House Republicans are under fire for proposing to repeal more than $200 billion of President Biden’s green energy tax credits after having campaigned on opposing tax hikes.
Speaker Kevin McCarthy has included a provision repealing the tax credits within the GOP’s proposal to raise the debt ceiling until May 2024. The bill is set to hit the House floor this week, despite opposition from Democrats and even some moderate Republicans.
Democrats say outright that canceling the green energy tax credits is the same as raising taxes.
“This vote should give my Republican colleagues serious heartburn about their pledges not to raise taxes,” Rep. Don Beyer, Virginia Democrat, told The Washington Times. “Repealing clean energy tax credits would drive up costs for regular Americans at a time when they promised to lower energy costs. It would also kill projects which are investing billions of dollars in red districts and states, eliminating tens of thousands of jobs.”
Mr. McCarthy disputes the claim, saying the green energy tax credit and subsidies do little more than “distort the market and waste taxpayer money.”
“Goldman Sachs says the savings from ending these green giveaways are as much as $1.2 trillion,” said Mr. McCarthy, California Republican.
Republicans have long campaigned on a pledge not to raise taxes. The issue is one of the major dividing lines between Democrats and Republicans.
Yet by proposing to nix tax credits that individuals and companies are relying on, at least one fiscal expert said House Republicans could in effect be pushing through a backdoor tax hike.
“Republicans have long argued that if you repeal a tax credit, but don’t do something to offset the revenue increase, then it’s considered a tax hike,” said Ben Ritz, an economic policy analyst at the Progressive Policy Institute. “This debt limit bill doesn’t cut taxes, it only cuts spending.”
Along those lines, the conservative Americans for Tax Reform purportedly debated scoring the debt limit bill as a tax increase.
One centrist Republican lawmaker admitted the messaging could be problematic as the GOP gears up for 2024.
“A lot of us opposed these tax credits when they first came up, but they’re out in the economy now, and canceling them could have adverse consequences — I don’t know if it’s raising taxes per se,” said the lawmaker, who is on the fence about the bill. “But it’s sure not cutting them.”
The prospect of being blamed for a tax hike is adding another wrinkle to the GOP leadership’s push to pass the debt limit proposal. Mr. McCarthy and his lieutenants are already struggling to unite the disparate GOP conference behind the plan.
House Republicans are proposing to raise the debt limit by $1.5 trillion in exchange for $4.5 trillion in spending cuts. Specifically, they want to cut federal spending by $130 billion for the upcoming fiscal year and limit future budget growth to 1% annually over the next decade.
GOP lawmakers also want to rescind at least $90.5 billion unspent COVID-19 relief, cancel Mr. Biden’s student loan forgiveness program, and require individuals to work at least 20 hours per week to receive Medicaid and food stamps.
While divisions linger over how strenuous to make the work requirements, the push to repeal more than $200 billion in green energy tax credits is making lawmakers squeamish.
“A state like South Carolina, we have a lot of solar farms and solar energy, both residential and commercial,” said Rep. Nancy Mace, South Carolina Republican. “I want to find out and figure out what kind of adverse impact it might have on the state of South Carolina.”
Climate-friendly Republicans, like Ms. Mace, are not the only ones feeling conflicted. Midwest conservatives representing farm country are also troubled.
Mr. Biden’s $739 billion climate change bill, known as the Inflation Reduction Act, included billions in new incentives for corn-based ethanol and other biofuels.
Overall, the law includes a new sustainable aviation fuel tax credit, $5 billion in drought assistance and more than $3 billion in farm debt relief. It also invested $500 million in biofuel infrastructure, including technology to expand the blending and distribution of corn-based ethanol.
GOP lawmakers in Iowa and other states with ethanol plants in their districts are worried about the repeal effort.
Mr. McCarthy’s allies are making the argument that voting for the debt limit bill does not mean it will become lawfully intact. Instead, they say it will strengthen the speaker’s hand to begin negotiations with the Democrat-controlled Senate and Mr. Biden on raising the debt limit.
“That is our first offer in this debt ceiling negotiation,” House Financial Services Committee Chairman Patrick McHenry, North Carolina Republican, said. “We’ll see if the president’s willing to come to the table and negotiate as previous presidents have.”
Mr. Biden, for his part, has refused to negotiate with House Republicans over raising the debt ceiling. The White House argues it’s not fair for the House GOP to take the government’s finances hostage because both parties contributed to the nation’s $31 trillion debt.
• Haris Alic can be reached at halic@washingtontimes.com.
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