses. Uh let's see. Uh Dr. McBride.
▶ 2:25:09And by the way, we mentioned earlier Medicaid nowhere. I I was on the campaign trail with President Trump all over the all over the country. And he never once said he was going to cut Medicaid. He just wanted to eliminate waste, fraud, and abuse. I don't think any American wants illegal aliens getting taxpayer dollars illegally. Waste, fraud, and abuse. And I think you guys will be very pleased if you look accurately and honestly at the one big beautiful bill. Uh Dr. Dr.
▶ 2:25:34McBride, your analysis shows that up to 1% of earners stand to gain $11,000 in benefits from IRA credits in 2027, while the bottom uh quantity receives under $100. Is it fair to say that the IRA's climate credits are effectively a subsidy for the wealthy? Yes. Yes, absolutely.
▶ 2:25:55Um it it's a um like as I mentioned it's amounts to spending uh even though it's these are labeled credits it amounts to spending uh to a large degree and it's these are spending subsidies running through the tax code and they are primarily uh uh benefiting high-income consumers as well as uh businesses.
▶ 2:26:17the businesses um you know so what individuals then in the end benefit from the businesses that are using these credits well that's usually attributed to the shareholders of those businesses well who are the shareholders they tend to be high income folks as well so the distributional analysis that uh we and others have done uh does find that these business credits that are uh represent most of the dollars in the IRA credits ultimately benefit the shareholders of these companies um and and they
▶ 2:26:47they tend to be savers, investors, uh that tend to be high-income folks. Thank you. I yield back. Thank you. And I now recognize Miss Simon uh from California. Thank you, Mr. Chair and ranking members. And thank you witnesses for being with us today.
▶ 2:27:03In 2022, we saw uh the the birth of the Inflation Reduction Act, which made health care more affordable to Medicare patients, capping insulin at $35 a month, limiting annual out-of- pocket prescriptions to $200 and negotiating the price of prescription medication, including diabetes and cancer and audio immune disease. We've been talking a lot about the big and beautiful bill.
▶ 2:27:29For folks who have battled sickness and some of us who have battled death right in front of us, we know that what is in the big beautiful bill. For some of us, we're thinking of it as cold and cruel. Democrats expanded access to essential health care and lowered health care costs for millions of Americans, our elderly neighbors, our community members. And not a single Republican voted for the Inflation Reduction Act.
▶ 2:27:58But now, but now today, Republicans want to pretend that they care. They care about the woman right now who is sitting at Seattle Children's Hospital who had to quit her job because her baby has lymphoma. That baby is dying. She gets Medicaid for herself. child. Her child is waiting for her to deliver a message that she may have more months.
▶ 2:28:26I got to tell you, this cold and cruel bill, ma'am, these folks don't care about you. You are the ablebody adult that they're saying doesn't deserve health care. I can go on and on. And we saw just this week that President Trump said that he would reduce prescription drug cost. And I just want to say for those of us who have been at death's door with either ourselves or our family members, our children, and like myself, my husband, I think we want that.
▶ 2:28:56But we know, we know with this cruel and cold bill, over 10 million Americans will no longer have health coverage. And they're not going to be able to see that doctor or get that prescription drug that they so need, that home health care worker, that daycare worker who was ablebodied but is barely making the minimum wage to pay her rent. They don't care about you.
▶ 2:29:23That is why this is why any reduction in Medicaid or social security, any net decrease is the difference between life and death for poor Americans. And I'm talking about working Americans. You can't deny it. It's clear. It's clear.
▶ 2:29:42And so for those folks who are taking care of your elders and you're only working halfime because you're trying to lift the spirits of the weak, the widow, the sick, the child who is getting chemotherapy at this very moment, there are people who care about you and we're fighting for you. I have a question for you, Dr. G. And as a disabled American myself and a mother who I was a preeie, she took care of me while she went to college.
▶ 2:30:12She struggled. We grew up poor. She took care of veterans for over 30 years as a physician's assistant, as an LVN. I thank God for her and so many of others like her who have been fired by administration. Have mercy on them. But my question for you quickly is, what would cuts to Medicaid mean for vulnerable populations? That includes seniors.
▶ 2:30:42I'm talking about people with disabilities who are now covered by both Medicaid and Medicare. Give me a story. Sure. The the the cuts in the um the reconciliation bill we extremely harmable harmful vulnerable communities all across America. About 10% of Medicaid enrolles are seniors.
▶ 2:31:03Uh Medicaid is also crucial for providing um home and community based services for disabled people, enabling them to live in homes and get services in the community rather than being in institutionalized settings. Um the work requirements in the bill are especially worrying. Um supposedly they, you know, they are aimed at um at um increasing work, but what we really know they do is increase administrative burden, making it harder for people to get coverage.
▶ 2:31:31Uh Georgia is one state that implemented a similar program and in that in that state only about 3% of people who would be eligible based on income were able to get through that red tape to enroll in Medicaid. Um when people lose coverage it disrupts their care. It means that they might have to discontinue medications, lose access to a doctor or specialist they might be seeing. Um and it also puts strain on hospitals. Uh rural hospitals are at risk as the ranking member Christian Mory um noted.
▶ 2:31:57Um, and it could have uh repercussions for other other clinics in the community for substance use treatment. Those rural hospitals will close and folks will die. And I apologize to to cutting you off and I want to thank all of you all for being here. And Representative Frost, I apologize. I wanted to yield you time. Uh, thank you and I yield back, Mr. Chair. Thank you. Thank you all. Thank you. And I now recognize myself for five minutes. Um, and thank you to the witnesses for taking the time. We really really sincerely appreciate it.
▶ 2:32:27Uh Mr. Mr. Lieberman, uh the one big beautiful bill phases out the IRA and its harmful green energy subsidies. While passing while phasing these subsidies out, I think is a great start. Um I think ideally we'd repeal these immediately. We ran on repealing the Green New Deal. Every single Republican ran on repealing the Green New Deal. I think it's about time that we actually execute on that promise.
▶ 2:32:54Can you elaborate on on the importance of of repealing IRA green energy energy Yes. The same army of lobbyists that gave us the inflation reduction act will be back whenever those uh whenever those phase out uh deadlines come asking for extensions. I was on the hill for several years. I had dozens and dozens of meetings with lobbyists for subsidized alternative energy companies. always asking for more, raising the the caps, extending the deadlines.
▶ 2:33:24It never happened that one of them came to me and said, "We're not an infant industry anymore. You can you can end the the subsidies." There's always a demand for uh more. And it's very tough to stop these things. As you know full well, there's so many mustpass bills that these things can be slipped into every year. So phasing them out is really not phasing them out. So repeal would be far and away the best option. Yep. government handouts are are like a drug. Once you give them out, it's very very hard to pull them back.
▶ 2:33:52And we've seen the the army of of K Street descending upon Washington to keep these handouts in place. Could you just help us understand a little bit more about how much we might be able to uh to save by repealing the Green New Deal? Well, I think Dr.
▶ 2:34:07McBride has the numbers a little bit better than me, but it's certainly well into the hundreds of billions of dollars in terms of um of of uh of of reduced uh uh uh uh tax credits and uh and and other uh subsidies. And then there's the uh the additional effects. So many of the uh of the favored energy sources and technologies have problems of their own that will impose costs.
▶ 2:34:33So, uh, uh, best to, uh, to, uh, stop these bad ideas in the bud, right? Could you walk us through how some of these subsidies have distorted the energy market? Well, for example, when, uh, wind and solar are very subsidized. Um, that's what's going to be built. But, um, and that's fine on a on a on a sunny day, on a on a day where the wind is blowing at at at at an ideal speed, but there will be those times where you need backup power.
▶ 2:35:03But there's no incentive really for that backup power. Who wants to spend on a natural gas plant that has to sit idle and yield to wind and solar and only turn on and be able to to to to sell energy for uh for for those moments where a blackout needs to be avoided. It's it's it's not a a winning economic business model. And that's I think something that's true throughout the um uh inflation reduction act. It doesn't ban uh gasoline powered vehicles.
▶ 2:35:30It doesn't ban natural gas facilities, but it so heavily subsidizes the alternatives that it greatly discourages these things and that and as you say, it distorts the markets. Have you seen similar dynamics where Washington began spending money or doulling taxpayer dollars out to different private entities or or special interests and then once we tried to pull them back, you saw that same dynamic of of special interest lobbying Washington to keep their handouts in place.
▶ 2:35:58Well, you see it in the inflation reduction act itself. Many of the many of the tax credits were ones that in some cases began in the 1990s and have been extended many many times. So there's a long history of uh of these tax credits once they're established and once there's a concentrated group of uh of of companies that benefit from them, they're going to lobby hard to uh to keep them.
▶ 2:36:21So, uh, yeah, there the there's there's a long history of it being difficult to ever phase something out unless you repeal it when the opportunity arises. Yep. And Democrats love to claim that these subsidies benefit workingclass Americans.
▶ 2:36:36We have IRS data that found that 5.5 billion dollar of the approximately 8.4 4 billion in tax credit claims doowled out for residential energy tax credits came from filers earning more than $100,000 a year annually. I'd love to hear your opinion. Again, do you believe that these tax credits benefit wealthy Americans at the expense of our working class? The priorities in the inflation reduction act are simply not the priorities of of most working Americans.
▶ 2:37:07uh the bottom 60% of households take advantage of 10% of the tax credits. Um and with regard to something like electric vehicles, keep in mind upwards of 40% of American households are single vehicle households. They either don't want or most likely can't afford multiple vehicles. Ask yourself, does an EV really be can it really be that one go-to vehicle? And the answer is is is no.
▶ 2:37:31uh upwards of 90% of EVs are part of multi- vehicle and and and wealthier families and and a lot is true of many of these other uh uh um um subsidized uh uh uh uh u appliances and other things that just don't make sense for most working folks, which is why they needed to be subsidized. Yep. Thank you, Mr. Lieberman. And I now recognize the gentle lady from Arizona, Miss Ansari. Thank you. It is uh so funny to me.
▶ 2:38:00My colleagues across the aisle love to vote against their districts and their constituents in interests. They're sitting here railing against the inflation reduction act legislation that has launched $130 billion in private investments and created $400,000 jobs in Republican held districts since it was passed. If the planned investments are kept in place, it would create 90,000 more jobs and bring in 70 billion dollars more in planned investments.
▶ 2:38:31when we're talking about these jobs as well. When I have spoken to pretty much every single labor union, workingclass people who very much actually are are majority Republicans, sheet metal workers, electricians, plumbers, and pipe fitters, they are thrilled about the investments in the inflation reduction act because of the jobs they have created.
▶ 2:38:5218 of the 20 districts who have received the most funding from the IRA are in Republican held districts, accounting for 78% of the total IRA spending to date. But I guess they don't want those investments in their districts anymore, although I know they love attending the groundbreings and the ribbon cutings. In Mr.
▶ 2:39:10Gosar's district, which borders mine in Arizona, a project was announced that would bring in $1.25 25 billion dollar in investment and created an estimated 6,400 jobs thanks to the funding opportunities and the tax credits made possible by the IRA. That project has since been cancelled due to financial uncertainty because of President Trump's attacks on the IRA and House Republicans promise to repeal it. Dr. Gee, question for you.
▶ 2:39:39How would the repeal of these tax credits stifle innovation? I I want to talk about innovation because in so many of the committees I'm on in Congress, we talk about energy dominance and wanting to be at the forefront of innovation and the threat of China, but we are actively deciding to stifle that. Can you talk about what kind of risk that would pose to companies here in the US and the threat that they may move out of the country?
▶ 2:40:03So the investments that the inflation reduction act is making in manufacturing and new technology is really is key to us being able to compete with China on high-tech manu high-tech manufacturing and also breaking the strangle hold that China has on mineral processing which is critical for batteries and other technologies. Um, repealing these investments would create an estimated $80 billion of energy investment opportunities that goes to other countries, not the US, including China, um, the EU, Japan, South Korea, and Mexico.
▶ 2:40:33Um, we've already seen investments canceled because of the policy uncertainty created by discussions over this bill, as well as the Trump administration's efforts um, and cancellations of projects. And so um this investment as well as in things like the National Science Foundation are key to um inc to improving science and also investing the application of technology. So $80 billion in missed investments that is devastating. It's not just about that.
▶ 2:40:59The effects of the IRA repeal will also have an impact on hardworking everyday Americans in this country. We know that Rodium, a nonpartisan independent research group, found that a repeal of the IRA would increase the average household's energy expenses by over 7% over the next 10 years. This means higher energy bills and higher gas prices for everyone. So, Dr. Gee, how will Republicans plan to repeal the IRA's tax credits and energy subsidies raise costs for American families?
▶ 2:41:28So, the tax credits go to the clean energy economy, which lowers energy prices and benefits everybody. Um if these provisions were to be repealed um as you know Rodeium Group estimates about 70 uh dollars more per year is what Americans would pay for the electricity bills. Um it also means uh that oil and gas will need to fill the gap which will be an increase in gas prices that we could see in the future. So in my district I I represent Phoenix, Arizona.
▶ 2:41:55Many of my constituents already experience disproportionately high energy costs because keeping your AC on in the summertime is incredibly expensive. Um can you talk to us about how the IRA's investments in clean energy help in the face of growing energy demands? Yes, so we are facing increased energy demand. Um luckily 90% of what's coming online these days is clean energy. Um and the IR is not just about energy production. It's also about energy storage.
▶ 2:42:19So let me give one example of energy storage actually from Arizona which is the scatterwash battery storage complex in Phoenix. um that is a uh one that involves $559 million in uh financing um thanks to the IRA um for making that those investments possible. Um and it will be able to store enough electricity to power 50,000 Arizona homes during peak summer conditions for 20 years. Thank you. I yield back to our ranking member. Thank you.
▶ 2:42:49Um really quick, earlier uh Dr. McBride, one of the chairs asked you to confirm an updated CBO score for the inflation reduction act. You mentioned that there isn't one. We also don't have a C final CBO score for this big beautiful bill act that they want to vote on which will be the largest transfer of wealth from workingclass Americans to the wealthy in this country's history. Do does the tax foundation believe that we should even have a vote on a big bill like this when we don't have a final CBO score?
▶ 2:43:15Well, we do our own scoring and we do we uh use essentially a lot of the same methodologies that CBO and JCT does to estimate the tax side in particular. Uh but we uh as well do a deficit impact, debt impact, uh accounting for the spending. We have not yet done that in total. Uh this is a very big bill that's in the title that is very accurate. There is a lot in there. Do you think we should vote on it before we know the impact to our nation's national debt?
▶ 2:43:45Usw answer this, but this the gentleman's time is expired. Thank you. Oh, yes or no. He said he could answer U I I believe that is up to you. That is that is your that's your job to decide that. Okay. All right. Thank you. I recognize the gentleman. Okay. Over you see real quick.
▶ 2:44:02I ask unanimous consent to enter into the record the Tax um House GOP tax plan preliminary details and analysis which state that the big beautiful tax bill will result in wages shrinking without exception. Without objection, I now recognize the gentleman from Louisiana, Mr. Higgins. Well, sure, Mr. Mr. Chairman, it's okay to move forward here. All right. Thank you, Mr. Chairman.
▶ 2:44:29I'd strongly oppose the so-called inflation reduction act. When Democrats were in majority in 2022, they they they jammed this bill through Congress. Conservatives very clearly stated at the time that the bill would increase deficit spending and have very negative impact on inflation.
▶ 2:44:53uh it would impose new and oppressive mandates and we would end up investing money that we don't have. All deficit spending, 100% of it deficit spending. Investing hundreds of billions of dollars into uh fanciful ideas of of of energy production that would, you know, ultimately fail. And that's exactly what has happened.
▶ 2:45:20So, I'd repeal the entire thing if I could, every word of it. That's that's not where we are with our bill because with the with the current bill under consideration has been referenced here because in the spirit of compromise, you know, we we haven't been able to get to 100% repeal.
▶ 2:45:44the the arrogance like disconnect from some of my colleagues across the aisle is really stunning. Mr. Chairman, every American family imagines the the wondrous things we could do if we had unlimited money. You great things, no doubt, if you had unlimited money. In this town in DC, the federal government sells treasury bonds to finance deficit spending.
▶ 2:46:13America, especially the youngers out there, listen to you, Uncle Clay. We don't have money. Your nation, this generation right now, this Congress and Congress's past in modern history is spending money we don't have at a rate that's that's is going to collapse your country upon your head. We have $ 37 trillion in debt. That's $ 37,000 billion dollar.
▶ 2:46:43We This body is a long way from balancing the budget. But if we were to balance the budget and run a $1 billion surplus, and a billion is a thousand million, if we were to run a$1 billion surplus, it would require years to address a 37 trillion debt.
▶ 2:47:10My colleagues across the aisle are are just unbelievably supportive of spending more and more and more money that we don't have. And our country is careening towards bankruptcy. We face insolvency right now.
▶ 2:47:31and we must take courageous corrective action regarding the incredibly misguided and ill-advised IRA. Mr. Lieberman, as compared to affordable and energy, how has the IRA subsidies impacted investment in in uh in so-called sustainable energy? it.
▶ 2:48:00Have we have we stacked the deck? Have we put our thumb on a scale, sir? Oh, definitely. There's a lot of projects underway only because of the uh generous subsidies. Only because not market driven, not because of the energy that they will provide, not because it's affordable and abundant and transportable and works well with our grid, but because this town, this federal government has put our thumb on the scale. Am I correct? Uh, that's correct.
▶ 2:48:27I'd also add there's a energy success story that didn't require any uh uh type of the of of tax credits and that's the fracking. So let's shift to that. Let's shift to that. I'm going to ask Dr. McGra McBride because my Democrat colleagues, they act like that when no refineries and no plants were ever built before 2022. It's insane. I don't know how we powered the entire 20th century in the first quarter of this century, but we did.
▶ 2:48:56We managed to do that without IRA subsidies, spending money that we don't have. But is it safe to say that that that that private investments and alternative energy will move will continue with or without taxpayer subsidies, sir? Yes, absolutely. That that certainly the case. You look at EVs, we know EVs have been around for many many years. Uh I my household we we actually own a hybrid uh purchased like 15 years ago or something.
▶ 2:49:26Uh so these technologies the batteries that go into that's going to grow this this actually goes back decades. The development of the battery technology that we're enjoying now goes back decades. This stuff was was happening um with subsidies to some degree uh but also due to private market forces long before the IRA. I concur. Uh, thank you, ladies and gentlemen, for appearing today. Mr. Chairman, my time is expired. I yield.
▶ 2:49:57Thank you. I now ask unanimous consent to enter the following documents into the record. First is a statement prepared for this hearing by Gabriella Hoffman, who is the director of the Center for Energy and Conservation at the Independent Women's Forum in support of cutting the IRA's green energy subsidies. And then this uh article by Alex Epstein titled Why Congress's new budget should eliminate all IRA Tax Credits. Without objection, so ordered.
▶ 2:50:26And with that, I recognize Mr. Min from California. Uh before I begin, and thank you, Mr. Chair. Before I begin my remarks, um I would ask unanimous consent to include in the record a report from the joint economic committee's minority staff titled recent clean energy programs lower costs for family and are vital to US manufacturing jobs and energy security. Without objection. And if I could have my clock reset since I haven't started yet. Uh all right. As a member, I as first I just want to appreciate my uh colleagues from Louisiana's point about the national debt and our deficit.
▶ 2:50:57And we just note that the big beautiful bill has been estimated that it will double our national debt by the year 204. So if we care about fiscal responsibility, obviously we owe a an obligation to our future generations to not vote on that bill, to vote no. Now, as a member of Congress's joint economic committee, I've seen firsthand how the IRA has created massive new investments in the US economy, including in infrastructure and manufacturing. President Trump has repeatedly stated that his goal is to try to create more manufacturing jobs in the United States.
▶ 2:51:26His tariffs, which caused massive turmoil and led to the destruction of trillions of dollars of Americans hard-earned retirement savings, were a misguided attempt to try to bring manufacturing back to the United States. Well, the IRA has been extraordinarily successful in doing just this. And you don't need to take my word for it. Uh just about a month ago, this same subcommittee held a hearing on the topic of how to bring manufacturing back to the United States titled Made in the USA, igniting the industrial renaissance in the United States.
▶ 2:51:51And if you go back to the transcript of that hearing, you'll see that I asked every one of those witnesses whether the IRA's clean energy tax credits were incentivizing manufacturing in the United States. And every single witness, including all three Republican witnesses, said yes. The IRA was good economic policy and was creating manufacturing jobs here. In fact, one Republican witness stated that IRA was incentivizing more jobs and creating more innovation in the United States.
▶ 2:52:14Since the IRA was signed into law in 2022, it's led to over 2,000 new clean energy facilities opening and the creation of a million new jobs. Additionally, 3.4 million Americans have used clean energy tax credits for home energy improvements, saving between 460 to $1,000 per year in annual energy costs.
▶ 2:52:32Looking forward, the IRA's energy tax credits are expected to generate over$ 1.9 trillion in economic growth over the next decade, resulting in 13.7 million manufacturing jobs that will boost employment across the energy sector as a whole. At the same time, we're seeing massive costs that are acrewing to our economy from climate change, which is expected to cost an estimated 368 trillion each year by 2049. Transitioning to clean energy isn't just a massive jobs creator. It's also something that will help us avoid me massive negative costs to our economy.
▶ 2:53:02It's also worth noting that clean energy is seen by countries around the world as the future of economic growth which is why China is investing so heavily in subsidies for clean energy technologies uh 10 times as much as the United States according to some estimates. Now Dr. Gee, in terms of jobs and economic growth, do you see more growth potential in clean energy in the future or do you see more growth potential in fossil fuels? Absolutely. There's a lot of unp potential in clean energy.
▶ 2:53:26Um in fact to date about 800 billion uh dollars in private investments have been announced for clean energy. Um this lot of manufacturing yes the spurred body inflation reduction act and that's uh 300,000 jobs created to date and another 600,000 in the pipeline. Um although those are in jeopardy if the provisions of the are repealed. Now, I recently went on congressional delegation to Korea, talked to a number of companies that had invested heavily in the United States in manufacturing.
▶ 2:53:54Hyundai, LG, solar panels, electric cars, all manufactured right here in the United States. Many billions of dollars, thousands of jobs. Uh, and what they told me is that if the clean energy tax cuts are tax credits are repealed, uh, they will, those projects don't pencil out. They will have to cut thousands of jobs. Uh, this is what we're talking about. Now, I want to get to Dr. Trish's testimony. Dr. Trish, am I summarizing your testimony correctly? Just yes or no.
▶ 2:54:16If I say that your main point, as I read it, is that the IRA stunts innovation in pharmaceutical and medical devices industries by capping the cost for Medicaid Medicare recipients. Is that basically the thrust of it? And at the same time, I want to make clear that even if I agree with you that we're talking that these do result in less innovation, we are talking about a trade-off here, right? Medicare patients get lower costs and more access to drugs. Uh, and that this may reduce, according to you, innovation by lowering the profit motive for pharmaceutical companies. Now, Dr.
▶ 2:54:46Trish, you may know I represent quite a lot of life sciences companies in my district, including Irvine and Newport Beach, among other cities. And in recent months, these companies and many others like them have repeatedly reached out to me with huge concerns about reduced innovation due to federal policies. You want to guess how many of those talked about IRA or the clean energy tax credits or Medicare I'll let you tell me. Zero. Zero. Would that surprise you? Uh, there's a lot of discussion going on about different types of guess what they're talking about. You want to take a guess? Dr. Gee, guess what these companies are talking to me about?
▶ 2:55:16I would guess they're talking about the cuts made to uh basic science by the Trump administration and Doge NIH and NSF. Yep. Cuts to FDA staff, which they're worried will increase patent approval times, approval times generally for devices. They're also worried about the illegal arrests and deportation proceedings for graduate students, which has led to enormous fears that the top scientific minds in the world will stop coming to the United States.
▶ 2:55:37In fact, just the other day, I was having dinner with a friend of mine who's a leading cancer research at University of California, San Francisco, and he told me that his top graduate student candidate had just emailed him to tell him she was not coming to the United States, even though UCSF was her top choice because of concerns about the anti-immigrant rhetoric and actions under the Trump administration. Now, Dr. Trish, you didn't mention any of these things, NIH cuts, FDA cuts, uh effects of anti-immigration policies.
▶ 2:56:02Is is it your opinion that these are just not important when we're talking about Uh, no, that's not my opinion. In fact, my colleagues at the Schaefer Center have published on the impact of NIH cuts on. So, I'm reclaiming my time. If we're talking about innovation, then wouldn't these be much bigger? Are these life sciences companies misleading me when they don't talk about IRA and they only talk about the Trump administration's policies? Uh, no. We're there's there's, you know, the the fundamental math hold claiming my time.
▶ 2:56:29Would would you agree with the statement that the Trump would you agree with the statement that the Trump administration's policies are having a much more inhibiting effect on innovation in life sciences and pharmaceuticals than IRA? There's a lot to unpack there. Thank you. We now recognize Mrs. Boowbert from Colorado. Thank you, Mr. Chairman, and thank you for being here to our witnesses.
▶ 2:56:53Um I you know I just want to start by saying uh that the the inflation reduction act um the idea of it creating jobs is a myth. Uh this is this is something from the federal government and it's actually destroying our grid. Um and it's harming harming every American with inflation and less economic opportunity. Uh the the IRA is actually diverting investments um to uncompetitive businesses and jobs.
▶ 2:57:21these these uh businesses cannot compete in our market. It's literally one side of the government choosing winners and losers and we are paying millions for um EV jobs that pay less than the national average.
▶ 2:57:34Um the IRA disproportionately benefits China by increasing uh the demand for Chinese companies and uh they really dominate the solar and wind uh supply chains and directly subsidize Chinese-owned solar and wind projects operating in uh the US. So I I just wanted to clear that up. It was never about reducing inflation. The American people were lied to. Um it was an inflation expansion act, not reduction. Um but uh on to our witnesses, Dr. McBride.
▶ 2:58:04Um, do you know how much uh CBO originally said um how much the inflation uh reduction act would cost um in renewable subsidies? Yes. In in total, including the tax side and the spending side uh 370 billion for the climate programs, $370 billion as we are over $36 trillion in debt. And um we we know that um the original estimates were were weren't correct that we were that we were given.
▶ 2:58:32So what is the real cost of um the green energy tax credits? Well, the credits alone that was about 270 billion originally estimated now looks to be about a trillion dollars or $1.2 trillion when you in include the interactions with regulations like the tailpipe rules. Absolutely incredible. Um m Mr. uh Lieberman, uh these renewable energy tax credits uh will cost the American people approximately up to $4.6 6 trillion dollars by the year 2050.
▶ 2:59:02Um, will the green energy sources u by themselves support the uh the current energy requirements uh of the United States? I don't know if I'd go as far as some people who say they're parasitic energy sources. That might be a little too far. But we know that wind and solar are just not available 247. There will always have to be a need for other energy sources to make sure that we have reliable electricity and policies like those in the inflation reduction act make it very hard to ensure reliability.
▶ 2:59:33Absolutely. And I think there are many of us here who are for that all of the- above energy approach. But it's when we're um subsidizing and promoting China, lifting them up, sub using the American tax dollars to um pay for this that's that's where we have a problem with it. U m Mr. Liberman, um given the growing demand for power in the US, uh what are the unintended risks uh to our electric grid that we're facing with um these uh displacing uh um proven energy methods?
▶ 3:00:02Well, the the the the North American Electric Reliability Corporation or NERK just recently released their their summer assessment. They're warning about potential blackouts in the US and North America over the summer. And uh they they specifically mention uh times of low wind and solar. They also mentioned bringing coal offline and not replacing it with anything that's uh that that's as reliable.
▶ 3:00:27And having followed these these these NERK studies for a number of years, their warnings are getting stronger and stronger and the links that they're drawing to uh to uh wind and solar are also being stronger and stronger. This is real. We saw in Spain and Portugal very serious blackouts. They're being studied. We don't have definitive answers yet. So, uh, but but but those are two countries with with a with with a with a lot of of wind and solar. We can't draw conclusions yet, but but there's some real reliability risks.
▶ 3:00:58Yes. Uh, and their their main their energy sources are unreliable and that's why there we've seen it in in California. Um, we've certainly seen brownouts there. uh in Colorado they've begun to shut down our coal fired energy plants and um they want to stop uh mining the coal arguably the cleanest coal in the world right there in Colorado and uh where our communities are being regulated into poverty because of it but this um so-called inflation reduction act it's a it's a disaster for our energy um and and the costs and
▶ 3:01:28um the economy it's it's really this act is what has caused um so many problems in increased energy prices. It was a shameful boondoggle and um it's pushing this unreliable um sources uh wind and solar while taxing our um dependable oil and gas. So I I want to thank the witnesses uh for being here and I yield. Thank you. I now recognize Mr. Palmer from Alabama.
▶ 3:02:00Thank the chairman. Um, it's interesting listening to my Democratic colleagues defend the so-called inflation reduction act. I I often call refer to it as the in income reduction act. But the one of the things about um that I I think gets lost in this is how much energy cost went up during the Biden administration. And um um there was a by the end of the Biden administration electricity cost had gone up 29.4%.
▶ 3:02:314%. Uh, that's after the IRA. That's after a massive investment in in the Green New Deal um resources. So, how do you think the Biden administration could explain that? U Mr. Lieberman, energy fluctuates and but things are made worse by bad policies and made better by uh by by good policies.
▶ 3:02:57And this was an administration that prioritized the climate change agenda over the affordable energy agenda. There there there's no question about that. And the inflation reduction act is part of that. In the first three years, residential electricity prices went up 23%. Industrial electricity price went up 19%. Home heating oil prices 69%. Oil prices uh increased 52%. Natural gas prices 32%. uh gas at at the pump.
▶ 3:03:27Um just in ter in terms of how does that impact the household? Um for those using home heating oil, it was $3,000 a year. Now, the reason I bring that up is because how higher energy costs impacted health of people in Europe. And I think most people realize the Economist magazine is not some right-wing publication.
▶ 3:03:53They found um that u because of higher energy cost in in Europe, they attributed that to 68,000 additional excess uh winter deaths. People simply couldn't afford to adequately heat their homes. 68,000 is n over almost 9,000 more than died from COVID during the same time period that came out in 2023. So there consequences for these decisions.
▶ 3:04:22It's also interesting that that Europe is finding out that renewables are not reliable. Uh for the first time, Germany is now looking at nuclear power generation. Uh that's an area where Mr. Chairman, I think we need to really be focused uh particularly in the small modular uh nuclear reactor area. So what I would ask uh you Mr.
▶ 3:04:48Liberman is given that we know that um renewables are not reliable. They they do not produce a consistent base load uh and and the need to have a consistent base load and and considering that we're in in a arms race for artificial intelligence with China.
▶ 3:05:08Shouldn't we be looking at at u rather than investing in more renewables, investing in in in nuclear or may maybe more hydrocarbon power generation so that we will have the ability to to uh power the the data centers that we're going to need to compete in AI. The energy mix and the electricity mix is best determined by energy markets. Renewables will have a role in those energy markets, but so will uh dispatchable sources that that are available.
▶ 3:05:38and can be ramped up when when when are are needed. So, uh uh the free market has done a remarkable job solving our uh our our energy challenges and we should never stray too far from uh from free markets and and Europe as as you as you say really should be a a warning for us. They're further down that road than we are. It's not working well. They're not leaving us in the dust because they've embraced uh clean energy. just the opposite.
▶ 3:06:07And I think we can we can we can we can look at these European countries as as as a warning sign. Well, you know, the National Electric Reliability Corporation puts out a risk analysis and uh for several years in a row and and I honestly don't can't remember what the last one said, but I think I think it's consistent. The number one risk to our power grid is not a cyber attack. It's not an EMP attack. It's changing the resource mix.
▶ 3:06:37What what to to put that in layman terms as we have shut down hydrocarbon facilities and and tried to replace those with renewables. We have not met the power demand. We have not been able to fill that gap and it's put us I think not only an economic security uh created an economic security problem but potentially a national security problem for us. Mr. Chairman, I yield back. Thank you, Mr. Palmer. Mr.
▶ 3:07:04Chair, I ask unanimous consent to introduce uh this article in Politico uh from just a couple days ago. Senate Republicans uh colon house GOP's energy tax credit cuts won't work where a number of Senate Republicans are quoting without objection. Without objection. Thank you. I now recognize Mr. Perry. Thank you, uh Mr. Chairman, Mr. or Dr. McBride, just listening to some of my colleagues. I'm just going to give you a vignette here. If if the first well we'll start with this.
▶ 3:07:34How much did the CBO if you know score the uh IRA at regarding the subsidies that would be given to these uh so-called renewable energy sources. Do you recall in total 370 billion 270 billion of that was from tax tax credits. Right. And do you remember what the outside organizations other than the CBO scored it at shortly thereafter? Closer to a trillion. There was a range of estimates.
▶ 3:08:01A lot of they talked about the uncertainty, but I think it was over a trillion, 1.2 trillion or something like that. So, let's just say if the federal government decided to uh give tax credits for manufacturing crap, do you think that there would be an interest in companies to manufacture dog crap for the tax credits, especially if it equated to $1 trillion? Yes, sir. Of course they would, right?
▶ 3:08:28And we could all sit up here and say manufacturing is growing. There are all these manufacturing jobs associated with this new bill and the tax credits and these subsidies to manufactured dog crap. Well, quite honestly, Mr. or Dr. McBride, I don't see what we've done here as very much different because I think this is dog crap or well, this this is garbage. It is distorting the market. It is destroying the energy grid.
▶ 3:08:57It is well this is my opinion is in your opinion are these subsidies encouraging the construction manufacturing placement of inefficient unreliable energy sources at the peril of reliable base load energy sources in general I'm not an energy expert but that's what I understand in general there's a there's a problem here of the Um
▶ 3:09:27the general problem is subsidies uh for particular technologies. Now some of these credits do try to go to a ne more neutral approach uh which is good but the most neutral approach is going to be uh to remove the subsidies entirely and to allow to allow the market to sort out what is the where does what is the future. This is an area where there's a lot of uncertainty about the future. The technologies are evolving every day.
▶ 3:09:56Hey, the companies are coming online are changing every day. Trying to get into that space and specify this or that technology as these credits do um is is a proven way to waste a lot of resources. Actually, Mr. Lieberman, do you have a um do you have a comment on my question? I think you you you you hit on something that that so many of these subsidized alternative energy jobs are just pushing aside unsubsidized conventional energy jobs.
▶ 3:10:26Uh one example that I recently learned about there were two refineries in California. They used to refine oil into gasoline and and diesel fuel. They shut down and they were rebuilt making renewable diesel and sustainable aviation fuels. And that's happening across the country. Not surprising, renewable diesel and sustainable aviation fuels currently get tax credits of a dollar per gallon on up and you know conventional gasoline and diesel gets gets nothing.
▶ 3:10:55Now you could visit those two uh facilities and say look at the the new jobs, look at the new activity, but nothing really new. They used to make gasoline. Now they these now they and incidentally the the alternatives are more expensive even with the right. They're more expensive. They're less efficient. I mean, if you live in California, if you lived in California in the 80s, you didn't think about brown outs or blackouts at all.
▶ 3:11:18But if you live in California today where they do all this subsidization and have all this green energy or actually don't have it, it's a way of life and it's going to come across the country. And it's because of these subsidies that are not only inefficient and ineffective, but they're also bankrupting the country, right? I mean, these subsidies, my friends over here say on the other side of the aisle say the one big beautiful bill is going to, you know, increase the the debt and the deficit.
▶ 3:11:44And and I'm not necessarily in disagreement with them because and that's why I have some concerns about voting for the bill, but they failed to recognize or acknowledge that they blew a a huge hole in the budget with these tax credits and subsidies for nothing. We're actually charging consumer there. They their elect have electricity's bill bill bills gone up or gone down on average since the enactment of the IRA. Mr.
▶ 3:12:09Lieberman, according to the US Energy Information Administration, electric rates, electric bills have been going up faster than the rate of inflation since 2022. I wonder why that is. The the inflation reduction act is dog crap and it should be repealed entirely. I yield. Thank you. And thank you to our witnesses. I think this has been a very enlightening and educational hearing and uh really appreciate your service to our country.
▶ 3:12:38And with without objection, all members will have five legislative days within which to submit materials and to submit additional written questions for the witnesses which will be forwarded to the witnesses for their response. If there are no further business, without objection, the subcommittee stands