Future historians will not be kind to the Republican Party.
Climate advocates, Democrats, and even some House Republicans who last month had supported a tax package that gutted federal support for clean energy were hoping the Senate would make fixes to protect energy manufacturing and jobs.
But on Monday, Senate Republicans disappointed them, proposing to quickly end most tax breaks for wind and solar power, electric vehicles and other clean energy.
Draft legislation released by the Senate Finance Committee would terminate or scale back most of the major tax incentives for clean energy contained in the Inflation Reduction Act of 2022, the Biden administration’s signature climate law.
The plan would eliminate within six months a $7,500 consumer tax credit for purchases of electric vehicles as well as home energy rebates for things like electric heat pumps and induction stoves. A tax credit for homeowners who install solar panels on rooftops would end within 180 days. A subsidy for making hydrogen fuels would expire this year.
Federal tax credits for wind and solar power, which have been in place for decades but were made more lucrative under the Inflation Reduction Act, would be rapidly phased out. Wind and solar companies could qualify for the full tax break only if they began construction in the next six months. They would receive 60 percent of the tax break if they began construction in 2026, and 20 percent of the tax credit if they began construction in 2027. Projects built after that would get nothing.
That’s a slightly longer runway for renewable energy than is in the House version of the bill, which would have ended those tax breaks almost immediately.
But the phaseout is quicker than many clean-energy supporters had hoped for, and some analysts had warned that pulling support for wind and solar power could cause electricity prices to rise in the coming years.
Senator Mike Crapo, Republican of Idaho and the chairman of the Senate Finance Committee, said in a statement that the tax package “powers the economy” by permanently extending tax cuts for individuals and businesses.
“The legislation also achieves significant savings by slashing Green New Deal spending and targeting waste, fraud and abuse in spending programs while preserving and protecting them for the most vulnerable,” he said.
Brad Plumer also in New York Times:
Repealing those credits could increase the average family’s energy bill by as much as $400 per year within a decade, according to several studies published this year.
The studies rely on similar reasoning: Electricity demand is surging for the first time in decades, partly because of data centers needed for artificial intelligence, and power companies are already struggling to keep up. Ending tax breaks for solar panels, wind turbines and batteries would make them more expensive and less plentiful, increasing demand for energy from power plants that burn natural gas.
That could push up the price of gas, which currently generates 43 percent of America’s electricity.
On top of that, the Trump administration’s efforts to sell more gas overseas could further hike prices, while Mr. Trump’s new tariffs on steel, aluminum and other materials would raise the cost of transmission lines and other electrical equipment.
These cascading events could lead to further painful increases in electric bills.
“There’s a lot of concern about some pretty big price spikes,” said Rich Powell, chief executive of the Clean Energy Buyers Association, which represents companies that have committed to buying renewable energy, including General Motors, Honda, Intel and Microsoft.
A study commissioned by the association found that repealing the clean electricity credits could cause power prices to surge more than 13 percent in states like Arizona, Kansas, New Jersey and North Carolina and lead to thousands of job losses nationwide by 2032.
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Majority Leader John Thune (R – Nebraska) insisted in a Fox News interview that despite multiple studies showing massive deficits accruing from the legislation, economic stimulus from the package would more than offset projected shortfalls. In other words, exactly what Republicans have said for the last 45 years as tax cuts for the wealthy have continued to explode deficits during their tenures. (see graph at top)
Republicans continue to make it clear that their number one priority is that in no case should their billionaire donors be required to pay taxes at the same rate as teachers, nurses, cops, firefighters, plumbers, electricians, carpenters, cooks, or waitresses – you know, the “little people”. Climate, the economy, their own children’s future, and a livable planet be damned.
Committee for a Responsible Federal Budget:
The House-passed One Big Beautiful Bill Act (OBBBA) would add $3 trillion to the debt through Fiscal Year (FY) 2034 as written and $5 trillion if made permanent. Over the long run, it would add far more to the debt.
We estimate that by FY 2054 the bill would:
- Increase debt by $15 trillion as written, or $31 trillion if made permanent.
- Increase debt to 172 percent of Gross Domestic Product (GDP) as written, or 190 percent of GDP if made permanent.
- Increase deficits to 8.4 percent of GDP as written, or 9.6 percent of GDP if made permanent.
- Increase interest costs to 6.0 percent of GDP as written, or 6.6 percent of GDP if made permanent.
These estimates likely understate the fiscal impact of OBBBA, as they assume interest rates that are significantly lower than today’s levels and don’t account for OBBBA’s effects on growth and interest rates. Most modelers have found that after boosting near-term output, OBBBA would reduce long-term output and increase interest rates as a result of additional borrowing.
Transcript: Berkshire Hathaway 2024 Stockholder’s Meeting:
And one thing that may surprise you, but we… Almost everybody I know pays a lot more attention to not paying taxes, and I think they should. We don’t mind paying taxes at Berkshire, and we are paying a 21% federal rate on the gains we’re taking in Apple. And that rate was 35% not that long ago, and it’s been 52% in the past when I’ve been operating. And the government owns… The federal government owns a part of the earnings of the business we make. They don’t own the assets, but they own a percentage of the earnings, and they can change that percentage any year.
And the percentage that they’ve decreed currently is 21%. And I would say, with the present fiscal policies, I think that something has to give, and I think that higher taxes are quite likely, and if the government wants to take a greater share of your income, or mine or Berkshire’s, they can do it. And they may decide that someday they don’t want the fiscal deficit to be this large, because that has some important consequences, and they may not want to decrease spending a lot, and they may decide they’ll take a larger percentage of what we earn, and we’ll pay it.
We always hope, at Berkshire, to pay substantial federal income taxes. We think it’s appropriate that a company, a country that’s been as generous to our owners… It’s been the place… I was lucky. Berkshire was lucky, was here. And if we… If we send in a check like we did last year, we sent in over $5 billion to the US federal government. And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime of federal taxes, whether income taxes, no Social Security taxes, no estate taxes.
“Electricity demand is surging for the first time in decades, partly because of data centers needed for artificial intelligence, and power companies are already struggling to keep up. ”
The power draw for air-conditioning goes up nonlinearly with each degree increase, and more people who thought they would never need air-conditioning are plugging them in.