Climate law in the crosshairs during Trump’s visit to the Hill

Republicans say the Biden administration’s policies on tax incentives for renewable energy could get in the way as they prepare to meet former President Donald Trump on Thursday.

Many said they weren’t ruling out gutting parts of the Inflation Reduction Act, Democrats’ landmark 2022 climate bill, as the GOP shapes its own plans to extend the 2017 Republican tax cuts.

Trump has already made clear he wants parts of the Inflation Reduction Act repealed, including those relating to offshore wind and electric vehicles.

Rep. Kevin Hern (Okla.), chairman of the conservative House Republican Studies Committee, said he was looking forward to Thursday’s message from Trump, “what every American wants to hear: that we will go back to the policies he had… We didn’t have an economic problem.” We had great energy policy.”

Rep. Byron Donalds (Fla.), considered a front-runner for vice president, said late last week: “Everything is on the table.”

Democrats themselves are sounding the alarm about a potential repeal. Senate Majority Leader Chuck Schumer (D-N.Y.) said Wednesday that eliminating the law “is not an idle threat.”

But killing the Inflation Reduction Act may not be that easy. First, Republicans will have to win the White House and both houses of Congress in November. In recent weeks, some Republicans have expressed that they do not believe the party should eliminate many tax credits for renewable energy, including hydrogen and carbon capture, noting their benefits to red state counties. Business and some fossil fuel interests have also come out to defend parts of the law.

However, it is not yet clear whether these Republicans will prevail over those who want the law to fall. The House Ways and Means Committee panel is examining tax incentives in the Inflation Reduction Act, and House Budget Chair Jodey Arrington (Texas) has strongly suggested that she would support repealing clean energy regulations.

“We’ll definitely look into it,” Arrington told E&E News POLITICO. “I think it has largely distorted the market and cost consumers more money as a result because it has moved away from cheap energy.”

In 2025, a key role in writing the repeal of the Inflation Control Act and the tax cut bill will likely fall to Arrington and the Budget Committee.

Any extension of the GOP’s proposed 2017 tax cuts would have to be advanced through budget reconciliation, a process that requires only a simple majority in both chambers but also involves strict budget rules. Both the Tax Cuts Act and the Inflation Reduction Act were adopted by consensus.

House Speaker Mike Johnson (La.) raised the issue of reconciliation during a visit with Senate Republicans during their weekly luncheon. After the meeting, Johnson told reporters Wednesday that there was “a lot of consensus” in the room, although he provided few details.

“We discussed a lot about reconciliation and how aggressive we can be within the rules,” he continued. “Clearly, Democrats have used reconciliation much more aggressively than the Republican Party in recent years. We would like to make big policy changes that would be good for all hard-working Americans, all families, everyone in every state.”

House Majority Leader Steve Scalise (La.) said of the budget reconciliation planning process: “We’ve had a lot of good feedback from members who are excited about it.”

Trump’s separate meeting with House and Senate Republicans on Thursday is expected to cover a number of topics, but lawmakers say they expect reconciliation and tax hikes to be resolved.

The former president did not hide the fact that he wanted to take advantage of numerous tax breaks under the Inflation Reduction Act.

In a statement Wednesday, a Trump campaign spokesman said the Senate hearing would be “future-focused on how Republicans can work together to advance policies that save America, including protecting Social Security and Medicare, securing the southern border and cutting taxes for hard-working families to restore the thriving economy of President Trump’s first term.”

Debt account as a “reference point”

In interviews Wednesday, Republicans laid out a wide range of options for how the GOP would treat the inflation reduction bill if the party takes control of Washington next year.

Arrington said he views the bill passed by the GOP in the spring of 2023 to raise the debt ceiling as a “benchmark” for what Republicans will lobby for in 2025.

That bill – the Limit, Save Grow Act, H.R. 2811 – contained a number of conservative provisions, the most important of which was the repeal of most of the Inflation Reduction Act’s energy credits, excluding credits for biodiesel, renewable diesel and other alternative fuels, after the threatened rebellion Republicans in the Iowa delegation.

“I think our conference stands by that,” Arrington said. “I don’t think that’s going to change.”

But some GOP lawmakers, despite the fact that not a single Republican voted for the Inflation Reduction Act, remain adamant that its clean energy programs go nowhere. They point to jobs and construction in their states and counties.

Co-Chair of the House Bipartisan Climate Solutions Caucus, Andrew Garbarino (R-N.Y.), stated at last week’s POLITICO Energy Summit: “We see a lot of companies spending a lot of money in red states. I also know that I would not support repealing many of these tax breaks. I think a lot of them should stay.”

The moderate party agrees that the programs included in the Inflation Reduction Act, which bring significant benefits across the country, should be maintained.

“You have to look at everyone and ask, ‘Did they get their refund?’” Sen. Thom Tillis (RN.C.). “Whenever you look at tax policy – ​​what has it positively stimulated? Has it stimulated capital investment? Has it increased revenues for the Treasury?”

He added that some programs may not be worth fighting for if it means sacrificing other GOP priorities, such as regulatory or tax policies that benefit the economy.

Sen. Lisa Murkowski (Alaska) also said she thinks there is a “general appetite” in her party to spare some of the clean energy programs in the Inflation Reduction Act.

However, other conservatives support a complete repeal of Biden’s entire program, and the entire inflation curbs bill has drawn their ire. Democrats say they take such conversations seriously.

“This is a key issue in the election: our Republican colleagues say that if they come into office, they will use reconciliation to take down the IRA. This is not an idle threat,” Senate Majority Leader Chuck Schumer (D-N.Y.) said Wednesday at an event with the League of Environmental Voters. “Make no mistake, America: if they take power, all these wonderful things will be destroyed.”

Senate Agriculture Chairwoman Debbie Stabenow (R-Mich.) said she should look no further than the current Farm Bill reauthorization negotiations as evidence that Republicans support the inflation-reduction bill.

“We know that MAGA Republicans — we know that Donald Trump — would like to repeal all of this,” Stabenow said of Democrats’ climate gains. “Right now I’m working on a five-year farm bill where Republicans today want to take that money and put it somewhere else. So it’s important to stay focused here.

Republicans are trying to take billions in unspent Inflation Reduction Act funds and use them in farm bills for environmental programs — but without requiring them to focus on climate change.

“They’ll have to run me over.”

Republicans handling Senate finances and House ways and means have been mulling over these topics for the past several weeks, and GOP lawmakers in each chamber have formed several working groups to dig into the details.

One of the House “tax panels,” of which Rep. Nicole Malliotakis (R-N.Y.) is a member, will examine manufacturing tax incentives that have become important to many industries, both clean energy and fossil fuels.

She predicted there would be a “broad discussion” about which energy and manufacturing programs Republicans might want to protect, noting that there was clear unity in opposing “American taxes going to communist entities in China.”

“We want to fix this,” Malliotakis continued. “We should limit the amount of money spent on this program. We should try to prioritize all incentives here in the United States – American companies will benefit.”

She also believed that some lawmakers would be keen to focus on electric vehicle subsidies, suggesting that the savings from scrapping this credit “would likely be used as a means of payment in some way.”

In the Senate, ranking finance member Mike Crapo (Idaho) is wary of his members’ performance so far.

“I’m not taking any position yet on tax policy for next year,” he said in an interview Wednesday.

But a Republican committee aide said the working groups would address all elements of the expiring tax cuts — “some broader, some more targeted” — and that “this is a collaborative effort and all finance Republicans are committed to the process.”

Crapo also suggested that there could be big changes: “We will see a phenomenal change in tax policy as a result of the expiration of the (Tax Cuts and Jobs Act). We also have a lot of other tax ideas being thrown out. We have a phenomenal opportunity here to look at the structure of our tax code and our tax policy.”

But first he will have to defeat Senate Finance Chairman Ron Wyden, the Oregon Democrat told E&E News.

“There are undoubtedly Republicans who do not support the need for renewable energy development, and we will see if some of them are willing to try a rearguard action in the next Congress to knock them out,” he said, adding: “They” will have to run me over.

Reporters Nico Portuondo, Andres Picon and Garrett Downs contributed.