[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
THE U.S. TAX CODE SUBSIDIZING
GREEN CORPORATE HANDOUTS AND
THE CHINESE COMMUNIST PARTY
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HEARING
BEFORE THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
APRIL 19, 2023
__________
Serial No. 118-10
__________
Printed for the use of the Committee on Ways and Means
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U.S. GOVERNMENT PUBLISHING OFFICE
53-011 WASHINGTON : 2024
COMMITTEE ON WAYS AND MEANS
JASON SMITH, Missouri, Chairman
VERN BUCHANAN, Florida RICHARD E. NEAL, Massachusetts
ADRIAN SMITH, Nebraska LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania MIKE THOMPSON, California
DAVID SCHWEIKERT, Arizona JOHN B. LARSON, Connecticut
DARIN LaHOOD, Illinois EARL BLUMENAUER, Oregon
BRAD WENSTRUP, Ohio BILL PASCRELL, Jr., New Jersey
JODEY ARRINGTON, Texas DANNY DAVIS, Illinois
DREW FERGUSON, Georgia LINDA SANCHEZ, California
RON ESTES, Kansas BRIAN HIGGINS, New York
LLOYD SMUCKER, Pennsylvania TERRI SEWELL, Alabama
KEVIN HERN, Oklahoma SUZAN DelBENE, Washington
CAROL MILLER, West Virginia JUDY CHU, California
GREG MURPHY, North Carolina GWEN MOORE, Wisconsin
DAVID KUSTOFF, Tennessee DAN KILDEE, Michigan
BRIAN FITZPATRICK, Pennsylvania DON BEYER, Virginia
GREG STEUBE, Florida DWIGHT EVANS, Pennsylvania
CLAUDIA TENNEY, New York BRAD SCHNEIDER, Illinois
MICHELLE FISCHBACH, Minnesota JIMMY PANETTA, California
BLAKE MOORE, Utah
MICHELLE STEEL, California
BETH VAN DUYNE, Texas
RANDY FEENSTRA, Iowa
NICOLE MALLIOTAKIS, New York
MIKE CAREY, Ohio
MARK ROMAN, Staff Director
BRANDON CASEY, Minority Chief Counsel
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C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Jason Smith, a Representative from Missouri, Chairman....... 1
Hon. Judy Chu, a Representative from California.................. 2
Advisory of April 19, 2023 announcing the hearing................ V
WITNESSES
Daniel Turner, Executive Director, Power The Future.............. 4
Drew Horn, CEO, GreenMet......................................... 8
Kenny Stein, Policy Director, Institute for Energy Research...... 19
Vance Ginn, Senior Fellow, Americans for Tax Reform.............. 27
Ben Beachy, Vice President of Manufacturing and Industrial
Policy, BlueGreen Alliance..................................... 43
PUBLIC SUBMISSIONS FOR THE RECORD
Public Submissions............................................... 197
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THE U.S. TAX CODE SUBSIDIZING
GREEN CORPORATE HANDOUTS AND
THE CHINESE COMMUNIST PARTY
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WEDNESDAY, APRIL 19, 2023
House of Representatives,
Committee on Ways and Means,
Washington, DC.
The committee met, pursuant to call, at 10:04 a.m. in Room
1100, Longworth House Office Building, Hon. Jason Smith
[chairman of the committee] presiding.
Chairman SMITH of Missouri. The committee will come to
order.
We are here today to examine what has happened with the
mountain of green special interest tax breaks in the
President's so-called Inflation Reduction Act. In the eight
months since that law's passage, three things are clear.
Number one, taxpayers are footing a bill for these tax
breaks that are hundreds of billions above what they were told.
Some estimates reach as high as 1 trillion, over three times
more than originally estimated. Other economists estimate the
battery manufacturing credits alone will cost over $196
billion, a 542 percent increase--542 percent increase.
Number two, the White House opened up convenient loopholes
to make not only foreign countries, but even our adversaries
like China eligible to claim these taxpayer-funded subsidies.
And number three, the design of these credits has allowed
large companies, big banks, and the already wealthy to make
billions off the backs of hard-working American taxpayers.
Ultimately, the White House and my colleagues on the other
side pushed through these corporate welfare subsidies that cost
more than three times as much as they told us it would, while
paying big dividends to big business and China.
While the wealthy and politically connected get a massive
windfall from the Democrats' taxpayer-subsidized handouts,
working families, small business owners, and farmers, they are
struggling. Witnesses at Ways and Means field hearings have
told us of the challenges they face to hire, make payroll,
afford input materials because of the President's inflation
crisis. I anticipate we will hear more of these challenging
stories at our hearing Friday in Georgia.
President Biden, he may succeed in strengthening the
manufacturing sector, but for China, not the U.S. Solar cells
manufactured in China and assembled into panels in the U.S.
will qualify for these special interest tax breaks, even if
they are implicated in human rights abuses. The world's largest
solar manufacturer is a Chinese company that just had its solar
shipments confiscated at the border last fall over forced labor
concerns. They are now planning to partner with a business in
Ohio to utilize these very credits to build a facility here in
the United States. Are these the type of businesses that we
should be rewarding?
This is just one area where the Biden Administration has
opened the door to China. To develop projects like EV battery
manufacturing, U.S. companies are partnering with Chinese
Communist Party-controlled companies that control over 50
percent of the processing capacity of key battery ingredients.
Meanwhile, White House regulations and red tape make it
difficult for America to develop critical resources for EV
battery ingredients right here at home.
As congressional scorekeepers now realize, this money will
get spent faster than expected. The Biden Administration is
creating even new loopholes to benefit foreign companies and
foreign workers. The latest example is the Administration's new
critical minerals agreement with Japan that evades IRA
safeguards and allows benefits to flow to foreign companies. No
wonder USTR did not let the American people see the text of the
agreement before signing it. This is a low-emission tax subsidy
fire sale only Washington and Wall Street would love.
These special political tax breaks flow to big companies
and big banks, with congressional scorekeepers estimating that
large corporations today receive over 90 percent of them. These
are companies with sales in excess of $1 billion. Financial
institutions receive three times more than any other industry.
Financial institutions receive three times as any industry,
that is correct.
And when it comes to the 15 percent minimum tax on
corporations that Democrats touted last year to look tough on
big business, and to make sure everyone pays their fair share--
that is what they say, but guess what? They exempted their
special interest tax breaks from that rule, creating a loophole
for their friends, their donors, their buddies, and politically
favored corporations.
American workers should not have to send money to
Washington in order to subsidize big corporate virtue signaling
about climate commitments and woke agendas. We cannot ignore
these facts among misleading marketing about good intentions
and climate change. Democrats sold America a bill of goods with
the Inflation Reduction Act. And the sad part is, once again,
America and the American worker will pay the price.
Chairman SMITH of Missouri. I now turn to Ms. Chu for the
purpose of an opening statement.
Ms. CHU. Thank you, Mr. Chair, for gathering us to discuss
how, in just eight months, the Inflation Reduction Act has done
more for American workers and families than the Tax Cuts and
Jobs Act has done in almost six years.
The climate crisis is real, and its effects are only
becoming more extreme. In California, all but one of the
state's 10 largest wildfires in history have occurred since
2017, and years of severe drought have now been followed by
months of extreme rain and snow.
Democrats did something about this, and we made sure that
the clean energy transition will mean more jobs, more
manufacturing, and higher wages here in the United States. The
Inflation Reduction Act is the single-largest clean energy
investment in U.S. history, with first-of-their-kind
requirements to strengthen American supply chains and create
quality, high-paying jobs. This legislation is proving that
green jobs are good jobs, and putting the country on a path to
responsible, sustainable energy independence.
So far, the green tax credits have spurred over 100,000
jobs for U.S. electricians, mechanics, construction workers,
technicians, support staff, and others. Just in the law's first
6 months, 90 new clean energy projects have been announced in
31 states. These projects include battery manufacturing,
electric vehicle manufacturing, and wind and solar
manufacturing sites. If this isn't delivering results for the
American people, then what is?
Along with the Bipartisan Infrastructure Law and the CHIPS
and Science Act, these landmark laws have led to companies
committing more than $200 billion to U.S. manufacturing. Our
investments in semiconductor and clean tech are nearly double
what they were in 2021, and nearly 20 times the total in 2019.
The result is less reliance on vulnerable supply chains
overseas and offshoring of well-paying jobs: just another way
that Democrats are growing the economy from the bottom up and
the middle out.
Meanwhile, Republicans are over 100 days into the Congress,
and the American people can see that their priorities include
shielding tax cheats from accountability, proposing a 30
percent tax increase on everything Americans buy, and
threatening to drag the country into an unnecessary economic
crisis that would decimate Social Security and Medicare. What
we have not seen is any plan that would reinvest in American
workers and families.
If they were serious about these goals, they would support
the Inflation Reduction Act's work to onshore critical supply
chains and revitalize communities. But instead, we get hearings
like this one, which use China as a way to distract from their
own policy failures. It is dishonest, because the truth is that
the Inflation Reduction Act is one of the most impactful laws
in our nation's history to reduce our reliance on China and
other foreign markets and move jobs and supply chains back here
to the United States. And it is reckless and false rhetoric
that has consequences. As we have seen since the pandemic, this
rhetoric contributes to dangerous anti-Asian hate that hurts
Asian Americans here in the United States.
In the last 100 days, notwithstanding all their America-
first rhetoric, one of the most consistent themes of our
committee's majority has been to put foreign interests ahead of
the American people. Last month we marked up a bill in this
committee that would put the interest of foreign bondholders,
including Chinese bondholders, ahead of veterans, seniors on
Medicaid that are in nursing homes, Pell Grant recipients, and
every American awaiting a tax refund. And this is a pattern.
The Republican tax scam gave more benefit to foreign investors
than the bottom 60 percent of Americans. We didn't hear any
America-first concerns at that time.
I am disappointed that we are once again spending valuable
time on political posturing against our clear successes,
instead of working together to create American jobs, shore up
our domestic supply chains, or catapult our nation to leading
in the new green energy economy. It is a waste of our time, a
waste of the American people's time, and it is all in the
service of extending another round of handouts to the wealthy
and well-connected.
Ms. CHU. I yield back the balance of my time.
Chairman SMITH of Missouri. Thank you, Ms. Chu.
I want to welcome the witnesses and thank you for taking
your time out to be before the best committee in Congress, the
House Ways and Means Committee. I will now be pleased to
introduce each and every one of you.
Daniel Turner is the founder and executive director of
Power The Future.
Drew Horn is the founder and CEO of GreenMet, and formerly
associate director of policy for the Office of the Vice
President.
Kenny Stein is policy director at the Institute for Energy
Research.
And Vance Ginn is senior fellow at Americans for Tax
Reform, and formerly the chief economist at the Office of
Management and Budget.
And Ben Beachy is vice president of manufacturing and
industrial policy at the BlueGreen Alliance.
Mr. Turner, you are now recognized.
STATEMENT OF DANIEL TURNER, EXECUTIVE DIRECTOR, POWER THE
FUTURE
Mr. TURNER. Thank you. Chairman Smith, Ranking Member Neal,
and members of the Ways and Means Committee, good morning and
thank you for the opportunity to appear before you.
My name is Daniel Turner, and I am the founder of Power of
the Future, a group that advocates for the millions of energy
workers, especially those in rural America. These men and women
produce the energy which powers our homes and our nation, and
their jobs are under constant attack.
Energy undergirds everything from our economy to our
national security. Everything grown, manufactured, transported
requires energy. And as energy prices go up, food and consumer
goods have become more expensive. Our current state of high
inflation is driven largely by administrative actions designed
to significantly raise the cost of fossil fuels. No one has
been hit harder than working-class and rural Americans.
We are producing less oil than we have in years because we
have an administration that has promised no new drilling. As a
result, gas prices are still nearly $1.50 higher, on average,
than when President Biden took office. The proposed government
solution: $7,500 tax rebate on new electric vehicles. For most
Americans who cannot afford an EV, which averages $60,000, that
is not clearly a solution at all.
So who is benefiting from these tax rebates? Data shows the
average EV owner earns over $100,000, more than double the
average salary. The tax benefits for going green are anything
but equitable.
The other beneficiary is the Chinese Government. My
organization has previously authored two studies, one showing
how 70 percent of EVs and green technology are manufactured in
China; the other showing how 90 to 95 percent of the rare earth
elements in those technologies are sourced from markets
dominated by China. As a consequence, every tax break, subsidy,
or government program meant to incentivize the purchase of EVs
is really a direct benefit to China.
It does not have to be this way. President Biden has spoken
often about a supply chain that starts in America, a goal with
which I wholeheartedly agree. Yet, along with that lofty
rhetoric comes a sobering truth. Efforts to open the U.S. mines
needed for the green supply chain have been thwarted. Mines in
Minnesota, Arizona, Alaska, and many other states are stopped,
while the Biden Administration has made deals for these same
materials from foreign countries, some of which have records of
slavery and child labor and disastrous environmental practices.
Yes, the metals and the rare earths to ``go green'' are
still needed, but the jobs and the tax revenue are being
outsourced, rather than coming to Americans.
I have been to Alaska Native villages fighting the
government to open a mine, where the unemployment rate
currently runs around 80 percent, where mothers pour soda into
their babies' bottles because milk, if they can even find it,
costs $12 a half gallon, and there is no running water. These
communities are pleading for the mine to open for the jobs,
electricity, infrastructure. But most of all, the dignity and
hope. These communities deserve the chance to utilize their
land for their much-needed benefit.
And we have done this for decades to coal communities. All
across America, the war on coal has closed mines and plunged
once thriving communities into poverty. Radical environmental
groups, many of whom have been investigated for their ties to
Russian and Chinese funding, launch glitzy ad campaigns to
close coal mines. And when they win, they return to their
headquarters and leave those towns struggling with systemic
poverty. Yet we still use coal, it is just more expensive. And
eventually, like the metals and the rare earths, it will be
imported from other countries, where child and slave labor
often mine it.
Fossil fuels are not going away. The government is just
making them more expensive and, as a result, making life more
expensive. The burdens grow harder. The natural gas tax this
Congress passed last year will not have companies ``pay their
fair share,'' as proponents claim. The American people will
just face higher costs. Even the discussed bans on gas stoves
and gas hot water heaters will do nothing for climate change,
they will just make life harder for struggling Americans.
I am here today to talk about policies that unleash
American energy and, by extension, American prosperity and the
American dream. I look forward to taking your questions and
having a robust and honest conversation.
[The statement of Mr. Turner follows:]
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Chairman SMITH of Missouri. Thank you, Mr. Turner. Mr.
Horn, you are now recognized.
STATEMENT OF DREW HORN, CEO, GREENMET
Mr. HORN. Thank you, Chairman Smith, members of the
committee. Thank you for the opportunity to testify today. My
name is Drew Horn, and I am president and CEO of GreenMet, a
private company working to develop American critical mineral
and green energy supply chains. I am here today to explore the
connection between our domestic energy supply chain policy and
our national security.
The intent of the Inflation Reduction Act, signed by the
President in 2022, was to invest in companies whose focus is
domestic energy production and manufacturing. As we have seen
in recent headlines, implementation of the IRA has been
inconsistent with congressional intent.
The Treasury Department is responsible for ensuring
compliance with the IRA. It is imperative that Treasury close
loopholes that currently enable foreign adversaries to
circumvent U.S. law. Treasury has already announced guidance
pertaining to the qualification of critical mineral
requirements, highlighting the need for supply chain
transparency and sourcing requirements. However, industry
stakeholders are still waiting for Treasury guidance on what
countries qualify as a foreign entity of concern.
In the meantime, Chinese-backed companies are taking
advantage of U.S. tax credits by establishing quasi-Chinese
subsidiaries on U.S. soil within U.S. supply chains.
Nationwide, industry and financial leaders are waking up to the
threat that this presents to America and to our allies.
Chinese dominance and continued incursion of our energy
supply chains is the most significant national security threat
that the United States and other friendly countries are facing
in the 21st century. I want to emphasize the fact that when
Chinese-backed companies are allowed to do business inside the
U.S., we must assume Chinese intelligence agencies are
illegally collecting sensitive U.S. information, stealing
intellectual property, and doing everything they can to
continue Chinese Communist Party dominance in this sector. In
effect, a Trojan horse is introduced into our nation's
industrial and manufacturing sectors.
The CCP's approach is to conceal its ownership or
influence. U.S. companies and universities that present
themselves as homegrown domestic entities dedicated to
promoting U.S. commercial and national interests is one method
of that disguise. In some instances, Chinese-backed companies
or universities have filed for and were actually granted U.S.
Government funding. All of this is supported by CCP national
policies.
Current U.S. control mechanisms like CFIUS are insufficient
to protecting U.S. industry from this subterfuge. I
emphatically urge each Federal agency and department to take
this issue seriously by, one, defining foreign entities of
concern; two, solidifying congressional free trade agreements
with our allied partners; and three, investing in true American
companies. Doing all these things will secure and diversify
America's supply chains.
To begin, Congress should push Treasury to provide clear
definitions of foreign entities of concern. Look to current law
for our National Defense Industrial Base, which prohibits
acquisition of sensitive materials from non-allied foreign
nations in the interests of national security. Foreign entities
of concern should match the definition of covered nations as
defined in U.S. law. The case for applying this definition to
our domestic mineral supply chains is now.
Next, Congress should continue to play an active role in
ratifying ongoing free trade agreements and giving clear
mandates for cooperation with allies. At any point, the PRC may
limit global access by restricting trade of these critical
minerals, all of which have China as the dominant global
mineral and metal producer. Therefore, trade policy plays a key
role in decreasing our import reliance on foreign entities of
concern.
In the short term, the U.S. will need to engage with allies
and free trade partners to secure our mineral supply chains.
The solidification of free trade partnerships, even with the
current patchwork of agreements, ensures our continual
cooperation with longstanding allies, and buys us time to bring
more American supply online.
And finally, we all must commit to building domestic supply
chains, thereby reducing our reliance on other nations.
I truly believe this is a bipartisan issue, and one that
affects the entire industry. We must incentivize true U.S.
alternatives to support our national security and policy goals.
Our energy security is our national security. Strong policy
will continue to de-risk domestic energy production, creating
pathways for willing Wall Street investors and patriotic
companies to unleash American energy production again. Domestic
options, when paired with the right mix of prudent government
support and time, can organically grow without foreign
interference.
We must control our own destiny. But the window of
opportunity to rebuild domestic supply chains is closing if we
don't take action now.
Thank you for the opportunity to testify today. I look
forward to your questions.
[The statement of Mr. Horn follows:]
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Chairman SMITH of Missouri. Thank you, Mr. Horn.
Mr. Stein, you are recognized.
STATEMENT OF KENNY STEIN, POLICY DIRECTOR, INSTITUTE FOR ENERGY
RESEARCH
Mr. STEIN. Mr. Chairman, thank you for the opportunity to
testify at this hearing.
The subsidies in the misnamed Inflation Reduction Act which
we are examining today are worse than merely misguided
industrial policy because the industries singled out for the
most generous subsidy, which--namely, the wind, solar and
batteries industries--are not actually domestic industries. The
inputs and components that will build the subsidized green
energy system envisioned by the IRA will be coming from foreign
countries, especially China, which thoroughly dominates both
the solar and battery industries, and is a major part of the
wind industry.
The IRA thus discards even the usual justifications for
industrial policies such as domestic industry or security. This
green industrial policy actually seeks to destroy domestic
energy and replace it with foreign energy. The policy set
forward in the IRA will tax our children to pay China for green
energy to replace the oil, natural gas, and coal that we
currently produce here in the United States. Because of the
uncapped nature of the IRA tax credits, there is actually no
way to know how much taxpayers are eventually going to be on
the hook for.
Additionally, despite some of the IRA subsidies getting
firm end dates, both the Production Tax Credit and the
Investment Tax Credit could hang around for decades, as they
are set to phase out only after a certain emissions target has
been met. Most forecasts don't see that threshold being met
until the 2040s, or even later.
If the prospect of our children and grandchildren paying
for these vast subsidies for decades to come isn't bad enough,
these subsidies will ultimately be funneled into the hands of
Chinese companies.
The problem with wind, solar, and batteries is that they
require an enormous amount of minerals to build in the first
place. For example, a typical electric car requires six times
the mineral inputs of a conventional car, mainly due to the
battery module. An onshore wind plant requires nine times more
mineral resources than a gas-fired plant. Because of this,
since 2010 the average amount of minerals needed for a new unit
of power generation capacity has increased by 50 percent, as
the share of renewables in new investment has been rising.
Unlike oil and natural gas, which are found and produced
around the world, the production of the main green minerals is
quite concentrated. In 2019, for example, the top 3 extractors
of copper and nickel produced more than half of global
production alone. And the top 3 extractors of cobalt rare
earths and lithium produced 75 to 85 percent of global
production. In contrast, the top 3 producers of oil and natural
gas, which both include the United States, produce less than 50
percent of total global production.
But this mining concentration actually pales in comparison
to the concentration in processing, where China thoroughly
dominates. China now processes the majority of the world's
nickel, cobalt, lithium, graphite, manganese, and rare earths,
which are all key inputs for wind turbines, solar panels, and
batteries. For several of those categories such as graphite,
manganese, and rare earths, China accounts for 80 to 100
percent of global production.
China's dominance goes beyond the processing itself. China
also controls the manufacturing and production of lithium ion
battery cells, anodes, and cathodes, and polysilicon wafers,
crystalline silicon cells, and solar modules. What this means
is that green energy is truly made in China. Thus, the vast
spending from IRA subsidies will be spent on Chinese products
and inputs, and enrich Chinese companies.
Now, the IRA did include some incentives to try and bring
back many of these inputs domestically. But the process of
opening a new mine stretches for many years, if not decades.
New processing facilities will--unlikely to meet U.S.
environmental standards, which, frankly, is part of why a lot
of this production happens in China today. Some final assembly
of imported Chinese components will probably happen in the U.S.
and often foreign-owned facilities in order to gain the IRA
subsidy eligibility. But that facade cannot hide what is
actually happening, which is a long way of saying that green
energy will not be made in the USA any time soon. To subsidize
green energy today is to subsidize China.
For decades, the primary goal of American energy policy has
been security of supply to ensure that the United States can
rely on itself for energy supplies in the event of a conflict
or crisis. Just in the last five years, we have just about
achieved that energy security that had been so elusive for so
long. The U.S. is a net exporter of oil, natural gas, coal, and
refined products, and what oil we still import mostly comes
from Canada and Mexico. Yet the avowed goal of the IRA is to
throw away that hard-earned security and replace our entire
energy system with inferior green alternatives sourced from
overseas.
To put this in context, at the peak, in 2001, the United
States relied on the Middle East for 23 percent of our oil
needs. That was viewed as a national security crisis. The U.S.
currently imports 74 percent of our rare earth needs from
China, with many other green metal needs over 50 percent. There
is no prospect of that changing in the near future. Yet we are
intentionally seeking to increase reliance on these Chinese
energy sources.
The security issue goes beyond merely China's control of
the inputs of the green energy system. An electric grid that is
more reliant on intermittent sources is more fragile and
expensive. This weaker, more expensive grid is more susceptible
to failures, be they weather events, human error, or deliberate
damage, because there is not a strong reserve of stable,
dispatchable generation.
The IRA energy subsidies are pushing the U.S. towards more
expensive and less reliable electricity, while also discarding
America's energy security in favor of dependence on China.
That--we get this supposedly in return for a small degree of
reduction in carbon dioxide emissions, even though the
magnitude of that reduction is questionable once you calculate
Chinese manufacturing and the overbuilding of the grid.
It might seem incredible to the average voter to believe
that we would be consciously replacing domestic energy with
unreliable, expensive, foreign-controlled energy, but that is
the net effect of the subsidies in the IRA.
Thank you for the opportunity.
[The statement of Mr. Stein follows:]
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Chairman SMITH of Missouri. Thank you, sir.
Mr. Ginn, you are recognized.
STATEMENT OF VANCE GINN, SENIOR FELLOW, AMERICANS FOR TAX
REFORM
Mr. GINN. Chairman Smith, members of the committee, my name
is Dr. Vance Ginn. I am the president of Ginn Economic
Consulting, senior fellow at Americans for Tax Reform, and
chief economist at the Pelican Institute for Public Policy. I
was also the associate director for economic policy at the
Office of Management and Budget in 2019 and 2020.
And when--yesterday was Tax Day. And we have got an issue
here where we are looking at taxes, what was in the Inflation
Reduction Act and the massive amount of debt, excessive
government spending that is hitting the nation. I think this is
a major fiscal crisis that we are looking at, an economic
threat that is very large for the American people across the
nation that is driven by excessive spending.
But at the same time, we do have a tax problem in this
sense--usually excessive spending problem, which it is, but now
we are seeing how taxes are also influencing the economy and
taking a pretty big hit, overall. We have got about $31
trillion in national debt, which amounts to $95,000 owed per
tax--per American, or $250,000 per taxpayer.
The CBO estimates we are going to have an average of $2
trillion a year in--just in the deficit annually, and nearly $1
trillion pretty soon on the net interest payments on the debt.
This is a massive amount of an issue. Along with rising
interest rates, we are also seeing slow economic growth. Last
year, when you look at the fourth quarter of 2021 to the fourth
quarter of 2022, there was 0.9 percent growth, and the overall
economy was the slowest from Q4 over Q4 on record during a so-
called recovery.
So I think what we really need to be focused on, as well,
is reining in government spending, passing responsible American
budgets that grow no more than the means of the--of taxpayers
across the country. And I think we would be in a much better
position.
And that fiscal crisis has been increased dramatically by
the so-called Inflation Reduction Act, which--inflation is
still at a multi-decade high of over five percent, still
running pretty hot. I think we have still got some increases in
inflation that is moving forward, as well. So it is something
that really needs to be looked at.
And so when you are breaking down what is in the Inflation
Reduction Act, the CBO's estimate of $391 billion last year,
there have been more estimates that have come out that show
this is closer to $1.2 trillion, more than 3 times as much as
what was initially estimated just last year at a huge cost to
the American taxpayer over time, along with a lot of the green
energy agenda, other things that are a part of this for
unreliable sources of energy that are putting money into the
situation of picking winners and losers throughout this overall
economy.
Some of this has been because of, you know, the incentives
matter. When you start handing out taxpayer dollars, there will
be an increase in EV production, and we have seen that. So
those estimates have been changed compared to what was done
last year.
There is also Treasury guidance that has changed some of
the dynamics of how much the costs were going to be within the
Inflation Reduction Act, and also looking at the electric
vehicle, you know, battery cells and modules and what those
costs were going to be. CBO initially estimated those to be $30
billion, and now the estimate, when you look at $45 for these
batteries per kilowatt hour, are being closer to $196 billion,
nearly $200 billion, nearly 7 times what CBO initially
estimated just last year. This is quite remarkable when you
think about it, that--the cost to taxpayers of what this is
going to do.
And there is still a lot more that is going to be done. I
mean, even Senator Manchin said recently, when he looked at the
Treasury's recent guidance, he said in a press release, ``The
guidance released by the Department of Treasury completely
ignores the intent of the Inflation Reduction Act. It is a
pathetic excuse to spend more taxpayer dollars as quickly as
possible, and further control--cedes further control to the
Chinese Communist Party in the process.''
And so, as has been mentioned before, this will mean more
production in other countries, one of those being in China. So
what are the concerns with that?
There are a lot of concerns that have been discussed over
time. But also looking at the defining eligibility, there are
still going to be additional eligibility requirements coming
out of Treasury. What sort of effects will those have on the
estimates that were done?
You know, in economics trade-offs matter, incentives
matter. The amount of money that is being spent of taxpayer
dollars continues to matter. And we want more money in the
pockets of taxpayers, so that way they can put food on the
table, save for a rainy day, and things of that nature. And as
we are spending more, running up deficits and debt, we are
crowding out the productive private sector of our economy, and
we are picking winners and losers in the process.
So our hope is that Congress and others will look at re-
estimating the high cost of the Inflation Reduction Act, and
finding ways to start to look at what those costs really mean
to taxpayers in the process as you move forward here in this
committee and in others.
So, you know, given the economic situation that is
happening right now, slowing growth, slow growth last year, you
know, Americans have faced 24 consecutive months of declining
real wages in inflation-adjusted wages year over year. This is
not a good situation. So I hope that you will take a re-look at
the--estimating the Inflation Reduction Act's cost.
Thank you for your time, and I look forward to your
questions.
[The statement of Mr. Ginn follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH of Missouri. Thank you, sir.
Mr. Beachy, you are recognized.
STATEMENT OF BEN BEACHY, VICE PRESIDENT OF MANUFACTURING AND
INDUSTRIAL POLICY, BLUEGREEN ALLIANCE
Mr. BEACHY. Thank you, Chair Smith, Ranking Member Chu, and
the distinguished members of the committee. My name is Ben
Beachy, and I am the vice president of manufacturing and
industrial policy at the BlueGreen Alliance, which is a
national partnership of labor unions and environmental
organizations.
At the BlueGreen Alliance it is our belief that we should
not have to choose between good jobs, a livable climate, and a
fairer economy. The Inflation Reduction Act is the nation's
most full-throated embrace to date of this essential truth.
Addressing climate change requires us to build a clean
economy, and that offers real opportunities to create good jobs
for workers and to invest in hard-hit communities. This win-
win-win for climate, jobs, and justice is embedded in many of
the IRA's more than 100 climate and clean energy programs. I
will zoom in on the law's investments in manufacturing.
As we build the growing clean energy economy, we face a
clear choice. We can continue to hitch our climate goals to
vulnerable overseas supply chains that are marred by labor
abuses, higher levels of pollution, and shipping bottlenecks,
or we can build our clean energy future on a foundation of good
jobs, clean manufacturing, a reliable industrial base, and
greater equity. The investments in the Inflation Reduction Act
decisively put us on the latter path, offering more than $50
billion in landmark investments to revitalize manufacturing for
the clean economy.
The IRA's clean manufacturing investments alone will create
an estimated 900,000 good jobs over the next decade, according
to recent economic analysis. The law's total climate
investments are expected to create more than nine million jobs.
This offers an unparalleled opportunity for hard-hit workers
and communities to reap the economic gains of climate action.
Many of the jobs will be in communities in both Republican and
Democratic districts that have been hollowed out by decades of
divestment and de-industrialization.
By creating good manufacturing jobs in the hardest-hit for
the hardest-hit workers, including Black and low-income
workers, we have the opportunity to counter the racial and
economic inequality fed by manufacturing job losses; the
opportunity to build the clean economy with union labor, not
forced labor overseas.
And we are already starting to see the results. As Ranking
Member Chu named, within six months of President Biden's
signature on the Inflation Reduction Act, companies have
announced a wave of solar, battery, and other clean tech
manufacturing investments that will create more than 100,000
jobs across 31 states. That is faster than anyone predicted.
The IRA's onshoring incentives also support our climate
goals. You know, much has been said already this morning about
the extreme concentration of clean tech manufacturing overseas,
that 97 percent of the wafers used in solar panels are made in
China, that China also makes 3 out of 4 of the world's electric
vehicle batteries. The IRA's historic domestic manufacturing
investments are squarely aimed at solving that very problem.
The law rightly recognizes that ensuring access to clean energy
means making more of the nuts and bolts here at home.
The pandemic has taught us much about the dangers of heavy
dependency on vulnerable supply chains for essential goods.
That is as true for clean energy as it was for N95 masks.
Overseas corporations also tend to produce more emissions than
U.S. factories in making the aluminum and steel that go into
our clean energy goods. Solar panels, for example, are about 85
percent aluminum, and producing the average ton of aluminum in
China causes 65 percent more climate pollution than in the
United States.
To meet our climate goals, we need to invest in clean,
reliable domestic supply chains for clean energy. That is what
the IRA does. In short, it changes the game. The law finally
reverses the untenable status quo. It attaches clean energy
expansion to manufacturing job growth, while detaching clean
energy from vulnerable imports. It marks an overdue return to
smart industrial policy by investing in industries that are
strategically imperative not only for climate action, but also
a thriving and more just economy. That is a win-win-win: a win
for the workers now taking good union jobs; for the hard-hit
communities seeing investments for the first time in decades;
and for all of us who seek a livable climate.
Thank you again for the opportunity to speak today.
[The statement of Mr. Beachy follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman SMITH of Missouri. I want to thank you all for
your testimony, and we will now proceed to the question-and-
answer session.
And I will first start with you, Mr. Turner. Rural,
working-class communities, as taxpayers, will be on the hook to
pay for these green energy subsidies. Meanwhile, analysis has
shown that these special interest tax breaks in the Inflation
Reduction Act overwhelmingly flow into the pockets of large
financial institutions three times more than any other
industry. Large corporations with sales in excess of $1 billion
receive over 90 percent of all these tax breaks. Companies who
make more than $1 billion received 90 percent of the Democrats'
green handouts. That is not helping working-class families.
That is not helping rural communities. That is helping their
political buddies.
So will rural working-class communities benefit from these
credits, Mr. Turner?
Mr. TURNER. Thank you for the question, Mr. Chairman. Rural
Americans bear the brunt of these last couple of years since
the pandemic.
A study I found out of Iowa State University talked about
how rural Americans' cost of living have increased 9.2 percent.
Their earnings have only increased 2.6 percent. Rural Americans
are paying more than $2,500 a year in gasoline than they did a
couple of years ago. And that makes sense: rural Americans have
longer commutes to work, to the grocery store, et cetera.
Expenses now consume 93 percent of rural take-home pay. Two
years ago it was eighty-five percent. So there is a lot less
available cash, just liquid cash for rural Americans to
suffer--to have at their advantage.
I used personal analysis of what the Biden Administration
is offering to rural Americans. I like to think I am a good
ambassador for rural America. I was up at 4:00 this morning to
do a couple of hours of farm work before I drove here. So I am
from rural America. I use the Virginia estimator--because I
live out in rural Virginia--for their solar panels. The average
cost for my solar panels for my farm would be around $38,500.
Now, with the Federal rebate it would be $26,900. But I still
have to come out of pocket $26,900.
There is still a problem. That doesn't work at night-time,
which is a drawback, I think you could say, to solar panel
because there is a thing called night, and it is not going away
anytime soon. So I would need to add another $12,000 worth of
batteries on top of that.
Now, this would save me maybe about $125 a month in my
electric bill. But to offset that cost, I need about 18 years,
while the average lifespan of a solar panel is 20 years. And
that is to assume that it doesn't break, it doesn't get hit by
a hail storms--which we have in rural America--it doesn't have
any roof damage, et cetera.
So what are my savings? And what they say to me as a
response is, well, then you should go to the bank and get a
loan. And to your point, Mr. Chairman, financial institutions
receive the bulk of this. So they get the tax benefits on the
upfront, but then I am supposed to take out a loan at 9.5
percent APR to pay for these solar panels.
And I can say the same about electric vehicles. Motortrend
did a very good study on a famous pickup truck that the
President drove around in. Not to knock the pickup truck, but
the pickup truck was incapable of hauling 8,000 pounds more
than 100 miles. I haul 900-pound steers often enough to know
that that pickup truck is absolutely useless. Well, that pickup
truck is close to $100,000. What is the response? Here is a
$7,500 rebate, and finance the rest.
So it is not made for the farmer in mind. The green
subsidies are not made for rural Americans in mind. We are
paying with our tax dollars for benefits and subsidies that
others--the wealthy, quite frankly--are getting.
Chairman SMITH of Missouri. Thank you.
Mr. Horn, the unfortunate truth is that, instead of making
us more independent for the minerals and components needed in
electric vehicles, the structure of the Inflation Reduction Act
credits and the subsequent regulation have actually
supercharged demand in China and made us more reliant on them.
Can you shed some light on how the Inflation Reduction Act and
the Biden Administration's interpretation of the law is
emboldening China, increasing the Chinese Communist Party's
ability to spread its harmful influence?
Mr. HORN. Mr. Chairman, I want to be clear about a few
things. I am in no way, shape, or form against technological
advancement, or energy efficiency, or any of these other
developments. And I am not here today to debate or even speak
so much on acting and standing U.S. law as I am to try and
recommend closing loopholes and solutions that move things
forward.
I think there is some intent that may have been missed in
execution when we talk about some of the recent bills and
legislation that has been impacted. And I think that it doesn't
take into consideration the nature of some of the adversaries
that we are dealing with around the world.
When you take the Chinese Communist Party--and I want to
take a moment to say Chinese Communist Party, not the Chinese
people, but an extension of the government in communist China
that looks to exploit and predatorily take advantage of folks
all over the world--you are dealing with a very complex and
sophisticated entity. It is one that watches us, that has
massive resources, that looks at everything we do, and looks
for any moment of weakness or access to exploit a loophole so
that it can take advantage and use it against us.
So while the Inflation Reduction Act is meant to build
domestic energy supply chains, to build domestic green energy
materials sourcing, what it has done in effect, without the
proper enforcement, is allow workarounds for Chinese state-
subsidized, state-owned entities to infiltrate inside our
country, and to actually work against the very intent of the
actual legislation and the IRA itself.
So what I would say is that it really comes down to proper
enforcement. And what we have right now is a situation where,
with the loopholes, it is actually going to lead to a worsening
of the problem if we don't close those.
And I would just like to summarize and finalize that by
saying that American solutions do exist. And there is an
effective lobby out there that tries to dissuade from the fact
that they are not that far and not as far from coming online.
But they have to be legitimate, they have to be truly American,
and they have to be solutions that, once they have assistance
in time that is initially given from government subsidies and
involvement, can stand on their own. And those need to be given
the true ability to grow and to flourish.
Chairman SMITH of Missouri. Thank you, Mr. Horn.
Adding on to the loopholes that Mr. Horn just was
suggesting, Mr. Stein, both Chinese and American companies are
getting creative in the ways in which they partner to exploit
these taxpayer-funded credits to take advantage of this massive
new windfall.
[Slide]
Chairman SMITH of Missouri. As you can see from the
headline in the poster right beside me, Ford will build a U.S.
battery factory with technology from China. That is in
Michigan. Can you walk us through how a foreign company like
the Chinese battery maker CATL, which is partnering with Ford
on EVs, can gain economic benefits from this green handout
regime?
Mr. STEIN. Sure. So the IRA has many tiers of stackable tax
credits that go into all these incentives. And at the
foundational level for this battery factory, there is a tax
credit for manufacturing the batteries here. And that is open
to anybody. There is no domestic input requirements. That is
just having the factory physically located in the United
States.
Now, there is additional requirements if you want to--for
the EV tax credits that--you know, the national sourcing
requirements, what countries they are coming from, and that
sort of thing. But that is on top of other subsidies. So the--
there is already--there is an immediate economic benefit from
the--just having the physical factory here, even if it is
assembling things that are all coming from China.
In the same sense, because they can count as a minority
partner, when you start talking about foreign entity of concern
issues, if they are a minority partner, and Ford is officially
the majority owner, does that qualify as foreign entity of
concern? I would be willing to bet that the Treasury is going
to read that as broadly as possible.
So--and again, the--when we talk about critical minerals
and mining, there is no requirements that those actually come
from the United States. Those can be produced by affiliates of
the Chinese company brought from China, or shipped from their
mines in Indonesia or Congo through China, and eventually make
it to here.
So we get a--this is what I mentioned about there is a
facade of domestic production of these things, but everything
going on in the background, the entire supply chain, is still
controlled by the China, Chinese companies, and, ultimately,
the Chinese Government.
Chairman SMITH of Missouri. Yes, the Chinese Government is
populating off of our green tax credits from the Inflation
Reduction Act.
Mr. Ginn, the Inflation Reduction Act is at the heart of
the tax credits we are talking about today. That bill was sold
to the American public as a plan to do just that, bring down
inflation by reducing our deficit. You recently penned a report
looking at the cost of the Inflation Reduction Act, and
specifically these tax subsidies. The projected costs to the
American taxpayers have skyrocketed. To what do you attribute
this increase, and how high could these costs go?
Mr. GINN. Mr. Chairman, you are right. This--we recently
looked at some of the data that is coming out, the latest
information that wouldn't have been available last year when
CBO was doing their estimates on the number of EV vehicles that
are being produced.
I mean, if you give tax breaks--incentives matter, right?
And so you start to do more production along those lines
compared with others.
Also, some of the new Treasury guidance that has come out
along the lines of what was in the Inflation Reduction Act, a
combination of those things has contributed to an increasing
cost of those EV tax credits for battery cells and modules. CBO
initially estimated it to be $30.6 billion last year. There is
a range of estimates now, but if you look at the $45 tax credit
that goes for these electric vehicle batteries, the higher end
along with the increasing number of them, there is a 100--that
would be $196.5 billion, which is a 540 percent increase
compared to--or a higher amount compared to what CBO estimated
just last year. And that is given some assumptions. And so it
could be even higher than that, depending on how many
vehicles--or batteries are being produced, how many vehicles
are sold, things of that nature.
And again, as has been mentioned earlier, a lot of this is
going to upper-income folks, big businesses, and that sort of
thing, at the same time not doing much to reduce inflationary
pressures in the economy.
Chairman SMITH of Missouri. Thank you. I now recognize the
acting ranking member, Ms. Chu, for any questions.
Ms. CHU. Mr. Beachy, the IRA includes entirely new
requirements in the tax code for domestic content, which
incentivizes companies to onshore manufacturing of clean energy
technology like solar panels, wind turbines, and electric
vehicle batteries, just to name a few. How will this help the
U.S. economy?
Mr. BEACHY. Thank you. I appreciate the question.
The first way it will help the U.S. economy is good jobs.
You know, decades of bad policy saw the outsourcing of
factories as good for efficiency. That logic was dead wrong.
Workers lost a primary source of high-paying union jobs,
communities lost tax revenue, and our nation lost the
industrial base that is the backbone of most modern economies.
Now, I mentioned that the law's manufacturing investments
alone are projected to create at least 900,000 good jobs over
the next decade. Job quality matters just as much as job
quantity, of course. And it is important to note that
manufacturing jobs tend to pay better, have better benefits,
and better access to unions than on average, particularly for
workers without a four-year degree.
The second way that this would support our economy is these
investments could help us to build a more equitable economy
specifically by redressing the economic and racial inequality
that has been fed by manufacturing job losses. You know,
manufacturing job losses were actually concentrated among low-
income communities and communities of color, particularly among
Black workers. If we grow clean manufacturing in a targeted
manner, it can help to reverse these trends as part of a
broader strategy to build a more just economy.
The third thing I will name is energy security. You know,
we need more reliable supply chains for energy security, which
is a critical component of economic security. I had mentioned
that, you know, the pandemic has taught us much here, and the
need to have a local supply of essential goods is just as true
for clean energy as it was for N95 masks.
In short, you know, we should not expose our clean energy
future to shipping bottlenecks and geopolitical conflicts. You
know, that--those are three ways, essentially, that the IRA's
manufacturing investments alone could support a stronger and
fairer economy.
Ms. CHU. Mr. Beachy, you mentioned that this will help
those economies in communities that are low-income and
communities of color. These environmental justice communities
are more prone to flooding, extreme heat, and air pollution,
and it is our responsibility to ensure that they experience the
economic benefits of the clean energy transition.
Can you expand on the ways that the IRA is supporting
communities impacted by environmental, economic, and racial
injustice?
Mr. BEACHY. Yes, thank you.
I want to first make clear that we do not speak on behalf
of any environmental justice groups. They speak for themselves.
But we have been happy to support their leadership in this
domain.
You know, the Biden Administration created the Justice40
Initiative to help dismantle the structural racism in our
society, and ensure that investments such as those from the IRA
go to the most hard-hit communities. That includes
disadvantaged communities, and--which is a broad category. It
includes communities that have been enduring disproportionate
air and water pollution and environmental injustice;
communities that have been enduring disproportionate risks from
flooding and storms and droughts, as you named; communities
that have been experiencing economic insecurity, low-income,
higher unemployment due to deindustrialization and divestment;
and of course, structural racism that is interwoven through
each of these burdens.
The application of Justice40 to the investments in the
Inflation Reduction Act is--sometimes it has explicit set-
asides for disadvantaged communities, and in other cases we see
the Biden Administration putting forth guidance showing that
the projects will be prioritized to the extent that they invest
in these hard-hit communities.
Ms. CHU. And can you also say a few words about the IRA's
requirements for prevailing wages and apprenticeships? How will
these increased wages strengthen the clean energy transition?
Mr. BEACHY. Yes, it is critical to pair these investments
in our clean energy future with high-road jobs. Clean energy is
clearly the energy of the future. We want to make sure that the
jobs in clean energy are also the jobs of the future. That
requires that they be prevailing wage--prevailing wage
standards be met, as well as apprenticeship programs. To get
the full value of the tax credit, solar and wind developers
simply have to pay their workers well, and they have to ensure
pathways to longstanding careers that can sustain families.
That is--for the first time in our history, we are tying
clean energy to high-quality job standards.
Ms. CHU. Thank you, I yield back.
Chairman SMITH of Missouri. I now recognize Mr. Buchanan
from Florida.
Mr. BUCHANAN. Thank you, Mr. Chairman, a critical hearing.
And I want to thank all our witnesses.
Everybody wants to take a different tack, and I want to
focus a little bit on the spending, because we got the debt
ceiling, and what is really taking place here where we have got
an estimate of $275 billion, and it ends up--they are
claiming--Wall Street Journal and others are claiming it could
be $1.3 trillion.
You look at the last 20 years, frankly, we have--our
taxes--basically, spending has gone up $20 trillion in 20
years. So there is plenty of blame to go wrong. But I am
talking about being competitive. It also--your balance sheet,
we are getting weaker and weaker as a nation.
I would like to--Mr. Ginn, what is your thoughts? Just in
terms of the fact that we get an estimate, it is a trillion
over. As a business guy for a lot of years, it seems like you
need to cap it. If you want to do 250 or 300, pick a number,
you cap it. When the money runs out, it runs out. But in this
case, it runs on, and it could run on $1.32 trillion, but it is
going to add to the deficit and make us a weaker nation.
Mr. GINN. Thank you, Mr. Buchanan. You are correct,
Congressman. This is a massive amount of spending that has been
going on for a number of years now.
If you look at the last 20 years, the national debt has
increased by $18.5 trillion. And if we had just matched
something like population growth plus inflation, sort of a
spending limit type of rule that even Colorado and many other
states have, the increase in the debt would only have been $500
billion. So it would have been an $18 trillion swing in the
direction that is positive for taxpayers in the process,
because this debt matters. This debt has got to be paid back at
some point. We are paying higher and higher interest on that
debt as the overnight lending rate between banks set by the
Federal Reserve is at five percent. It could continue to go up,
given inflation is also elevated.
And so I think that these things are going to continue to
have a larger and larger cost And if something like the
Inflation Reduction Act, around $300 billion, can go up to $1.2
trillion in such a short period of time, we need to have a
better handle of that----
Mr. BUCHANAN. Let me real quick----
Mr. GINN. Yes, sir.
Mr. BUCHANAN. This year interest is going to be on the debt
$400 trillion; 10 years, $1.2 trillion. It will be bigger than
our budget for national defense.
Mr. GINN. Yes, sir.
Mr. BUCHANAN. Mr. Horn, let me ask you. In terms of looking
at trade, it seems like we are not even on the field, we are
not in the stand. I have been to Africa multiple times. You see
the Chinese are very active and engaged, building roads and
bridges and, of course, doing all the mining and other things
that they are doing.
What is your sense in terms of where we are at from a trade
standpoint, and are we competing at all with the Chinese and
other countries?
But I look at primarily the Chinese and what they are doing
with a billion people in Africa.
Mr. HORN. That is a great point, Congressman. We are not in
the game and we need to get in the game.
The reality is that the Chinese, the Russians, other
countries are making great strides forward by taking advantage
of these massive resources throughout the globe.
The United States used to be the leader in this space. This
was an area that we dominated and led the world in until we
started offshoring it in the 1990s. And we have continued to do
that since. We have the capability to lead the world again in
this space, not only by developing resources abroad, but by
processing them and exporting them from our own shores, as
well, too.
Mr. BUCHANAN. And let me just mention I am confident we
have the companies and the capacity and potential leadership,
but we have got to get in the game, and we are not in the game.
We are not on the field. And I am very concerned about that.
Nobody wants to spend any more money, but that is probably a
pretty good investment. We have got a lot of people that are on
the ground, but we have got to make sure we are committed to
trade and competing. And I think, if we compete, we can be
competitive, but we are not.
Mr. Stein, what is your thought in terms of the trade
aspect, in terms of where we are at compared to the Chinese and
others, in terms of what is going on in trade?
Mr. STEIN. Well, part of what the Chinese have done is a
very deliberate policy, and it is driven by state, state-backed
organizations and state-backed banks. And they have given out
loans, and they have bought mines, they have built processing
facilities. Even countries that have tried to--like Indonesia--
tried to increase the amount of nickel processing that actually
goes on domestically in order to improve their own trade
balance, well, Chinese companies have come in and built a bunch
of processing facilities that they own, and that product is
then shipped on to China to be used.
So they--this is a very active and conscious, state-driven
policy all over the world to get access to these minerals to
control their processing. And it is very much a forward-
looking, centrally-planned system.
So--and it is something that, you know, as a free market,
more free market country in the United States, we don't think
that way. Our--you know, individual companies might do long-
term planning, but this is part of why this is dangerous to
increase reliance on some of these----
Mr. BUCHANAN. Yes. Let me just close and just say that I
know we can compete with a lot of countries--Japan, China,
everybody else--but we have got to get back on the playing
field in an aggressive way. And we have got a lot of capacity,
a lot of great people, but we don't have the leadership, for
whatever reason, in this area, this space.
Thank you, and I yield back.
Chairman SMITH of Missouri. The gentleman from California,
Mr. Thompson, is recognized.
Mr. THOMPSON. Thank you, Mr. Chairman, and thank you to the
witnesses for being here today.
You know, Mr. Chairman, I really seriously thank you for
calling today's hearing. It is not every day that the minority
gets such a generous opportunity to talk about all the good
work that we have done.
I would like to start by making a simple point of
comparison. In the last Congress Democrats on this committee
advanced legislation, the Green Act, which ultimately served as
the climate portion of the Inflation Reduction Act. It was the
biggest investment in fighting climate change in our country's
history.
That bill was specifically drafted to incentivize the use
of domestically-manufactured goods. It includes very clear
incentives for companies to use steel, iron, and other
manufactured products sourced from right here in the United
States. It includes very clear requirements that, to access
these tax credits, companies must pay good wages. Credits for
solar energy, wind energy, geothermal energy for fuel cells,
for hydropower, to maximize any of these credits companies have
to use domestically-produced materials and pay domestic workers
a good wage.
On the other hand, the last time the Republicans were in
charge their sole legislative accomplishment was the 2017
Republican tax act/giveaway. It did not distinguish at all
between the U.S. and Chinese businesses. In fact, according to
JCT, foreign investors, including the Chinese Sovereign Wealth
Fund, got a $345 billion tax cut.
And on top of that, because my Republican colleagues are
completely unwilling to pay the debts they racked up when they
slashed taxes for the very, very rich and for corporations, the
majority's first markup of this Congress was a debt
prioritization bill that prioritized--wait for this--the
Chinese bondholders.
So just to recap, Democrats' signature bill invests in
clean energy, directly boosts domestic manufacturing and energy
production, moves us away from fossil fuels, and creates jobs
here at home, while paying down $300 billion of our debt. The
Republicans' signature bill in 2017 was fully available to
Chinese companies and investors, added over $2 trillion to the
debt, and primarily benefited very rich people and big
corporations. And your first bill of this Congress prioritized
Chinese debtors over America's seniors.
The contrast is pretty clear to me, and I appreciate the
chance to lay that out for the American people.
Mr. Beachy, in your opening statement you said Americans
shouldn't have to choose between good jobs and a livable
climate and a fair economy. I agree with you 100 percent. Could
you please talk a little more about how the incentives in the
Inflation Reduction Act will create good-paying jobs for
American workers?
Mr. BEACHY. Absolutely, thank you for the question. So I
just mentioned that--and when it comes to clean energy
deployment, the bill explicitly makes ties--the expansion of
clean energy deployment--to high road labor standards for the
first time in U.S. history. You know, for far too long we have
seen a discrepancy in the quality of jobs between the clean
energy sector and the traditional energy sectors. This bill,
this law, the IRA, aims to close that gap.
Again, wind and solar developers, it makes good business
sense for them to take advantage of the higher tax credit by
ensuring there is a prevailing wage for workers and high road
apprenticeship programs to ensure a pathway to sustainable
careers.
In addition, for the manufacturing sector, $50 billion
being invested in our--in manufacturing to really turn the tide
of de-industrialization that we have seen in recent decades.
Again, manufacturing jobs tend to offer higher wages,
better benefits, and increased access to unions. So this is
really an about-face for--to decades of policy that have
ignored and left many workers behind.
Mr. THOMPSON. Thank you very much.
I just want to add, Mr. Turner, I read some of the things
that you have posted online, talking about how there is no
climate crisis, it is all communism. You know, just this week I
have met with two oil companies, two major ag interests, one of
which was grape growers from my area, and the shellfish
growers, all of whom told me of deep concerns they have with
climate change and everything that they are doing to having to
deal with that. I don't think any of these people are
communists. And I think saying something like this is pretty
outrageous.
I yield back.
Chairman SMITH of Missouri. Thank you, Mr. Thompson. For
the record, I want to clarify a statement that you made. The
very first piece of legislation that passed out of this
committee was the Protecting Taxpayers and Victims of
Unemployment Fraud.
With that, Mr. Smith is recognized.
Mr. SMITH of Nebraska. Thank you, Mr. Chairman.
Certainly, thank you to our witnesses for your engagement
here today. I think it is important that we hear from all of
you, even with mixed viewpoints. I think that that can be very
healthy.
I certainly appreciated the emphasis, Mr. Ginn, of your
testimony on the ways the Biden Administration has
exponentially grown the cost of the Inflation Act by ignoring,
straight-up ignoring both the plain language of the bill, as
well as the intent of its authors.
I don't agree much with much of what is in the IRA, the so-
called IRA. There is nothing new there for anyone. But I do
want to point out, however, that Senator Manchin has been
extremely clear about his intent in negotiating the critical
mineral requirements for the so-called Clean Vehicle Credit.
That bill says critical minerals must be sourced in the U.S. or
from a trade agreement partner, or recycled in North America. I
appreciate that a number of my Democrat colleagues on this dais
have expressed similar concerns about the Biden
Administration's efforts to undermine that.
Trade agreements are negotiated using trade promotion
authority, and they are enacted through legislation passed by
Congress and signed by the President. These critical mineral
agreements fail to meet the standard, while giving away their
largest benefit access to U.S. tax credits, while accruing no
new benefits for American manufacturers or consumers. I would
say workers are hurt in that process, as well. Every time the
Biden Administration takes administrative action like expanding
the scope of these tax credits through critical mineral
agreements, it increases the cost of that legislation. To state
the obvious, that increased spending does not reduce inflation.
In fact, it increases it.
Mr. Ginn, you covered some of my concerns about the Biden
Administration's expansive view of trade agreements in your
testimony. I appreciate that. The size of the economies, let me
say, that the Administration is negotiating with in these
critical minerals agreements--for example, UK, EU, and Japan--
have a combined GDP of more than $25 trillion, far outweighing
the size of the economies of the countries we actually
currently have comprehensive, true comprehensive trade
agreements with. Those 20 countries have a combined GDP of just
under $10 billion.
From those numbers alone, I would assume the cost of the
credits flowing out to other countries would vastly increase.
Mr. Ginn, can you speak to that?
Mr. GINN. Thank you, Congressman, and I think you are
right. Part of this is going to other countries, especially
with the new rules that are being put out, and going to
countries that don't need these sort of benefits. I think this
is something that we should ultimately be looking at. If it is
really an inflation reduction act, you have got to look at
reducing the debt, reducing how much we are spending at the end
of the day, because, otherwise, this just increases the debt,
crowds out the private sector, is inflated away, and it reduces
our purchasing power in the process.
And at the same time that we are benefiting, you know,
other countries and things of that nature, that is a huge
trade-off for the American people as a whole, and I think it is
another downside of the Inflation Reduction Act.
Mr. SMITH of Nebraska. Thank you. I have concerns that,
even though I think there were probably some good intentions
with the legislation that was passed last year--of course, I
certainly maintain my objection--but some of those good
intentions as they are applied to, as we heard, over 100
programs, intentionally going against what market forces there
might be or market-based dynamics, whether it is wages, input
costs, or even the output impacts, I just have concerns that
there can be great intentions, but as has happened all too
often around this place, actual results are sometimes opposite
to what the intentions were. That is the foundation of my
concerns.
And I hope that we can have the discussions we need to have
to address the fact that, fiscally, this legislation is getting
away from us. And I would hope that there is either an
explanation of how we can rein that in with a strategy to do
so, or certainly, I would hope, some acknowledgment that at
least we need to have the conversations to do something
legislatively to take a stronger, more fiscally responsible
position.
Thank you. I yield back.
Chairman SMITH of Missouri. Mr. Larson is recognized.
Mr. LARSON. Thank you, Mr. Chairman, and I want to
associate myself with the remarks of Mr. Thompson, and also
start by asking Mr. Beachy and thanking you and all of our
witnesses for your testimony.
But, Mr. Beachy, are you a card-carrying member of the
Communist Party, or is the BlueGreen Alliance aligned with the
Communist Party? Is the Sierra Club, are they aligned, to your
knowledge, with the Communist Party?
Mr. BEACHY. I appreciate the question, sir. No.
Mr. LARSON. Well, thank you for that. And Mr. Beachy, Mr.
Thompson was talking about a couple of points, but the
Inflation Reduction Act, what is your estimate in terms of the
jobs that the Inflation Reduction Act will create?
Mr. BEACHY. So it is not our estimate. We actually
commissioned a proper economic analysis from the Political
Economy Research Institute at the University of Massachusetts.
Mr. LARSON. Well, let me ask you before you go any further,
are they a communist organization?
Mr. BEACHY. Thank you for clarifying. They are not.
Their analysis shows that, over the next decade, the
climate and clean energy investments in this law would create
over nine million good jobs, and that is across sectors. I
mentioned the 900,000 for manufacturing. There is actually
about five million jobs that would be created in clean energy,
thanks to the rapid expansion of clean energy deployment fueled
by this bill. There is jobs to retrofit buildings to make them
more energy efficient and healthier for residents. There is
jobs to restore and protect our lands and build the resilience
of our communities. There is jobs in agriculture for rural
communities.
The expanse of this bill reflects the fact that we have to
restructure the economy to meet the challenges of climate,
jobs, and justice. And in so doing we are creating over nine
million good jobs.
Mr. LARSON. Thank you, Mr. Beachy.
And let me say that I think that China does represent a
threat, and one that should be taken seriously, and that,
hopefully, in a bipartisan fashion, that we can focus on this.
I appreciated Mr. Horn's comments in terms of focusing on
the industries of the future that we need to be investing in,
and investing in it so that we regain our position that we have
lost over decades. That will require Americans pulling together
and making sure that we are making the kind of investments that
will create 12 million new jobs and have unemployment at its
current lowest level in 50 years.
More needs to be done, especially on the investment side in
the industries of the future. And with that, Mr. Chairman, I
yield back my time.
Chairman SMITH of Missouri. Mr. Schweikert is recognized.
Mr. SCHWEIKERT. Thank you, Mr. Chairman. And I am going to
direct this one to Mr. Stein, just because for some of us there
is more than just the scale of industrial policy and the
arrogance of Washington thinking. We understand what the next
technological breakthrough is because, you know, we are all so
brilliant up here.
But, Mr. Stein, I live in the desert. I live outside
Phoenix. We actually have an excess of power every afternoon.
So our, actually, power rates crash to almost zero, because we
produce excess photovoltaic, particularly in the summer months.
But then this thing called the sun goes down, and we are still
running our air conditioners.
So a project we are working on--and it is bipartisan, you
know, with my delegation--is we have all these lakes up and
through this really rugged mountain territory just outside
Phoenix, and we are going to pump water up when power is
basically free up on top of the cliff, and then run it back
down. So water is a battery.
But the way the Orwellian-named Inflation Reduction Act
definitions in--what is it, 42, and is it 40--also 48--does my
hydro battery actually count as a battery under their
definitions?
Mr. STEIN. Well, not for the Battery Tax Credit in
particular. It is the--it is chemical batteries that are--that
count as----
Mr. SCHWEIKERT. So it is not the elegance of what is
storage and green, it was almost the elegance of, hey, we are
going to give money to our favorite friends in industry.
Mr. STEIN. Right. It is subsidizing an industry, yes.
Mr. SCHWEIKERT. So back to--just another thing that has
just driven me crazy is our brothers and sisters on the left
promised us, hey, here is what these things are going to cost.
And I would be willing to work with them saying, okay, can we
hold everyone to our commitments? But we all see the
information coming out. And yes, I couldn't do this without
boards. So let's take a look.
The cost estimates on the battery production credits when
this piece of legislation was moved, our brothers and sisters
on the left told us it would be $30.6 billion. That is what
CBO--that is what we were told. We are now seeing estimates
that it has as high as $196.5 billion. Would you be willing to
take it back to what you told us it would be, what we told the
American people it would be?
So let's actually take a look at wind. The cost estimate on
wind was going to be $11.2 billion. Now we are actually seeing
that the scoring of the actual language--not what we were told,
not what the American people were told, but what is now 64--
excuse me, $68.4 billion--and look, whether you want to do
Credit Suisse, which, actually, I am not sure I would use,
considering they are pretty much gone now. But Goldman actually
came back and said, hey, it is not like $280 billion of
handouts to big green corporations; it may be $1.2 trillion.
Okay. Are you willing to actually put it back to the--at
least cap it at that 280, which you told the American people
and told us? Or do we actually say, well, Goldman is saying
that the actual language, when scored out, is $1.2 trillion?
Do I have anyone on the panel who has an expertise on
explaining what happened here?
Why are we now seeing four times the exposure to the
American taxpayers?
But can you imagine the distortive effects?
And the last bit of my rambling is I know most of us
probably showed up at our basic economics class. We have seen
the numbers of how many Americans intend to buy electric
vehicles. We are now going to give these huge subsidies, mostly
to the very wealthy. And it is not actually changing, really,
the number of people who intend to buy electric vehicles. We
chose to subsidize something people were already going to do.
We didn't, like, say--put in definitions saying, hey, we are
going to focus on the research for iron air batteries, which
could be done with all domestic, no foreign--you know, isn't
this--be nice if you were actually concerned about a domestic
product. Instead, we produced massive subsidies for very
wealthy people for something they were already going to do. It
is just the absurdity of what we are dealing with.
So thank you for tolerating me, Mr. Chairman, but I feel
better getting that off my chest.
Chairman SMITH of Missouri. Thank you.
Mr. Blumenauer, you are recognized.
Mr. BLUMENAUER. And it is important. We want you to feel
better. [Laughter.]
Mr. BLUMENAUER. You know, some of us, we are of a
generation--in fact, this show is still being shown around the
country, where Rocky and Bullwinkle--there was a feature that
had Mr. Peabody and his boy, Sherman, and they had a wayback
machine. And I am listening to the chairman describe what is
wrong with what we did, and I am having a moment where I feel
like I am in that wayback machine, because what the chairman
said attacking it was almost exactly what some of us were
saying six years ago for the Republican tax bill, only it was
more generous to foreign companies, and the American people got
less back, and it was concentrated at those who needed it the
least.
I am concerned about being trapped in the wayback machine.
I started the week being concerned for the speaker, who was
before the New York Stock Exchange sort of describing how we
are going to dodge the bullet on dealing with the debt ceiling.
And the poor guy could not explain what the Republican proposal
is, because what he had to commit to be elected speaker was
various things that don't pencil out.
And so we are kind of lurching towards a potential crisis
here. We are ignoring some of the very tangible results that
have taken place during the Biden Administration. We are
currently at a situation where the recent inflation is 2.7
percent, the lowest that it has been in more than 2 years. The
consumer price index increases have been the lowest since May
2021, at 5 percent. Gas prices have dropped 17.4 percent since
the spike that was occasioned by the invasion of Russia into
Ukraine. We have record labor participation. And some of my
most conservative concerns--friends are concerned about who is
not working anymore. Labor participation is at its highest
level in years. And in terms of the unemployment, it is the
lowest that it has been in 40 years. And Black unemployment is
now the lowest that it has been in history.
I don't think the Biden economic proposals and management
is a train wreck. Instead, it is very clear that this is
working. It is not done yet. There are things that we want to
do, things that we have put in place in the transition to a
green economy, creating millions of jobs, some of which we are
seeing in a number of the constituencies of my Republican
friends. This is working.
And I don't think any amount of going back into the wayback
machine, ignoring--actually, that wasn't fair because the
Republican bill actually included provisions that would have
dramatically scaled back wind energy investment in their
original bill, and had to be embarrassed by the committee to
taking it out so that it really didn't wreck the proposals that
we had going forward.
I hope that we can move forward.
I think it was you, Mr. Horn, that said something about
responsible budgeting. I am all in favor of it. I hope that we
will get an actual proposal from what the Republicans are going
to do with their budget, what they are going to cut, how they
reconcile it, and match it with the President and what we will
do, and have an honest conversation instead of appearing in
press statements, smoke and mirrors, and going back in the
wayback machine. I don't think that gets us anywhere, and the
American people deserve better.
I appreciate your tolerance for my walk down memory lane.
It was quite jarring as we started the committee. I--to quote
Mr. Schweikert, I feel better getting that off my chest, and
you can use my speech anytime.
Thank you very much, and I yield back.
Chairman SMITH of Missouri. We always want everyone to feel
better in our committee. So thank you, Mr. Blumenauer.
[Laughter.]
Mr. BLUMENAUER. Mission accomplished.
Chairman SMITH of Missouri. That is good.
According to a new analysis from the Coalition for a
Prosperous America, I would like to submit to the record the
Chinese Communist Party is likely to receive a windfall of $125
billion from these credits, which is more than half of what
China plans to spend on their military this year.
[The information follows:]
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Chairman SMITH of Missouri. Mr. Wenstrup is recognized.
Mr. WENSTRUP. Thank you, Mr. Chairman.
Thank you all for being here today. You know, one of the
things we hear about today is the crisis, the climate crisis,
and there is a crisis, especially if you have been a victim of
a drought or a fire or a hurricane. They all kill people. They
all destroy lives. Science is real.
Something to consider. You know, we use sunblock. Why? To
prevent skin cancer from over-exposure to the sun. Yet at the
same time, we need vitamin D. It is very important to our
health, both situations. And, you know, I might be able to
prescribe for someone a medication that would kill the virus or
bacteria that is within you, but if it kills you too, it
doesn't do much good.
I would--will want to submit to the record an article here
from the NOAA, the National Oceanographic and Atmospheric
Administration that is entitled, ``Study Reducing Human-Caused
Air Pollution in North America and Europe Brings Surprise
Result: More Hurricanes,'' a very scientific article from a
Federal agency.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The point I am trying to make is you can over-prescribe
sometimes, and we need to be careful about that. And if we
over-prescribe to the point of killing people, it is a problem.
And we need to take this very seriously.
Look, I have solar panels, and I am on the grid. I drive a
hybrid. All of these things. I am for all of the above. I am
all for new technology. I am all for clean air, clean water.
But science is real.
And Mr. Beachy, you said win-win-win. It is not always a
win, and this is clear evidence of that. If you look at what
this says, what it says is where there has been too much
diminished pollution, there is more hurricanes and more storms.
Why? Because there is no longer a screen between the sun and
the earth--warms the oceans, kicks it up, it does the same
thing over the land. So you can over-prescribe and do more
damage than good is the point I am trying to make.
And let me just, you know, quote some things from this
article. This is from 1980 to 2020. So without significant
amounts of particulate pollution to reflect sunlight, the ocean
absorbs more heat and warms faster. The decrease in pollution
has led to a warming--global warming, right? Have we done it to
ourselves?
As I said, I am all for clean air, clean water, healthy
people, especially as a physician. We have to take these types
of things into consideration. It is creating more hurricanes
and more storms. Here is a quote in the article: ``The ironic
results suggest the necessity of careful policy decision-
making,'' which is what we do here. ``The ironic results
suggest the necessity of careful policy decision-making in the
future that considers the pros and cons of the multiple
impacts.''
We have to do that, so don't make this a religion, make it
a science. And let's do what is right. Don't make it a
political point, make it a scientific point. So Mr. Beachy, it
is not a win-win-win, it is not. And the proof is here. Facts
don't lie. And I suggest we be more careful. And maybe as a
body here, we can work together scientifically to do things
that are better for America.
But my other grave concern in all of this is our dependence
on an adversary. In so many ways our supply chains, our energy,
everything else, we are going in the wrong direction. And I
want to reiterate the national security risks that that brings.
Mr. Horn, I know your military background. Thank you very
much. Could you maybe relate to this committee some of your
concerns about the national security risks that we take with
some of these policies that are being promoted?
Mr. HORN. I think we have to be realistic about the world
that we live in. And when we look at state actors, adversaries
across the world, they don't necessarily have our best
interests in mind. There has been a number of articles that
have come out just this week about the possibility of the
People's Republic of China cutting off supply of a lot of these
key materials which are needed not only for electrification and
energy transfer, but defense critical uses, as well. We cannot
afford to rely on them for our own capability to defend
ourselves from them and others.
Mr. WENSTRUP. And we end up feeding their military through
our acquisitions.
With that, I yield back.
Chairman SMITH of Missouri. Thank you. Mr. Pascrell is
recognized.
Mr. PASCRELL. Well, I think, Mr. Chairman, that this
hearing is a farce.
Let me start off very mildly. Republicans can't honestly
attack the Inflation Reduction Act, so they are resorting to
outright projection. The Inflation Reduction Act is the single
largest investment--that is a critical word. When we spend
money, the people's money, that is a qualifier. It must be an
investment not just for the moment, but for the future. That is
what investments are all about, whether you are in business or
whether you are in government.
So we are talking about manufacturing. We are talking about
good union jobs, clean energy, and innovation. Read the law,
what it says.
Democrats passed historic bills last Congress protecting
American industry and blocking benefits to Chinese communist
companies. Look, last month we were socialist. This month we
are communist. And I take exception to what you say and what
you write. What do you think, you are going to scare us? What
are we going to be next month? What is that hate speech going
to bring? How does it instigate violence in this country?
Communists, you write. We were the Greens at first. Really? I
am not a communist. I am not a socialist. But that is what you
said, sir. I respect your professionalism, but I don't respect
any of your ideas that insult anybody on this side of the
aisle, be it that side or this side.
So Republicans overwhelmingly opposed our agenda, and
certainly are no Mother Teresa on the Chinese Communist Party.
Republicans left domestic protections out of the 2017 tax bill,
nowhere to be found in that bill, and we are still discovering
what was in that bill. I guess we didn't read it at first.
The corporate tax breaks and offshore provisions were a
boon to China. Read the bill.
In 2018 Donald Trump vowed to protect a Chinese
communications company from going bust after the party approved
trademarks for a member of his family. In 2019 Donald Trump
sold out on Hong Kong. Last week the leader of the Republican
Party called the Chinese communist dictator the top of the line
and a brilliant man. I never heard him say anything like that
about somebody in this country, except that meets his
ideological standards. So who in God's name do you think you
are kidding? Where is the outrage? All we hear is silence on
those things.
The sad irony is the Democratic manufacturing agenda has
benefited Republicans' own constituents. The Financial Times
found that over 75 percent of the $204 billion in semiconductor
and clean energy projects pledged since the Inflation Reduction
Act, CHIPS Act have gone to GOP districts. Stop them. You don't
want them? You didn't vote for them. But I bet you took a
picture when I got some money, expand the business. How many of
you took pictures with the infrastructure that voted no?
Look, the jig is up. Certainly, don't listen to me. Listen
to the polling that has been going on after everything you put
before us and the people of this country. Republican districts.
That is over 58,000 jobs for their communities. So you should
be celebrating. Look at those districts that got plenty of
benefits. But every Republican in Congress voted against the
jobs bill from the Inflation Reduction Act, every one of them.
Want to take on China? Let's do it. But we need genuine
action, not another nonsensical hearing. And with that I yield
back reluctantly, and I can assure you I have a lot more to say
about what you have written and said. I hope I get that
opportunity, Mr. Chairman.
Mr. TURNER. Mr. Chairman, may I respond to----
Mr. PASCRELL. I yield back----
Mr. TURNER [continuing]. Some of these comments, please?
Chairman SMITH of Missouri. Go ahead.
Mr. TURNER. Because I know they are all directed at me.
At no point did I call anyone on this committee or any
Member of Congress a communist, and I resent the fact that it
is being implicated that I did.
What I was talking about by saying the green agenda is
communist in nature is this. We--I do not applaud this
government, this Administration, this Congress sending
government jobs----
Mr. PASCRELL. It is your government.
Mr. TURNER [continuing]. Sending our----
Mr. PASCRELL. Just as much as it is mine.
Chairman SMITH of Missouri. Let gentleman respond to your
accusations.
Mr. PASCRELL. I am sorry?
Chairman SMITH of Missouri. Go ahead, Mr. Turner.
Mr. TURNER. I do not applaud sending American jobs overseas
in the name of a green agenda. America used to be the second
largest coal producer in the world. We are now fifth. Why?
Because we have closed more than half of our coal jobs. World
coal supply is going up. So what are we saying? We are saying
we need more coal, but it is not going to come from America.
I stood with Navajo elders in northwest New Mexico who
looked at me and said in one of the most difficult
conversations I have ever had, because we were fighting to keep
that coal mine open, and he looked at me and said, ``This is
what you White people do to us all the time. You sent us to
this reservation. It wasn't our land, but you put us here. But
we found coal. And with that coal we built the entire
southwest. And now the green energy has come, and now you tell
us no more coal, and you plunge us back into poverty.''
I have stood with mayors----
Ms. SANCHEZ. Mr. Chairman, regular order.
Mr. TURNER [continuing]. In small towns of West Virginia,
where they look at their entire city that has been----
Ms. SANCHEZ. Mr. Chairman, regular order.
Mr. TURNER [continuing]. Entire small town that has been
decimated----
Chairman SMITH of Missouri. The gentleman has the floor.
When any witness is ever attacked by one of these colleagues, I
think that he needs the opportunity.
So go ahead, Mr. Turner.
Ms. SANCHEZ. Mr. Chairman, excuse me----
Mr. TURNER. Thank you, Mr. Chairman.
Ms. SANCHEZ [continuing]. But I believe Mr. Pascrell said
that his comments were not directed at any one person on the
panel in particular.
Chairman SMITH of Missouri. That is not how I saw it. Mr.
Turner.
Ms. SANCHEZ. Well, that is your opinion, but Mr. Pascrell--
--
Chairman SMITH of Missouri. You are not recognized, Ms.
Sanchez.
Mr. Turner, please finish.
Mr. TURNER. Mr. Chairman, I think that----
Ms. SANCHEZ. Okay, Mr. Chairman, thank you for running such
a democratic process here in our democratic government.
Chairman SMITH of Missouri. You are not recognized, Ms.----
Mr. PASCRELL. [Inaudible] respond----
Chairman SMITH of Missouri [continuing]. Sanchez.
Mr. PASCRELL [continuing]. Mr. Chairman?
Mr. TURNER. I have stood in small towns in West Virginia
that used to be thriving, that had communities with little
leagues and schools that were well funded that are all closed
because we have sent their jobs overseas.
There are billionaires who fund green groups in this
country that invest in foreign coal, and they will tell you
that they will be damned if a man in West Virginia works on a
coal mine, but a nine-year-old girl in Malaysia or Indonesia or
China they have absolutely no problem with.
And so when I call the green movement communist in its
nature, maybe that is being too gentle of a term. What it is
doing to rural America, oil jobs, coal jobs, fracking jobs, no
one is asking them how they are paying for gas, how they are
paying for 30 percent prices in food, 15 percent prices in
consumer goods. They are absolutely and categorically denied.
And I respect the gentleman at the end of this table who is
saying the jobs that will come, that will come. But the fact of
the matter is the future is very different than the actual.
Right now, rural American and rural American energy workers are
struggling tremendously, and they are being ignored.
Chairman SMITH of Missouri. Thank you, Mr. Turner.
Mr. PASCRELL. Mr. Chairman----
Chairman SMITH of Missouri. Mr. Ferguson, you are
recognized.
Mr. PASCRELL [continuing]. May I respond, Mr. Chairman?
Mr. FERGUSON. Thank you, Mr. Chairman.
And, Mr. Turner, if I could just simply say amen to you. I
am from a district that saw the devastation of a job market
following NAFTA. We were home to the largest part of the
textile industry prior to NAFTA. And because of decisions in
D.C., we lost a generation of workers, and we plunged more
people into poverty because of the insensitive nature of
decisions that are made in Washington, D.C. Now we are doing it
to more rural communities that are--that have been producing
the energy that America needs. Your comments are spot on.
Mr. Chairman, if I could submit for the record an article
from the National Review, where John Kerry simply suggests--and
it is reported--that oil workers laid off due to Biden policies
should go make solar panels.
Chairman SMITH of Missouri. So ordered.
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Mr. FERGUSON. Thank you, Mr. Chairman.
Ladies and gentleman, that shows the insensitivity of
people that are making these policy decisions. Where--what--
these people have grown up in these communities, they have
built their lives there, they have built their families there,
and now you are simply saying uproot and go move somewhere
else. The devastation in our rural communities--we have way too
many people on this dais that don't care about rural America
because there aren't enough voters there to get them reelected,
and they are completely out of touch with so many of the
problems that we are facing.
Washington, D.C. has done a hell of a job of turning rural
America into an inner city. The two groups of people in this
country that share the most in common all too often are rural
America and the folks in the inner city: lack of economic
opportunity, failing education, high drug use, high crime, and
failing infrastructure. It is painful to watch our fellow
Americans go through this.
And while they are gutting our communities for policies
like this that--promise of jobs that I promise you will never
come back to this reservation that you described, it has taken
a generation-and-a-half to get those jobs back in our district.
And we have done it, and we have overcome Washington, D.C. in
the great state of Georgia in the third district. But all the
time that they are gutting our communities, 90 percent of these
tax credits are going to the wealthiest corporations and to the
wealthiest Americans, 90 percent of them going to companies
that have over $1 billion in profit.
So while my colleagues on the other side of the aisle talk
about how important it is that corporate America pay its fair
share, and they say it over here, they then turn around and
give them the largest tax break that basically drives down to
zero their tax rate. What in the heck are they talking about?
Oh, we want them to pay, but we are going to give them a huge
tax break and a huge subsidy. This is lunacy.
And by the way, now we have under--you know, Joint Tax
apparently underscored this thing so badly that now we are
talking about over $1 trillion. So they want to raise taxes on
one hand, and then they want to--almost $1 trillion in new
taxes. Then they want to go ahead and give somebody a $1
trillion tax break. The hypocrisy is stunning, if not
nauseating.
So I look at this and think to myself, why are we doing
this? Why are we funding the Chinese Communist Party? The
private investment firm CALT (sic) that is involved in
automotive technology policy, the Chinese company, these tax
credits through licensing could actually go to the Chinese
Communist Party. This--these folks mean to do us harm, and they
mean to take down America. We have a bipartisan committee
looking at competitiveness with China. Why in the world would
we send $1, $1 of U.S. taxpayer dollars to the Chinese
Communist Party? It makes absolutely no sense.
So when I look at these things, and I look at what they are
doing, it is just mind boggling to me. We say that we want to
fight China, yet we are going to fund China. We say that we
want to help rural America, yet we gut rural America. We want
major corporations to pay their fair share, and yet we are
going to give them almost over $1 trillion in green energy tax
credit to lower their tax liability. How else are you going to
pay for all this other stuff if you are doing that? This makes
no sense.
I just wish that my colleagues on the other side of the
aisle, many of them, would understand the lives that they are--
that they will ruin in rural America and in rural districts
like mine. It is hard to watch.
And Mr. Chairman, I yield back.
Chairman SMITH of Missouri. Mr. Davis is recognized.
Mr. DAVIS. Thank you, Mr. Chairman, and I too want to thank
all of our witnesses.
You know, my district is seriously impacted by structural
racism. It contains many low-income communities, and certainly
it has people of color. It also suffers from economic
divestment, a lack of manufacturing opportunities when it used
to be a manufacturing Mecca. Almost anything that you could
think of was being developed in that area.
Mr. Beachy, could you discuss how impactful the Inflation
Reduction Act can be on dealing with communities like the ones
that I serve?
Mr. BEACHY. Absolutely. I appreciate the question, sir.
When we talk about the loss of manufacturing jobs,
sometimes there is a caricature that is presented, painting a
picture as if it was only White workers who lost their jobs and
suffered the economic impacts. Black workers were
disproportionately impacted by the deindustrialization of the
United States. Since the 1990s, Black manufacturing workers
have lost 30--there has been a 30 percent drop in Black
manufacturing employment. That is according to the Economic
Policy Institute.
The IRA aims to start turning the tide by reinvesting in
the communities that have been the hardest hit. It does this
by, for the first time, channeling billions of the people's
money into high-paying, good manufacturing jobs. And as
mentioned, this is not just theory. It is actually--the
evidence is already being seen. In the first six months enough
announcements of clean technology manufacturing to create
100,000 jobs, many in the heartland.
The critical premise of the IRA is that we do not have to
choose between good jobs, economic, racial and environmental
equity, and a livable climate. And it does this by choosing
sectors of the economy that are strategically imperative for
advancing each of these goals and fueling them. It is a welcome
return of industrial policy that has been used in this country
since the time of Alexander Hamilton. And by leveraging that
policy now, workers like those in your district, communities
like those in your district stand to gain from the benefits of
higher wages, cleaner air, fewer climate-related impacts. In
short, more jobs, a livable climate, and a more just economy.
Mr. DAVIS. Let me just ask in comparison to the
characterization of spending, would one call this spending, or
would they more appropriately call it investment?
Mr. BEACHY. It is absolutely investment, because there is a
return on this investment. And that return is money in the
pockets of manufacturing workers across this country that have
been--that have seen their jobs go away. It is a return in the
form of investments in communities that have seen their own
economic base de-industrialized.
I actually was born in the heart of West Virginia, in the
middle of coal country. And for too long folks in this town
have talked about energy transition and investing in hard-hit
workers and communities. The IRA moves from words to action.
There will not be fairness for workers that have been impacted
by energy transition and communities that have been impacted by
energy transition unless it is a deliberate policy choice.
The IRA, for the first time, invests real money in the
communities like the one I was born into. There is a $10
billion pocket of money to spur more clean technology
manufacturing; 4 billion of that is explicitly set aside for
communities facing energy transition. This----
Mr. DAVIS. Thank you, Mr. Chairman, and I yield back.
Chairman SMITH of Missouri. Mr. LaHood is recognized.
Mr. LaHOOD. Thank you, Mr. Chairman, and I want to thank
our witnesses today for your valuable testimony here today.
The Inflation Reduction Act, I think, is a great example
for us here in Congress of why regular order is so important.
Backroom deals, legislative texts thrown together at the last
minute, and a lack of proper discussion and deliberation leads
to all sorts of unintended consequences. Even Senator Manchin
is seeing the effects of this kind of legislating as he got
more of what he wanted out of it than anyone.
One particular area of concern that I have and want to
highlight, as some of my colleagues have already touched on, is
the lack of safeguards that were put in place to prevent these
tax incentives from being enjoyed by our adversaries. Well,
what do I mean by that?
In addition to serving on the Ways and Means Committee, I
also serve on the Intelligence Committee and the newly-formed
Select Committee on China, which is a bipartisan committee that
we are addressing the malign activities of the CCP. As a part
of that work on intel in the Select Committee on China, we
learn every day about the growing threats from China. And the
Inflation Reduction Act demonstrates how easy it is for us to
literally let them in through the front door.
Before I get to my questions, Mr. Chairman, I would like to
ask for unanimous consent to enter into the record this Fox
News article dated February 20th, 2023, entitled, ``CCP-Backed
Tech Companies are Poised to Cash In on Biden's Climate Bill,
National Security Experts Warn.''
Chairman SMITH of Missouri. Without objection.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. LaHOOD. Thank you.
Mr. Horn, you were actually quoted in this article, so I
will begin with you as I direct my questions. Can you talk
about the China 2025 initiative, and how aspects of the IRA
play right into CCP's efforts to gain advantage over the United
States as it relates to our allies?
Mr. HORN. Absolutely, and thank you for the question.
I think, before I answer just briefly, I want to state a
couple of things that I think everyone in this country
hopefully can agree upon, which is that the Chinese Communist
Party and the Russian Federation engage in practices that are
not only bad, in my opinion, for their own people, but are
dangerous to partner with, certainly for the United States or
any of our allies.
And so when we look at what the CCP is doing, I think that
it should serve as a threat to all of our interests everywhere.
They have been relatively overt in terms of what their plans
are for expansion and suppression of U.S. and other potential
competitive interests around the globe and as they expand.
What they have also telegraphed that we have failed to
properly acknowledge and react to is that they are planning to
use our own actions against us. They are planning to use our
government funding, our universities, our infrastructure,
anything that is exploitable against us in any means possible.
So when we look at aspirations of technological
development, I don't think there is anyone out there that would
disagree that we want to see technological development,
economic growth, commercial development, and economic activity.
But we have to be careful, as we look at driving catalysts to
drive U.S. industry and U.S. innovation, that we don't open
ourselves to a Trojan horse to come in and work against us
because the CCP is an expert at doing this. They know exactly
how to exploit what we do. They have been doing it for decades,
and their plan is to suppress us and prevent us from being a
competitor to their world domination.
I say again, their world domination is their goal. And if
we look at how they are exploiting and mistreating their own
people, they wish to do that to the entire world. And if we
allow loopholes without the proper oversight and enforcement,
we enable them to do so.
Mr. LaHOOD. Thank you for that, Mr. Horn.
I think one of my frustrations with the IRA is the Federal
Government putting their thumbs on the scale as it relates to
certain industries, and subsidizing those. Just to follow up on
that, when--can you share on how these types of incentives that
are made part of the IRA actually prevent U.S. alternatives and
competing companies from growing and thriving domestically?
Mr. HORN. I will give an example to try and put it into
context. So in the rare earth industry, there are, unbeknownst
to a lot of people, several U.S. alternatives that are actually
not as far from coming online as people would realize. However,
they stand a threat to the global hegemony and monopoly that
the Chinese Communist Party has on the industry, and they will
do everything possible to prevent those options from coming
online, from price fluctuation, flooding the market, everything
measurable.
So when the resources that are designed to go to U.S.
companies to allow them to compete on a fair stage with the
Chinese Communist Party are diverted, it allows the Chinese
Communist Party not only to take those funds, but to suppress
any possible legitimate competition for a better service
provider.
Mr. LaHOOD. Thank you.
I yield back, Mr. Chairman.
Chairman SMITH of Missouri. Thank you. Mr. Estes is
recognized.
Mr. ESTES. Well, thank you, Mr. Chairman, and thank you for
our panelists for being here today.
I know we have talked a lot about good tax policies, and I
just wanted to highlight, you know, when the Tax Cuts and Jobs
Act was passed in 2017, that was a good tax policy because it
actually ended up in more jobs for minorities and people of
color than had been in the previous decades. So it was so
important to help get the economy growing, and it didn't pick
and choose jobs for some people, and then doing away with jobs
in other industries. And so that is why it is so important as
we talk about issues like that in our hearing.
One of the great misnomers of the--of last year's so-called
Inflation Reduction Act--in fact, even C-SPAN titled the bill
``Taxes, Health Care, and Climate Change'' on the screen when
we were voting on the bill. It didn't reduce taxes, but it was
full of special-interest Green New Deal provisions that are
billions of dollars more expensive than initially proposed.
The official CBO score for the so-called Inflation
Reduction Act's energy and climate provisions was $391 billion
over the 2022 to 2031 time period. However, because the EV tax
credits are uncapped, that estimate is drastically low. An
estimate by Credit Suisse is that--double the estimate at $800
billion, and Goldman Sachs has provided an even grimmer outlook
at $1.2 trillion.
Mr. Chairman, I would like to submit for the record an
article from the Wall Street Journal titled, ``The Real Cost of
the Inflation Reduction Act Subsidies: $1.2 trillion.''
Chairman SMITH of Missouri. Without objection.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. ESTES. Thank you.
Part of why the EV tax credits in the IRA would be so much
more expensive than CBO has projected or predicted is because
the Biden Administration has been working overtime to expand
which foreign countries are eligible for the credit.
Republicans and Democrats on this committee were recently told
by the Administration that they have entered into a new trade
deal with Japan under the guise of a critical minerals
agreement, which conveniently allows Japan to qualify for EV
tax credits paid for by the American taxpayers. The Biden
Administration has been working overtime to expand eligibility
for the EV tax credit for foreign countries, all without the
approval of Congress.
Mr. Stein, do you have any knowledge of the Biden
Administration working with third-party groups on ways to get
around congressional intent regarding eligibility rules for the
EV tax credits contained in the IRA?
Mr. STEIN. Well, that is actually a big problem. The way
Treasury has been making these decisions and the IRS has been
making these decisions has been behind closed doors. It is not
clear who is lobbying them on these things. Certainly, there is
big companies that are lobbying, but who they are all meeting
with, that is not public information. We actually have been
FOIAing Treasury to try and find out who is taking these
meetings. But right now we don't really know.
Mr. ESTES. So we have also seen the Biden Administration
attack American energy production under the guise of climate
conservation.
I can tell you that the Kansans I represent are really the
ones who care about conservation. The farmers, ranchers, and
energy producers who work the land are caring for our natural
resources. Instead, the--President Biden and my colleagues on
the left have done everything they can to end hydrocarbons,
decimating American energy production, and relying on dirtier
fuel from foreign adversaries. The result has been higher costs
for Americans, and that is even when President Biden admits
that we will be continuing to use hydrocarbons for years to
come into the future.
Just last week the EPA announced their new emission
standards, which will force Americans into more expensive
vehicles that are simply impractical for families--rural
Kansans and Americans who aren't in areas with access to EV
charging stations, or that have to drive long periods of time.
In the same time, adding these new EVs will put a greater
strain on our energy grid, weakening American energy
production, and strengthening the world's largest battery
producer, China.
Mr. Stein, can you help my colleagues understand the
detrimental impact of strengthening China by forcing Americans
to buy electric vehicles?
Mr. STEIN. So we have seen--we have already seen examples
just in California, I think last year, when they were having
wildfire and electricity shortage issues, and they said,
``People, don't charge your electric vehicles in order to
protect the grid.'' So the problem is that, if you are having
problems with the electricity grid and your cars also run on
the electricity grid, then you don't have that redundancy that
you have if you can get in your car and get away from the
wildfire, for instance.
And so it ultimately--the--making a greener grid, it
becomes more fragile to begin with. That is the problem that
California is already facing. Texas is facing the same problem.
But then you increase the load on the grid, too, by adding--
trying to add all your transportation onto the grid. It is only
compounding that weakness that you have created.
Mr. ESTES. Yes, that is why it is so important to have a
strong base load, even to support the sustainable energy that
we produce. So thank you all.
And I yield back, Mr. Chairman.
Chairman SMITH of Missouri. Thank you. Ms. Sanchez is
recognized.
Ms. SANCHEZ. Yes, I am just--wow. I have heard a lot of
talk from my colleagues today about standing up to China, and I
will just say that talk is cheap, but making generational
investments to reshore good-paying jobs and create supply
chains within the United States and making those investments,
that is not cheap. And rebuilding our infrastructure and
modernizing our energy systems to keep our economy competitive
with China, that is not cheap either.
But when my colleagues on the other side of the aisle talk
tough on China, sadly, their talk is cheap. Most of them were
here to spend more than $2 trillion on a tax windfall that
overwhelmingly benefited the wealthiest in this country and
multinational corporations. And the Republican tax scam didn't
do one single thing, nothing to prevent foreign individuals and
businesses from reaping the benefits of that windfall.
Mr. Beachy, it hasn't been even a year since we passed the
Inflation Reduction Act, but there are clear differences in the
results of the IRA and the 2017 tax scam. Can you tell us just
briefly what are some of the results that we have seen from the
IRA so far?
Mr. BEACHY. I am happy to. So I mentioned at the top that
in the first six months of the--since President Biden signed
the IRA we saw companies announce clean technology
manufacturing investments. That totaled about $90 billion. And
those investments will take place in 31 states, and they will
create about 100,000 jobs. That is due--according to a report
by Climate Power.
Ms. SANCHEZ. So we are already seeing early investments
because of the IRA, and aren't those investments designed to
pay dividends over time for American workers, as well?
Mr. BEACHY. Indeed, they are.
Ms. SANCHEZ. Can you talk a little bit just briefly about
how the prevailing wage, and apprenticeship, domestic content,
and assembly requirements across the IRA's credits work
together to create good-paying, union jobs here in the United
States and keep them here?
And can you also answer whether these kinds of jobs that
they are creating would be available for workers who are
transitioning out of traditional energy sectors?
Mr. BEACHY. Yes, I appreciate the question.
On--so first is the actual deployment of solar and wind
power. You know, the IRA invests a historic amount to deploy
more clean energy to meet our climate goals. But for the first
time, critically, it pairs those investments with the high road
labor standards of prevailing wage and apprenticeship programs
to ensure that clean energy workers can enjoy family-sustaining
jobs.
In the same time, the IRA includes, like, as you noticed,
as you mentioned, the domestic content bonus, which creates a
demand pool paired with all of the supply push investments for
clean domestic manufacturing of the nuts and bolts of clean
energy, everything from EV batteries to solar panels and all
their component parts, wind and all of its component parts.
That is a durable investment because those jobs will be around
for a long time. Smart industrial policy means investing in the
technologies of the future, and that is what we are doing.
Ms. SANCHEZ. I appreciate that because we don't use gas
lamps to light our homes anymore. We use energy-efficient light
bulbs, and we must progress. So traditional energy sectors may
have job losses, but there are jobs that are being created. And
it is not crazy to think that perhaps they can transition into
some of the new jobs that are being created.
Mr. BEACHY. I mentioned that the policy takes seriously
that the fairness for workers and communities impacted by
technology shifts won't just happen organically. It has to be a
deliberate policy choice. I mentioned the $4 billion investment
for clean manufacturing in coal communities.
In addition, there is a bonus credit to encourage solar and
wind developers to invest in hard-hit energy-transition
communities across the country.
There is an additional program that will have $250 billion
in loan authority to retool existing energy infrastructure for
new purposes, providing an opportunity for economic development
in some of the hardest-hit regions in the country by the energy
transition.
Ms. SANCHEZ. I appreciate that.
Mr. Stein, I just want to make you aware that in the IRA
hybrid cars also count. And so hybrid cars which run on
gasoline can also be a cheaper alternative for families that
can't afford purely electric cars.
Mr. Ginn, I just want to be clear that the 2017 Republican
tax scam bill cut taxes across the board to a rate lower than
anybody was even asking for, with no restrictions to prevent
foreign corporations from getting a tax cut. Did the 2017 tax
scam bill do anything at least to make sure that those foreign
corporations spent their tax windfall on building U.S.
manufacturing facilities with good-paying jobs?
Mr. GINN. I am not sure about that specific provision, but
I do know that there were trillions of dollars that were sent
back, repatriated from other countries back to the United
States, along with more----
Ms. SANCHEZ. No, the question was whether or not the bill
did anything to make sure that foreign companies who got this
big tax windfall had to reinvest that in building U.S.
manufacturing facilities with good-paying union jobs.
Mr. GINN. I was not a part of those discussions, and so I
am not advised.
Ms. SANCHEZ. I will take that as a no, and I yield back my
time.
Chairman SMITH of Missouri. Thank you.
For my colleagues on the other side of the aisle who
continue to disregard the Tax Cut and Jobs Act and what it did
for hardworking Americans, today under the Tax Cut and Jobs Act
a family of 4 who make $64,000 or less will pay 0 in Federal
taxes. And in a congressional district with the median
household of $50,000 a year that I represent, that is a
substantial tax cut for working class--hard-working-class
families. And that is the fact, and that needs to be in the
record.
Mr. Smucker, you are recognized.
Mr. SMUCKER. Thank you, Mr. Chairman, for holding today's
hearing.
It really is important that we revisit the true cost of the
Inflation Act. And I know many of my colleagues have raised the
new $1.2 trillion price tag of the tax credits in the Inflation
Act, but I also want to draw attention to another area that was
just mentioned about the true cost of these credits.
The inflation--the IRA is chock full of requirements to
utilize unionized labor, prevailing wage mandates, and union
apprenticeship ratios. And I would never--I respect labor
unions and the choice that workers have to participate in a
labor union, but in my district and across the country, as
well, about 90 percent of our workers have chosen not to be
part of a labor union. And in that regard, this policy is
discriminatory against most of the workers in my district, in
addition to increasing costs when we limit competition only to
union companies.
I want to also mention two things that were brought up in
the hearing. One was labor force participation rate. I think
Mr. Blumenauer brought this up, and he mentioned that we are at
record highs. And I would like to submit for the record, Mr.
Chairman, a chart posted by the Saint Louis Fed, if I can do
so.
Chairman SMITH of Missouri. So ordered.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. SMUCKER. This chart shows that, just prior to the
pandemic, February 2020 labor participation rate was at 63.3
percent, and the latest, March 2023, it was 62.6 percent. But--
so still not at pre-pandemic participation rates. Very
important. And--but it shows that Democrat policies have failed
to have workers return to the workforce in the numbers they
were prior to COVID. That has a lot of different policy
impacts.
And one additional thing. Social Security was mentioned,
and Democrats are fond of saying that Republicans are taking
actions that would hurt the beneficiaries of Social Security. I
want to remind people listening that the Biden Administration
recognizes that within 9 years the trust fund will be
insolvent, which would result in individuals relying on Social
Security getting about 80 percent of their total benefits that
are owed to them. And they have chosen in their budget to not
address that in any way, no policy proposals that would fix
Social Security to ensure that we can keep the promises that
were made to people relying on Social Security.
We talked a lot--and, Mr. Turner, I appreciated some of
your comments. You talked about the impact of the policies on
rural Americans. Certainly I am seeing the impact of rising gas
prices on people all across my district. I have had individuals
talk to me saying they have had to make tough decisions about
buying food or gasoline. And interestingly, President Biden has
characterized our rising gas prices as--an ``incredible
transition'' is what he called it. Interior Secretary Deb
Haaland refused to say gas prices were too high when prices had
surpassed $6 per gallon in some parts of the U.S. It really
appears that driving prices higher on traditional energy may be
intentional on the part of those who want to see us move to
renewable energy faster than the market would allow for.
Do you think that is true? Do you think this is
intentional, that this Administration wants to see higher gas
prices that are hurting American people?
Mr. TURNER. Yes, Congressman, thank you for the question.
Absolutely, it is intentional because fossil fuels are very,
very popular in America. And even if people may use them as a
pejorative, Americans love the fossil fuel economy that it has
created. They love the convenience. They love the comfort. It
is the reason why millions of people, legally and illegally,
are trying to get into this country, because fossil fuels have
made us an incredible country.
To make fossil fuels unpopular----
Mr. SMUCKER. I am going to stop you, because----
Mr. TURNER [continuing]. You have to make them expensive.
Mr. SMUCKER [continuing]. I am running out of time. Thank
you. I think the case can be made this is intentional on the
part of the Administration to see higher gas prices, and the
impact on the American people is devastating.
Mr. Ginn, you talked about industrial policy, government
picking winners and losers, and we certainly see that in the
IRA. Talk a little more about the impacts of that. How does
that affect--you talked about the importance of economic
growth. I could not agree more, but how does industrial policy
impact economic growth?
Mr. GINN. It simply crowds out other, more productive
purposes that were chosen by the marketplace compared with
government planning or the use of taxpayer dollars for propping
up specific industries or businesses overall. But that should
be done based on profitability, not based on the taxpayer's
dime.
Mr. SMUCKER. Thank you.
Chairman SMITH of Missouri. Mr. Hern is recognized.
Mr. HERN. Thank you, Mr. Chairman, for holding this hearing
today.
My main concern is that the Democrats don't understand the
monster they have created. Goldman Sachs's new $1.2 trillion
score of this bill should scare every single American,
regardless of party. I fear that there has been an over-
subsidization of a market that is not capable of producing the
intended result.
I know it is hard for some in Congress to wrap their heads
around $1.2 trillion, but that kind of subsidization involves
massive global input to produce the needed output, and it is
concerning that Democrats didn't understand what would have
happened when you unleashed this type of impact on the
marketplace.
To think that the Chinese Communist Party would not benefit
from this poorly-formed policy is both naive and foolish,
especially in the highly-integrated global marketplace that we
see today.
I see a lot of talking about both sides of our mouth from
the Administration and my Democrat colleagues. My Democrat
colleagues say that they want to drive energy costs down and
look for cleaner solutions. Guess what? I do, too. But to spend
$1.2 trillion in taxpayer money to fund green energy while also
attacking the oil and natural gas industry will only drive
energy costs up. The unintended consequences of these actions
will have consequences that far outweigh the pros.
Driving investment out of less expensive, reliable,
traditional energy into expensive renewables will further drive
up costs, creating energy poverty across this great nation.
Time and time again, this Administration has put the cart
before the horse on extreme policy without thinking about the
unintended consequences. It will be a tough road ahead. And I
beg to question how will my Democrat colleagues explain to
their voters why energy prices go up drastically in the next
decade due to poor decision-making here in this committee.
Ronald Reagan once said, ``If you want more of something,
subsidize it; if you want less of something, tax it.'' We do
not know what the true American consumption of renewable energy
is. An unprecedented $1.2 trillion in subsidies for renewable
energy both--is both reckless and wasteful. This
Administration, with the help of Congress, has created an
apocalyptic market distortion in our energy markets that will
have a devastating effect on the American people who rely on
less expensive traditional energy.
Mr. Ginn, I, like every Republican that I know, is an all-
of-the-above energy supply individual representative here in
Congress. I believe that there is a place in the market for
renewables to compete on a level playing field with the
traditional energy sources. That being said, can you tell us
what the unintended consequences of the IRA are in respect to
the unprecedented subsidization of green energy, and what the
means of the economics of the energy industry are and the
provisions in the IRA inflationary (sic)?
Mr. GINN. Yes, sir. Thank you for the question, and you are
right. You are putting your thumb on the scale more towards
renewable, unreliable sources of energy over a longer period of
time. And there should be a level playing field for all energy
sources to whatever is going to be profitable. That means it is
best for the American people and the process, as well.
And so this sort of industrial policy does not allow for
there to be more economic growth, prosperity. And there is a
lot of talk today about, well, there will be a transition. The
transitions are best based on market forces, not based on
government direction and mandates. That is taken straight out
of what communist countries like China do, not what America
should do, based on free market capitalism that is the best
path to let people prosper. We need to get back on that path,
and this is what the Inflation Reduction Act leads us more
towards, the direction of the economy instead of letting
markets work.
Mr. HERN. Thank you.
Mr. Stein, what do these massive subsidies mean for our
energy costs and our grid security as these hand-picked winners
in the IRA are untested as reliable sources?
Mr. STEIN. Well, that is a key, is reliability. Ultimately,
unreliable sources increase costs to the electricity grid as a
whole. And that is the key, that wind and solar look very cheap
at the specific turbine because when the wind blows it is very
cheap. But grid-wide, you have to pay more for transmission,
you have to build extra wind turbines for backup, you have to
build gas plants for backup. There is--the overall cost to the
grid increases electricity costs, and you see that around the
world. You see that in California, you have seen that in
Germany, in Denmark, in parts of Australia. Higher--the
renewables penetration means higher----
Mr. HERN. Mr. Stein, if I may--and thank you so much for
your response, but I want to give a great example of that. The
largest--we think of Google being a green company. Their
largest or near-largest data server farm in the world sits 25
miles to the east of Tulsa, Oklahoma, 1,000 yards from a gas-
fired/coal-fired energy production facility. And when asked why
they are there, they need reliable energy, reliable energy.
So for all the talk that my colleagues across the aisle are
talking about, this is not reliable energy. The fossil fuel
industry has always provided that, and will continue to do so.
Mr. Chairman, I yield back.
Chairman SMITH of Missouri. Mr. Higgins is recognized.
Mr. HIGGINS. Thank you, Mr. Chairman.
The United States, according to a study out of Brown
University, spent $6.2 trillion in 3 Middle East wars in the
past 20 years. The Middle East is made up of 17 countries. It
has a population of about 480 million people, all in. And if
you were to take oil off the table, the entirety of the Middle
East has an economy equal to Finland. We lost 7,000 American
soldiers in wars in Iraq and Afghanistan, again, because of our
addiction to oil. So the oil age won't end because we run out
of oil. The oil age will end when we find a better, more
efficient way to power everything, including automobiles, a way
to power them that is quicker, quieter, and eventually cheaper.
There has been a lot of talk here about jobs and the
economy. Let's talk about jobs and the economy. Fortune
Magazine, January 11th, 2001: ``Trump to leave office with the
worst jobs record since Herbert Hoover. The number of employed
Americans fell by 3 million during the Trump time in office,
including the loss of 300,000 manufacturing jobs.'' Don't
lecture me on job creation, particularly in the manufacturing
industry. Fortune Magazine.
Bloomberg Analytics, February 23rd, 2023: ``Biden
Administration, 12 million jobs created in 14 months.'' To
quote them, ``Biden is on track to be the greatest jobs-
producing President in the history of the country,'' 12 million
jobs in 14 months, including 800,000 new manufacturing jobs.
Unemployment, 3.4 percent, the lowest unemployment rate in 54
years. Inflation forecasted--it is high now, it is over 5
percent--at 2.5 percent at this time next year, consistent with
historical trends as it relates to inflation.
The Inflation Reduction Act, probably misnamed, but it did
provide incentives not only for American manufacturers, but
also American citizens to bring the cost of electric vehicles
to parity with gas-powered vehicles. This is beginning to turn
a trend that we are 15 years late in addressing.
You know, China, we need to be tough on China. They cheat
on their currency, they steal our intellectual property, they
treat their people poorly, they treat their environment poorly.
But we need to be tougher on ourselves about China. All of the
rare earth minerals that go into manufacturing batteries, most
of them are in Africa. China spent $1 trillion in
infrastructure investment not to help the people of Africa, but
to allow them to exploit the continent of Africa so that they
could control all of the rare earth minerals. China now refines
68 percent of the world's nickel, 40 percent of the copper, 59
percent of lithium, 74 percent of cobalt.
So the Inflation Reduction Act is an effort to encourage
domestic manufacturing of electric vehicles, and we have a long
way to go. It is not solving the problem right away, but it
represents a beginning. Mr. Beachy, you have talked about the
Inflation Reduction Act in terms of jobs, in terms of economic
development. But also could you talk briefly on the efforts to
make electric vehicles more affordable for Americans, but also
incentivizing domestic manufacturing of those electric
vehicles?
Mr. BEACHY. Absolutely. Thank you for the question.
So there are historic tax credits available for the
manufacture of electric vehicles, and making those vehicles
more affordable at the same time. It is critical to pair those
two goals together, swift deployment and good manufacturing
jobs making the component parts. The $7,500 tax credit will
make electric vehicles more affordable, and the use tax credit
will make them $4,000 cheaper for your average family.
Meanwhile, though, it invests--those tax credits are built
to make sure that those component parts are made here, and that
is critical for jobs. It is also critical for our clean energy
goals and our climate goals. You know, when one country
produces the vast majority of the supply of a critical energy
good in the world, we should treat it as the same way we treat
a corporate monopoly. We should not pin our climate goals on
hope that the world's monopoly producers maintain prices low
forever.
The IRA responds to that problem by investing in the clean
manufacturing of the technologies of the future here, including
electric vehicles, solar panels, wind turbines, et cetera. That
is as good for our jobs goals as it is for our climate goals.
Chairman SMITH of Missouri. Mrs. Miller is recognized.
Mrs. MILLER. Thank you, Chairman Smith, and thank you all
for being here today.
Last year Republicans were united in warning the Democrats
that their out-of-control spending was going to come back to
bite the American people. And that is certainly the case with
the spending that has gone on, the so-called Inflation
Reduction Act, which has ballooned in cost, empowered the Biden
Administration to ignore Congress, and most of all, it
supercharges the inflation crisis that the American people were
already bearing.
The bill was portrayed as a promise to help our struggling
economy, but as soon as it was forced through Congress in the
backroom deals, the truth came out. Instead of a bill to help
the middle-class Americans, the IRA is welfare for billionaire-
dollar businesses, handouts to well-connected Democrat donors,
and tax breaks for luxuries for the upper class to enjoy.
My constituents in West Virginia will pay the price for
liberal elitists to feel self-righteous for buying an electric
vehicle that contains parts made with child and slave labor,
and is sourced directly from the Chinese Communist Party.
Everyday Americans will also pay the price through higher
electricity prices because the IRA increased the already
perverse incentives to produce less power for more expensive
means.
When we have such abundant natural resources, we must ask
why radical liberals are picking winners and losers in the
process, trying to tax us back into the Dark Ages.
Mr. Turner, I represent the major energy-producing state of
West Virginia. We are the second-largest producer of coal in
the United States, and an important producer of natural gas and
oil. I want to thank you for your comments, because our coal
communities applaud you for standing up for them in Washington,
D.C. Washington, D.C. tends to denigrate those people as
insignificant. I know what bad policies from Washington, D.C.
do. I have a county in my state, in my district, that has gone
from 100,000 people down to 14. We understand bad policy is bad
policy.
The Inflation Reduction Act creates incentives for
unreliable electricity sources, namely wind and solar. While
renewables can play an important role powering the grid, they
fail to provide affordable baseload power that is essential for
our families, our businesses, and our emergency services.
Most wind and solar products are not made in the United
States, while our traditional energy is sourced from states
like mine. What will the impact be on rural communities if
these credits are not repealed?
Mr. TURNER. Thank you, Congresswoman. These jobs will
continue to move overseas. Like I said earlier, we are still
producing more coal than ever before. Estimates for coal
production and--coal consumption, excuse me--are continuing to
go higher. But America's share of that pie is just getting
smaller. West Virginia's share of that pie is getting smaller.
These tax credits will go to companies that just produce coal
in India, in China, in Malaysia.
So my question is, if we still need coal and we are
admitting we need coal--solar panels are made with coal, all
these wind turbines are made with coal. EVs require coal. So if
we need coal, why can it not be American coal? Why is it green
to send the coal jobs to a foreign country, and then plunge
communities like the great communities in West Virginia, plunge
them into poverty, claiming that we are somehow protecting the
environment? It makes no sense. Not only are West Virginia's
environmental standards far superior than anything you would
see in Southeast Asia, but the jobs and the tax revenue stay in
your community, as well.
Mrs. MILLER. You are exactly right. Thank you so much.
Mr. Horn, before President Biden's Treasury Department
announced the rules regarding the Electric Vehicle Tax Credit,
which clearly ignores the intent of Congress, I led a letter
with several of my Ways and Means colleagues warning the
Treasury of major concerns with Ford's partnership with China's
largest battery manufacturer, CATL. I would like to submit that
letter for the record.
Chairman SMITH of Missouri. So ordered.
[The information follows:]
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Mrs. MILLER. Can you detail the national security risks of
these types of partnerships with CCP companies, as well as the
broader risks that come from continuing the U.S. reliance on
China for our EV batteries and critical minerals?
Mr. HORN. Congresswoman, I cannot overstate the complexity
and the ability to work around us that the Chinese Communist
Party has. They will continue to exploit every loophole. So
when they see an opportunity to use a Trojan Horse approach to
get a Chinese state-subsidized company in--partnered with an
American company, it is nothing short of an infection by a
foreign body.
Mrs. MILLER. Thank you.
I yield back.
Chairman SMITH of Missouri. Mr. Murphy is recognized.
Mr. MURPHY. Thank you, Mr. Chairman.
Gosh, I think in every committee on this Capitol Hill we
are talking about China, China, China. We are at war with
China. Let's just call it that way. They are trying to destroy
our way of life. They have balloons. They are--viruses, they
are--everything. They are stealing our intellectual capital,
everything.
Let me try to be non-partisan here, and point out three
points I think everybody would agree with. My Democratic
colleagues, maybe they will look at the film.
Number one is a clean environment. We all want that, right?
Okay.
Number two, where--everybody is against slave labor. We
talk about it horribly in our country 150 years ago. It
shouldn't happen.
Number three, we want to cut CO2 emissions, correct?
We can all agree on those things. But let's actually dive
down on those.
A clean environment. Why would my Democratic colleagues
want to promote the destruction of the earth in mining policies
in countries that it is much dirtier, absolutely poorer for the
environment, rather than the U.S.? Perplexing, beyond my
understanding.
Two, slave labor. In the pursuit of the moral authority or
the moral high ground of saying I feel better about my EV, we
are having--we are promoting child labor in the Congo, but it
is okay, we are just not going to talk about that.
And then, third, CO2 emissions. So we want to pretend we
are doing great for the world with our EV vehicles, when China,
to feed our appetite for energy, clean energy, is now growing
two coal plants a week--a week--and we are exporting that to
them. So we are making our small little incremental change
here, and we are blowing it out on the other side of the world.
So in actuality, it doesn't mean a damn thing.
So let me offer a suggestion. Oliver Stone, you know, that
Hollywood guy, he and I are just buddies. He and I agree on
something: clean energy. It is called nuclear power. That
satisfies every single thing here: we are not giving jobs to
China; we are not throwing money to China; we are not using
slave labor; it gives us a clean environment, and no CO2
emissions. So why don't we gather around that? So I know that
is a little bit off topic. It helps with the environmentalists.
It stops funding communist China.
And I actually have a question for Mr. Beachy.
You said the Sierra Club was not happy with the CCP,
correct?
Mr. BEACHY. I said they were not a communist. That is
correct.
Mr. MURPHY. Okay. Would they be happy--are they happy with
the fact that China is now producing two coal plants a week to
feed our appetite for clean energy?
Mr. BEACHY. No, they absolutely would not. And that is why
they support global engagement so as to reduce emissions across
the world.
Mr. MURPHY. Okay. I mean, I just think it is--we are
blinding ourselves. We are not understanding, one, that China
wants to take over the world, and we are feeding them for it.
And by the way, they don't give a damn about climate. They
are not doing anything about climate because they are pushing,
pushing, pushing coal.
Anyway, I just don't get it, guys. Come on, wake up, and
let's get to the table. The United States is literally giving
our competitive advantage away to China as they race to cheat
American companies.
Mr.--I am sorry here, I am just a little--I just can't
believe sometimes. You all, wake up.
Mr. Horn, you served under the former President Trump
during a time when the U.S. became the global energy
superpower. Can you describe how our energy security and energy
affordability have changed since this President Biden took
office?
Mr. HORN. Well, Congressman, I want to say that I think
there has been attempts by both presidents to try and combat
communist Chinese policy and the CCP. I think a lot of it comes
down to what we are talking about in this hearing, which is
moving beyond intent to actual execution and impact of policy.
The problem that we have currently with looking at some of
the loopholes in the Inflation Reduction Act is that it
basically plays to the Chinese Communist Party's ability to
work our own policy against us----
Mr. MURPHY. Absolutely.
Mr. HORN [continuing]. And exploit loopholes. To quote what
you said about them wanting to take over the world, that is
absolutely their priority, and they have clearly stated it. And
we have given them a variety of tools for them to do that with
Federal support if we don't look to close those loopholes and
to close those workarounds.
And I would say just one final piece on this. The ultimate
tragedy here is that there are a plethora of American
opportunities and American projects that can actually move the
ball forward on this front, on other energy fronts, as well.
You referenced nuclear. That is a separate subject, but there
is obviously massive amounts of American opportunity in the
mineral space there, as well. All we have to do is unleash our
own capabilities, and the market will correct this itself.
Mr. MURPHY. Absolutely. And I think we can do it in America
cleaner, absolutely cleaner. We are not feeding our world's
greatest adversary, and we are creating our own American jobs.
It is not that hard. We just have to wake up and understand
that we have somebody--a country on the other side of the world
that wants to see our demise, and we are feeding them with our
own pursuit of clean energy, when we could be doing it at home.
Thank you, Mr. Chairman. I will yield back.
Chairman SMITH of Missouri. Ms. Sewell is recognized.
Ms. SEWELL. Thank you, Mr. Chairman.
As we work to create a more equitable economy emerging from
the pandemic, we must look to addressing climate change within
our tax jurisdiction, and the impact it will have on all
communities across America. Use of the Tax code to allow for
the expansion of section 45Q is just one example of sound
bipartisan policy that will allow for future large-scale carbon
capture and sequestration projects to develop over the next
decade.
I am proud that my bill, Carbon Capture and Sequestration
Expansion Act, was incorporated last year into the Inflation
Reduction Act, but there is still much work to be done.
It is no secret that air quality measurements over the last
three decades show that low-income communities of color face
some of the worst pollution rates. This has been proven through
science, and ignoring such facts will continue to lead to an
array of life-shortening health outcomes for many in my
communities. It is for this reason that I am serving as the
Democratic lead sponsor on the Carbon Capture and Utilization
Parity Act this Congress. Working with Congressman Schweikert,
our bill works to establish parity between 45Q carbon capture
tax credits for sequestration, while at the same time support
using captured carbon in the creation of products to reduce
emissions.
In other words, we can make communities healthier, and
simultaneously establish good-paying jobs.
Earlier this year, Climate Power released a study which
compiled investment announcements made by the private sector
companies along with the anticipated job creation such
investments would make. And it showed that lots and lots of
jobs will be created. In my home state of Alabama alone,
projections show $1.3 billion worth of outside investment
coming to the state, resulting in over 1,200 new jobs. These
manufacturing investments serve as a great starting point in
addressing racial inequality related to income in Alabama. But
like our tax code, there is still much work to be done.
Last Congress I had the distinct honor and privilege of
being co-chair of the Ways and Means Racial Equity Initiative.
Our two years of work further highlighted why many in the
African American community have known for years, and that is
that the loss of manufacturing jobs in the United States has
disproportionately affected people of color.
My question is to you, Mr. Beachy. With my remaining time,
can you further elaborate on the research that you and your
colleagues have conducted at BlueGreen Alliance on how U.S.
investments within the IRA have the ability to create a new
workforce in places like Alabama and in communities like the
ones I serve?
Mr. BEACHY. I am happy to. So I already mentioned that
there is over $50 billion of investments in clean manufacturing
in this bill, which is truly historic, offering an opportunity
to rebuild solid manufacturing jobs and our nation's industrial
base at the same time, while better equipping us to have more
reliable supply chains for clean technology needs.
It is also true that a lot of the investments in the IRA
are dedicated to reducing the kinds of emissions you spoke to.
Industrial emissions I will just name. There is a new $6
billion program created at the Department of Energy to slash
industrial emissions from steel, cement, and aluminum
facilities while making these facilities more competitive. I
mean, these are facilities that produce the backbone of our
economy, materials that go into all of our infrastructure and
our clean technology.
I mentioned that solar panels are 85 percent aluminum.
There is also a lot of steel that goes into our wind and solar.
And so we have to produce these materials more cleanly. Right
now they are in--many of them are made in China with a much
higher degree of climate pollution. What the IRA proposes is to
make those materials here, and that $6 billion is invested not
only to reduce the greenhouse gas emissions that come out of
those facilities, but the air pollution, as well, that
disproportionately impacts Black folks and communities of color
and other low-income communities.
Meanwhile, that will invest in good paying jobs in these
same facilities, including in your home state of Alabama and in
many others across the country.
Ms. SEWELL. Thank you, and I yield back the balance of my
time.
Chairman SMITH of Missouri. Mr. Kustoff is recognized.
Mr. KUSTOFF. Thank you, Mr. Chairman. Thank you for calling
today's hearing, and thank you for the witnesses for appearing
today.
Dr. Ginn, if I could, with you and some of these figures
have been cited previously, but if I can--and I may be covering
ground that was covered, but maybe a little bit more in detail.
So when the CBO issued its forecast, and they--their number was
391 billion, we have heard about Goldman Sachs, that they see
the total cost of the green credits as exceeding a trillion,
and we have talked about Credit Suisse. If I can, to you,
somebody who has been in OMB and Budget, how did they get it so
wrong? Where is the disconnect?
Mr. GINN. Congressman, it is a great question, and it is
one that I think is kind of a common problem when we score some
of these, or they score some of these at CBO without looking at
dynamic effects, and they look more at the static analysis.
Whenever you throw this kind of money at particular
things--this being EV batteries--what do you get? You get more
of it, and on the back of taxpayers.
And one thing that I have heard quite a bit today is that
this is an investment for the future. But government can't
invest. Government only spends other people's money. It is not
their money to invest at the end of the day. That money should
be in the private sector, where you can allocate resources
better along the way.
And so whenever you are looking at what the CBO did, there
is a lot of new data that has come out since they made these
estimates last year, 381 billion--or sorry, the $30 billion.
That was the overall amount, but the $30 billion here, just for
the EV batteries. That new information, the number of batteries
that are being built, and some of the changes that have been
made at Treasury since then, the rules that have been put in
place, that has increased the cost dramatically to where--
closer to the $200 billion mark, almost 7 times greater than
what they estimated last year.
Mr. KUSTOFF. You may be saying this; I am going to ask this
in a different way. In theory, if this were being scored today
based on what we know, based on some of the things you just
talked about, obviously, it wouldn't be 391 billion.
Mr. GINN. Correct.
Mr. KUSTOFF. Okay. It might be a number closer to what
Goldman Sachs has concluded.
Mr. GINN. I believe so. Yes, sir. And that is one reason
why, you know, we are looking at Americans for Tax Reform to
have this re-estimated based on the latest information that is
available, potentially even having a pause of some of this that
is going out there.
I mean, something needs to be looked at because this was
sold as an amount to the American people. And the amount that
is actually going out the door of their tax dollars, it is all
adding to the national debt, interest on the national debt and
so forth, is not that amount anymore. And so we need to have a
close look at these dollars.
Mr. KUSTOFF. All right. So let's assume there is another
review, whether it is ATR or whomever, CBO came out with a
different number, and the number came back along the lines of,
again, what Goldman has talked about and Credit Suisse. What
remedy or remedies should Congress look at?
Mr. GINN. Congressman, it is another great question. I
mean, this is currently the law of the land. So, you know, you
have to look at that and say, okay, should we pass another law
that starts to strip some of this out with these tax credits,
EV tax credits, or something along those lines?
I think it will need to be some form of a legal change
along those lines.
Mr. KUSTOFF. Thank you. If I could just briefly, I want to
read you a portion from a Forbes magazine article dated
February 24th of this year. ``Chinese companies in the green
energy space are allowed Federal tax incentives and other
benefits to the tune of millions of dollars, thanks to the
Inflation Reduction Act passed by Congress and signed into law
by President Biden last year. If you are making solar panels or
EV car batteries, the government will help you. This--that
includes China's companies. From tariffs to product dumping and
commercial lawsuits, solar is the one China sector under
constant pressure from U.S. trade law, yet the U.S. taxpayer
will subsidize them anyway.''
Number one, do you think that is accurate, Dr. Ginn?
And two, if it is, who are the biggest losers under the
Inflation Reduction Act?
Mr. GINN. Congressman, the benefits certainly went more
towards upper-income folks, larger businesses. They are the
ones that are benefiting from the Inflation Reduction Act. It
is not the families. I mean, they are getting hit hard by this
of increased inflation.
I mean, I think this is a misnomer. It is still called the
Inflation Reduction Act, but it is contributing to more
inflation, increasing the debt, and things of that nature. And
it is also counter to economic growth. In fact, it--maybe it
should be called the Inflation Recession Act, because that is
ultimately what we are getting from it.
Mr. KUSTOFF. Thank you.
My time is expired. I yield back.
Chairman SMITH of Missouri. Mr. Arrington is recognized.
Mr. ARRINGTON. Thank you, Chairman.
Thank you, panelists. I am especially delighted that we
have a Red Raider-trained, I think, engineer here. And so I
know I can trust your numbers, Mr. Ginn.
Mr. GINN. Economist, not engineer, but economist. Thank
you, sir. Wreck 'em.
Mr. ARRINGTON. Wreck 'em. Look, I am the Budget chairman,
and my perspective may be a little different than some of my
colleagues. I want to talk about the overselling of the so-
called Inflation Reduction Act. Hopefully, we can all agree
that was false advertisement, and it is misleading the American
people with respect to the outcomes.
Secondly, the underscoring of the so-called Inflation
Reduction Act and the impact on our nation's financial health,
which is in serious decline, and what our children will inherit
in terms of the amassing debt, or what I call deferred tax on
our children as a result of passing the IRA under certain cost
assumptions or budget assumptions.
Today the debt for this great country is 25 percent larger
than the entire economy of the United States, the largest
economy in the world. Two years under this Administration and
my Democrat colleagues, $10 trillion in spending, 6 trillion of
which was deficit spending adding to the national debt in a
volume we have never experienced in the history of this
country.
CBO projects it will add $20 trillion more, based on
current policy. They say we will double the annual deficit.
They say we would triple the interest payments. In 10 years we
will be paying a trillion and a half. But in February--and this
was--the last time they revised their numbers was May of 2022,
but in February of this year they said we have to upwardly
revise the projections of the cumulative deficit based on the
policies of this Administration and the cost of those policies,
along with the interest costs, which I would submit are soaring
because of the spending-induced inflation. They had to revise
in just several months the cumulative deficit by $3 trillion,
based on spending and interest costs, $3 trillion.
This bill that was advertised as a deficit reducer, not a
deficit increase, was included--$400 billion of climate-related
policies, mainly tax-related; 100 billion in expansion of
government subsidies for health care.
I would submit to you that the pay-fors that CBO scored to
give this a deficit reduction number of 155 billion, they
were--some of them were total gimmicks. Others you could debate
whether they were a gimmick, like the IRS and $80 billion and
87 billion in IRS agents. But there was a rebate rule that
never went into effect from the previous Administration that
would have cost 122 billion, according to CBO. Never
implemented. That was just a cost on a piece of paper if you
implemented. That was used to supposedly offset the cost of
IRA.
So I don't even believe it was cost neutral. Certainly, I
don't believe it was going to reduce the deficit even before
this conversation. Now we are talking about this underscore of
tax credits for green industry, batteries, solar, electric
vehicles. We could be talking, Mr. Ginn, Dr. Ginn, about
hundreds of billions of dollars more on the debt and this
unsustainable trajectory, and the potential of a debt crisis
for this country, and the enormous recklessness and the burden
we are putting on our children.
Dr. Ginn, is it hundreds of billions? Is what I am saying
jiving with your economic analysis?
Mr. GINN. Congressman, yes, it is. I mean, I think this
will be hundreds of billions of dollars added to the national
debt.
There were a lot of gimmicks that were in there with CBO's
estimates. Some of them weren't out for a 10-year budget window
that they were looking at, what those cost estimates were going
to be. I remember, you know, if we had done something like that
in the Trump Administration, we would have heard that a lot in
the media, and we haven't heard any of that going on within
this so-called Inflation reduction Act now.
Mr. ARRINGTON. Thank you, and I yield back.
Chairman SMITH of Missouri. Thank you. Ms. DelBene is
recognized.
Ms. DelBENE. Thank you, Mr. Chairman, and thank you
everyone, for being here today.
Some of my colleagues on the other side of the aisle can't
even agree that we are in a climate crisis, so I guess it is
not surprising that they are holding this hearing attacking the
single most important Federal investment we have made in
fighting climate change.
It is critically important to me that we ensure a livable
planet for future generations, and that is why I worked so hard
with my Democratic colleagues last Congress to enact the
Inflation Reduction Act. And through the IRA, we are investing
in American goods and American jobs. And the benefits from
these investments are already having a tangible impact on
families in our communities.
Mr. Beachy, thank you for sharing your expertise with us
today. In passing the Inflation Reduction Act Democrats sought
to address climate change, create jobs, and advance equity. And
I wondered if you could explain how it is possible for a single
set of investments to achieve all of these three goals.
Mr. BEACHY. Thank you, I appreciate the question. A single
set of investments achieving multiple of our society's largest
goals is the secret sauce of industrial policy.
After decades in which industrial policy was seen as a
four-letter word, we have the IRA offering a historic course
correction by investing in industries that are strategically
imperative not only for our climate action, but also for a more
just and thriving economy, and this rebirth of U.S. industrial
policy is really long overdue.
I can name one example. There are a lot of examples in the
law that talk about how that--show how we can achieve climate
jobs and justice goals at the same time. One is the program I
just named in response to Congresswoman Sewell's question, a $6
billion investment in clean manufacturing. The guidance
recently came out from the Department of Energy for this
program, suggesting that the businesses that will be
prioritized for receiving Federal investments to make our
aluminum, steel, and cement more cost competitive and cleaner
will be those companies who not only reduce their greenhouse
gas emissions, but also cut local pollution, including air
pollution, also engage meaningfully with community groups and
unions, also create high-quality jobs, also sign community
benefit agreements to ensure that local communities and workers
are getting real health, economic, and environmental benefits
from those investments.
Now, that might seem like a very long checklist, but the
secret here is that those are mutually reinforcing criteria,
offering potential for overlapping wins. And when we see
opportunities for win-wins, seizing them is simply smart
strategy. As one example, 60 percent of our unionized steel and
aluminum plants in this country, all of which are very high
greenhouse gas emitters, are also located in disadvantaged
communities, the communities that have been hardest hit by the
unjust status quo. Investing in those facilities offers a win-
win-win opportunity for cutting a major source of greenhouse
gases, for investing in good, high-paying union jobs, and for
redressing historical injustices. That is one example.
Ms. DelBENE. Thank you. You know, this has been critical
legislation. And unfortunately, we have seen ongoing efforts by
my colleagues on the other side of the aisle to repeal all or
some of the Inflation Reduction Act, and most recently through
the polluters over people act last month.
You talked about some of the investments that have already
been announced as a result of the Inflation Reduction Act, and
the impact its potential repeal could have on our climate
goals, the American energy industry, and jobs, and on energy
prices for American families. Can you talk about what the
impact would be if the legislation was repealed?
Mr. BEACHY. Well, we certainly don't see repeal in the
offing, because voters don't tend to reject job-creating
proposals. Voters don't tend to reject proposals that allow
them to breathe clean air. Voters don't tend to reject
proposals that allow us to make the technologies of the future.
Those tend to be popular.
And I would--if we look at the numbers just so far, I
mentioned that--the report that--in the first six months, new
investment announcements will create over 100,000 manufacturing
jobs. I mean, those are spread across the country. You know,
20,000 of those jobs are in Kansas; 16,000 in Georgia; 11,000
in Tennessee; another 11,000 in Arizona. I do not think voters
will reject that job creation.
Ms. DelBENE. Thank you, and thank you, Mr. Chairman. I
yield back.
Chairman SMITH of Missouri. Mr. Fitzpatrick.
Mr. FITZPATRICK. Thank you, Mr. Chairman. I think the
sooner off that we all start rejecting this false narrative
that you have to choose between energy independence and
environmental preservation, the better off we are going to be.
That is not a mutually exclusive choice. You can accomplish
both. I am a huge conservationist, a huge environmentalist.
However, I voted against the Inflation Reduction Act for the
very reason that many of my colleagues here are offering up,
that you can't ignore the impacts of dealing with a nation like
China has negative impacts on our environment.
I will ask, I suppose, Mr. Ginn. Is it not common knowledge
that auto manufacturers that qualify for the EV production tax
credit can claim the credit, even if they license their
technology directly from Chinese companies?
Mr. GINN. I believe that is correct, Congressman. I--
something else that I think was mentioned earlier, too, is a
lot of these tax credits are going to financial institutions.
And so why are we continuing to prop up different areas of our
economy? It doesn't make sense, and especially if some of that
is going to places like China or others that haven't been very
friendly with us for a while.
Mr. FITZPATRICK. And they are--China is dominating the
battery manufacturing market. According to the International
Energy Agency--this was last year or two years ago, rather, the
most recent year they have data for--China produced about 75
percent of the world's lithium ion batteries. That is compared
to 7 percent produced by the United States, 75 percent to 7
percent. And yet my reading of the Inflation Reduction Act,
which I believe is accurate, will only continue to help these
Chinese battery manufacturers benefit through the collection of
royalty payments that are funded by the American taxpayer.
And yet, inexplicably, the Administration proceeds full
steam ahead on implementing these troubling provisions of the
IRA. And it is the troubling provisions that we are zooming in
on here, which, in turn, financially benefits Chinese
companies, rather than focusing on protecting, promoting, and
growing American manufacturers here at home, where we have fair
labor standards, where we have environmental protections, which
they have neither of in communist China.
My last question, Mr. Ginn. What is--if you could, just
opine or provide your reaction to the issue that I am raising:
Chinese battery manufacturers profiting off of the U.S.
taxpayers?
Mr. GINN. Congressman, it is an unfortunate situation that
shouldn't exist. It should not be on the back of taxpayers,
especially with our fiscal crisis the way that it is right now.
I mean, I think that is the largest threat that we have right
now, moving forward and what that is going to mean to not only
us and our grandkids, and yet we are funding communist China
and others through the process of the EV batteries.
What happens to the lithium whenever these batteries are
done? That is a whole other environmental issue that is going
on.
What about the particulate matter that has been on the
decline for many years in the United States, along with CO2
emissions going down in the United States, compared with a lot
of these other countries? And you are contributing to them
building more in countries that, as has been mentioned here
before, that do not have the same sort of environmental rules
and regulations and just cleanliness like we have that is also
provided by systems that are more based on free market
capitalism, and not by government direction, socialism.
Mr. FITZPATRICK. How would these lithium ion batteries be
disposed?
Mr. GINN. Great question. I don't have all the details on
that one, but it is not pretty, from what I understand. It is
not something that actually degrades like other types of--there
are issues there. Yes.
Mr. FITZPATRICK. Okay. Mr. Chairman, I yield back. Thank
you.
Chairman SMITH of Missouri. Mr. Steube.
Mr. STEUBE. Thank you, Mr. Chairman.
President Trump said, ``I don't want American--America to
be energy independent. I want America to be energy dominant.''
To accomplish this, Trump lifted drilling restrictions, sped up
fossil fuel production, gave the green light to domestic
pipelines, blocked extreme environmental regulations, and
reduced reliance on foreign oil. The U.S. was producing more
oil than we were consuming, and producing more oil than Russia
and Arab nations.
Once Biden took office, we went from energy independence to
energy dependence. Biden reversed almost all of Trump's
policies by focusing on climate change, wind and solar power,
and electric vehicles. After Biden's action, gasoline prices
rose more than $5 a gallon, which was a direct result of his
green energy policies.
A Goldman Sachs report projects that green subsidies in the
Inflation Reduction Act will cost $1.2 trillion, more than 3
times what my Democratic colleagues claimed.
The Wall Street Journal stated the Inflation Reduction Act
may go down as one of the greatest confidence tricks on
taxpayers in history. And my colleague, Mr. Estes, put that
article into the Record.
The Congressional Budget Office forecasted the Inflation
Reduction Act's energy and climate provisions would cost 391
billion between 2022 and 2031. This appears to be a huge under-
estimate. By Goldman's estimate, the Inflation Reduction Act
tax credits will cost tens to hundreds of billions more than
CBO estimated over 10 years. The forecast misses include
electric vehicles, green energy manufacturing, renewable
electric--electricity production, energy efficiency, hydrogen,
biofuels, and carbon capture.
Biden's disastrous climate policies and his environmental,
social, and governance standards are crippling the United
States economy.
Mr. Turner, can you elaborate on these statistics and its
effect on the U.S. economy?
Mr. TURNER. Congressman, thank you for the question. You
absolutely nailed it, especially when it comes to oil and gas
production.
You know, for years we heard this talking point, 9,000
leases, 9,000 leases. How come they are not using the 9,000
leases? Well, the Willow Project was a wonderful example of
that, and I am glad the Biden Administration gave approval for
this huge oil and gas lease in Alaska's North Slope. I have
been to Willow several times. I will be back in a couple of
months.
But that was an example of one of the 9,000 leases that
still requires government cooperation. And we don't have
government cooperation from this Administration. For every one
Willow, there are hundreds and hundreds of other companies
waiting just to produce oil and gas. And instead, the Biden
Administration makes deals with Venezuela. We make deals with
OPEC. The President himself goes to Saudi Arabia to ask for
oil.
I just want to know why the American oil and gas workers
have to suffer, while we look to other countries, some of them
hostile, for our energy needs.
Mr. STEUBE. Thank you for that. I agree with you 100
percent.
In 2018 the USTR, as part of an investigation under section
301, concluded that China engages in forced technology,
transfer theft of U.S. IP and trade secrets, discriminatory and
non-market licensing practices, and state-funded strategic
acquisitions of U.S. assets. USTR then imposed tariffs on an
estimated $370 billion worth of U.S. imports from China. China
countered with tariffs on 110 billion worth of U.S. products.
Most tariffs remain in effect today. China's imports from 2020
and 2021 fell below its commitment to buy at least $502 billion
of U.S. goods and services over 2 years. In 2021, China's
global exports grew by 30 percent over 2020. Its exports to the
United States grew by 28 percent over 2020. China is pressing
the USTR to lift U.S. tariffs, while sustaining its concerning
practices.
Mr. Stein, what actions are needed to address China's
trade, coercion, and efforts to sidestep U.S. policies?
Mr. STEIN. I think that is--it has to work at multiple
levels. Like, there is--certainly, there is opportunities
through the WTA and through retaliatory tariffs to approach
these things.
There is also legal mechanisms. There--Chinese companies
invest in the United States, and we don't have to let them do
so if they are not competing fairly in their home countries or
even in third-party countries.
Mr. STEUBE. Many of my Republican colleagues have expressed
concern about the irregularities in economic ties, U.S. ties to
PRC firms violating human rights and China's practices that may
force or unfairly incentivize the transfer of U.S. technology
and data to China. These issues are evolving into broader
concerns about U.S. competitiveness and national security.
Mr. Horn, can you provide types of Chinese threats and/or
national security implications with green credit access?
Mr. HORN. Congressman, any time we allow Chinese subsidized
or owned entities into the United States, we have to assume
that they are not only stealing IP. They are collecting
intelligence, and they are finding ways to use every piece of
our system against us.
Mr. STEUBE. My time is expired. Thank you for--the
witnesses for being here today.
Chairman SMITH of Missouri. Mr. Evans.
Mr. EVANS. Thank you, Mr. Chairman.
Rather than promoting fossil fuel and the aggressive
pursuit of deregulation, I stand with my Democratic colleagues
and understand that we must continue investing in a more
substantial future. This is the best approach to revitalizing
communities and neighborhoods in Pennsylvania and across the
country.
So far, the Inflation Reduction Act has invested--are
working to revitalize communities across the country. The
Inflation Reduction Act green tax credit are helping address
climate change by supporting renewable energy technology. These
green investments carry domestic content requirements that will
strengthen U.S. manufacturing in our nation chains. These green
investments also help prevailing wages and the apprenticeship
requirements that will support our American workers' need.
Mr. Beachy, how can you, with the Inflation Reduction Act,
help address environmental justice that has hurt communities of
color and low-income neighborhoods?
Mr. BEACHY. Thank you for the question. I appreciate it. I
mentioned before that we, of course, do not speak on behalf of
environmental justice groups, but we gladly partner with them
as they are leading on making sure these investments do support
communities that have endured decades of environmental
injustice.
There is the Justice40 Initiative, which says that at least
40 percent of the benefits from these investments need to go to
the communities that have been hard hit by years of
disproportionate exposure to air pollution, water pollution,
and other environmental hazards. That applies across a whole
slew of programs.
Then there are specific programs that offer very specific
benefits to communities that have endured environmental
injustice, economic injustice, and racial injustice. One of
them, for example, the Greenhouse Gas Reduction Fund, which has
about $7 billion designated for competitive grants,
specifically for low-income and disadvantaged communities,
for--with a priority for, like, community solar and other
investments. There is another 8 billion in there for financial
and technical assistance for these same communities.
Another program, Environmental and Climate Justice Block
Grants. For the first time, the government is investing real
money in communities that are disproportionately exposed to
both environmental injustice and climate impacts by providing
block grants for communities to decide how they can best spend
these investments. They can invest this money in reducing air
pollution, in remediation of toxic sites, as well as
investments in low emissions technologies that will support
both jobs, clean air, and a livable climate.
Mr. EVANS. I would like to ask you a follow-up. We know
that a lot of Inflation Reduction Act subsidies go to business
initially. But Mr. Beachy, how can workers and communities
secure economic and environmental benefits of the Inflation
Reduction Act?
Mr. BEACHY. Yes, it is a great question. So as an example,
many of the investments I have been talking about in clean
manufacturing will go first to businesses. At the same time,
the Biden Administration has been making clear that the
businesses that will be prioritized for these investments are
those that sign--that partner with unions and ensure high road
jobs, and also that sign community benefits agreements with
both workers and communities.
And what community benefits are, they are legally binding
agreements between the company and the local workers and local
communities to ensure tangible economic, health, and
environmental benefits on the ground, both for the workers
inside the factory and for the communities living outside the
factory.
You know, we have existing examples of these community
benefits agreements. They can include local hire provisions,
targeted hire for workers of color, for women, for other under-
represented workers. They can include community--business
investments into a community controlled fund, reductions in air
pollution, higher labor standards. It is, at the end of the
day, a binding legal agreement that puts communities and
workers in the driver's seat of determining the path of these
investments, and it is actually being attached to many of these
investments that are going to businesses.
Mr. EVANS. Thank you, Mr. Chairman. I yield back the
balance of my time.
Chairman SMITH of Missouri. Ms. Tenney is recognized.
Ms. TENNEY. Thank you, Mr. Chairman, and thank you to the
witnesses today.
I have heard it said by my colleagues across the aisle
that--I just call it the Inflation Act and the Green New Deal,
because that is what it was touted as, even before it was
signed into law--represents an attempt at industrial policy. If
so, I think it is a pretty poor attempt. The truth is this
isn't industrial policy, it is ideological policy.
The industrial policy would be bipartisan, and this was not
a bipartisan act, which is why we are trying to fix this today.
It would be well thought out. It would be the--have proper
safeguards in place to ensure adversaries did not benefit.
Well, we know that didn't happen. So the Democrats failed on
all three fronts.
Perhaps the most concerning of all is China will reap
significant rewards from the Inflation Act Green New Deal, as I
call it. Foreign entities of concern, including those
controlled by the Chinese Communist Party, will receive
billions of U.S. tax dollars under this giveaway program. It is
difficult to imagine anything more irresponsible than forcing
U.S. taxpayers to foot the bill for subsidies flowing directly
to those controlled by the Chinese Communist Party.
On top of that, the Biden Administration is hard at work
creating additional loopholes that will benefit foreign
companies at the expense of workers here in America. Instead,
America should be working to become energy independent, not
rewarding bad actors like China, as you have heard my
colleagues talk about: intellectual property theft, spy
balloons, TikTok.
And industrial policy is fundamentally about using policy
to encourage investment in critical sectors of our economy.
This has been done successfully in the past, and I think that
we all would support and advocate for some kind of targeted
industrial policy that puts American industry and, yes,
American workers first.
This is something both Republicans and Democrats should be
able to support, and it is what many of my constituents in the
rural Rust Belt region of upstate New York care about. And we
are an area that was basically, you know, the beginning of
everything. The Empire State has become the exodus state.
Everyone has left, they have gone to Asia, they have gone to
China. And China is benefiting from our bad policies. And right
now, as a state, we face among the highest tax and regulatory
burdens in the country. And we are--we have been saddled and
our taxpayers are being saddled with giving up and propping up
the government of the Chinese Communist Party with their tax
dollars.
And for their--you know, for industrial policy to be
successful, it should be thoughtfully developed, carefully
implemented, and, most importantly, it should be unified. The
Inflation Act Green New Deal, as I call it, failed on all these
fronts.
And it was a rushed piece of legislation that wasn't well
understood by anyone at the time, which all of my colleagues
have pointed out, the almost 1.2 trillion potentially, as
stated by Goldman Sachs, and the costs, including many of those
responsible for drafting it, which is why it was a one-size-
fits-all and one-party-dominated bill.
We are already seeing the negative effects, as pointed out
by my colleagues. The Joint Committee on Taxation scored it at
271 billion. We have seen beautiful charts showing all that,
unfortunately for us, and likely a real dynamic scoring of 1
trillion. And it is no surprise that this has been a mess,
based on the way it was put through.
So my question--and I come from an area where we are facing
catastrophic changes in energy policy that will destroy the
economy of upstate New York. My district, the New York 24, is
the largest agricultural district in the northeast, the largest
dairy district. We have very harsh winters. We have a wonderful
soil and water conditions, and a very short growing season. And
I wanted to just give my first question to Mr. Turner.
You talked about agricultural policy. Can you give us--just
quickly, because I am using up my time--how the Chinese
Communist Party's dominance in the supply chains will further
be cemented by the Inflation Reduction Green New Deal, and how
it will affect my rural communities in upstate New York, who we
depend on for our economic strength?
Mr. TURNER. It is a wonderful question, Congresswoman--and
I say this often on social media, and I know my social media is
well followed on this committee--but people who have a farm
like I do, you cannot find farm equipment that is hardly not
made in China. Giving China subsidies for more, this just puts
all of our farmers at an enormous disadvantage.
We have raised the cost of energy to the point that
fertilizers are more expensive. Your constituents would know,
as I would, hay was $7 a bale 2 years ago. I paid 11.75 at the
beginning of this winter, right? I don't get any of those
additional benefits when I sell my cattle. I just have to eat
those costs.
So all these benefits going to China are weakening American
rural communities, farm communities, and energy communities.
Ms. TENNEY. Thank you so much.
And I just want to ask Mr. Stein, will the green credits in
the Inflation Act Green New Deal actually make us energy
independent?
And how could we lower our energy costs?
And I am running out of time, so----
Mr. STEIN. Yes. Well, clearly, it is not going to make us
energy independent. We are actually going to increase our
dependence on China for the supplies of a lot of these things.
So we are actually eliminating our current near-independent
security that we have from our domestic resources, and
changing--we are actually making--so the Inflation Act would
make us less secure, as far as energy goes, certainly.
Ms. TENNEY. Thank you.
I am out of time. I yield back.
Chairman SMITH of Missouri. Mrs. Fischbach.
Mrs. FISCHBACH. Thank you, Mr. Chair. I appreciate the
opportunity.
And thank you to all of the witnesses today. I appreciate
it, and I know it is a long haul by the time you get to the
bottom.
But, you know, as we have discussed today, the so-called
Reflation Reduction--or Inflation Reduction Act appeared to
create incentives for domestic critical mineral production and
domestic manufacturing. Yet instead of bolstering the American
economy, the Biden Administration, as my--as many of my
colleagues have pointed out, has created carve-outs and
loopholes to continue our reliance on foreign countries and
foreign companies.
I am especially concerned with the Biden Administration
entering into the critical mineral agreements with Japan, while
at the same time continues to attack proposed copper and nickel
mines located in my home state of Minnesota.
Mr. Horn, is it backwards to create tax incentives for
domestic critical minerals without having a regulatory process
that allows for the development of the domestic critical
minerals?
Mr. HORN. Congresswoman, it is a very difficult situation
to try and fix all at once. And while I think there is a role
for allied partnerships and for trade, I think we have to
prioritize what we have in this country, primarily.
And when you look at the geology and the massive amount of
resources inside the United States, you know, we could surpass
our own internal demand very easily. Obviously, the great state
of Minnesota has incredible battery material wealth, and it
could be harvested and developed, refined, in my opinion,
cleaner and in a more environmentally sound and responsible
manner than anywhere else on the planet. But it comes with
challenges.
And realistically, especially when you are dealing with
public land or other government-regulated entities, it is
difficult to find ways forward with the projects. I see
projects every day, I talk to investors. And the scariest thing
that any investor will hear is that a project is on public
land, to be quite frank.
So while we should look to have trade agreements that
expand abilities to work with our allies--you know, I have seen
a lot of U.S.-Canadian collaboration, for example, that I think
is fundamentally necessary, especially when it comes to defense
industrial policy--we have to put the primary focus on doing
the work here in the United States to create the jobs that we
have referenced, to use the cleanest, most technologically-
advanced procedures, and to once again demonstrate to the world
the right way to actually bring about this technological
revolution.
Mrs. FISCHBACH. Thank you, Mr. Horn. And I will just add,
you know, if we want to become independent, we need to make
sure that we are using all of those resources, and that we do
it in a responsible manner, you know, making sure that we are
addressing that, and that the regulatory process is reasonable
when we do start to move towards using our own.
And also, I have serious concerns about the electric
vehicle tax credits that were expanded in that--in--again, in
the so-called Inflation Reduction Act. At the time when
Americans saw their grocery budgets at an all-time high due to
record inflation, Democrats spent billions of dollars on tax
credits that benefit the wealthiest Americans. In fact, a JCT
report in 2016 found that among individual taxpayers 78 percent
of the EV tax credits claimed were by filers with an adjusted
gross income of $100,000 or more.
So we have--already know that the wealthiest earners would
benefit the most from this tax credit. And now, because of the
Biden tax--Biden Treasury Department is implementing this bill,
we are learning that China will be a significant beneficiary.
And I know that we have talked about this, but I represent--Mr.
Ginn, I represent a very rural district in Minnesota, and the
median household income of my district is less than $65,000 a
year. That just came out the other day. But if Chinese
companies are allowed to access these tax credits--this is an
easy one, I think--but who will benefit more from the Inflation
Reduction Act, Chinese companies or my constituents?
Mr. GINN. Congressman, it is a good question, and I believe
it is the Chinese, but also a lot of big businesses here.
Financial companies are also getting a lot of these from the
equity that is built into the tax credits. And so very little
of it will trickle down, if you will, to the rural areas to
benefit them.
Mrs. FISCHBACH. And thank you, Mr. Ginn. I think they will
continue to experience those issues with inflation in their
grocery costs without seeing any of the benefits of this so-
called Inflation Reduction Act. So thank you.
And with that I yield back.
Chairman SMITH of Missouri. Thank you.
Mr. Beyer.
Mr. TURNER. Mr. Chair, may I have one quick moment to
address something the congresswoman said?
Chairman SMITH of Missouri. Very quick.
Mr. TURNER. Because I think it is very important. Thank
you, sir.
From Minnesota, the two largest copper deposits found in
American soil are Minnesota and Alaska. This Administration is
pushing electric vehicles. Fine. Their standards last week,
pushed by the EPA, want two-thirds of electric vehicles to be
EVs. The average EV has 60 to 80 pounds of copper. So they are
saying we need copper, and yet the same Administration that is
pushing us to use EVs and copper is denying us the permission
to open copper mines in America.
So that is not a sane policy. And if you are a miner in
these two areas that you said are rural and need the jobs, you
have to scratch your head and say, where is the sound policy
coming when it comes to this issue?
Mrs. FISCHBACH. And thank you, Mr. Turner. You put a bow on
it. Thank you.
Chairman SMITH of Missouri. Thank you, Mr. Beyer. You are
recognized now.
Mr. BEYER. Mr. Chairman, thank you very much. And I really
want to thank the witnesses for your testimonies, and I really
have learned a lot from your answers, and to my Republican
friends, too.
And I want to address one thing that has come up again and
again, which is the impact of the last 40 years on rural
America. I don't want to over-simplify, but for the sake of the
five minutes, you know, impact number one was globalization and
the free trade agreements. We had CAFTA and NAFTA under
Clinton; we had KORUS under George Bush; we had USMCA under
Donald Trump; and many others along the way. And add to that
technology, because I have been visiting manufacturing firms
for 50 years, and 50 years ago there were a lot of people in
them, and now there are very few people in them because the
impact of technology.
So that is part one, which is why, even though we struggle
with it, you know, President Biden's commitment to a worker-
centered trade policy was trying to reconcile our commitment to
global trade with the fact that we have to defend American jobs
at the same time.
And the second half is what has happened to fossil fuels,
specifically coal. I was lieutenant governor of Virginia for
eight years, so I spent nine-and-a-half years going to the coal
fields. And even 40 years ago, it was really tough. The coal
companies were going broke. They moved to longwall mining,
which eliminated lots of jobs. The coal companies that existed
couldn't pay for the health care and the retirement benefits.
And we spent--and then climate change comes along, and we have
the trade-off between protecting those coal miners, whom we
love, and protecting the planet and all the people who live
everywhere else who were, you know, really hurt by it. And that
is not easy.
And we have struggled with it for a long, long time, trying
to figure out how do we bring rural America back.
The easiest throwaway is broadband, which we are all
committed to, but it is much more than that--and education,
which we are all committed to.
Mr. Beachy, what is in the IRA that would actually help
rural America adapt to the world we live in today?
Mr. BEACHY. I appreciate the question. Let me first concur
with the deleterious effects of our trade agreements under the
status quo under both Republican and Democratic
administrations. We have seen trade agreements that have
incentivized the outsourcing of our manufacturing to countries
with lower labor and environmental standards, contributing both
to job loss here and greater climate pollution.
That actually--under-reported element of that is that when
the most emissions-intensive factories in the world produce the
steel and aluminum of the world, it means an increase in global
industrial emissions. And the IRA aims to fix that by investing
in clean manufacturing of bedrock materials like aluminum,
steel, and cement in this country.
To your question of hard-hit communities, I named earlier
that there is a--I come from West Virginia. I take this
question very seriously, as do many. And up until now, it has
been a lot of talk. The IRA recognizes one essential truth,
which is that while there has been a lot of hand-waving in the
past, assuming that technological shifts will just naturally
take care of workers and communities, we know that is
absolutely not the case. Some communities and some workers are
indeed left behind when policy allows them to be left behind.
The IRA takes a step in the right direction by dedicating
funds--4 billion under a manufacturing program, a bonus tax
credit for the wind and solar developments, a loan program
worth $250 billion in loans--to specifically invest in energy
transition communities to retool for the clean energy economy.
And that is not--those aren't words. Those are actions, really,
for the first time that we have seen in a long time.
For the rest of rural America outside of energy
communities, there is a $9.7 billion investment in rural
electric cooperatives, allowing for rural communities to switch
to clean energy not only for the benefits for clean air and
climate, but also for the benefits for jobs and economic
development in those communities.
There is investments for farmers to be able to increase
their energy efficiency, cut down their energy bills.
There is investments that are going throughout the
heartland right now. I mentioned that, of the 100,000 jobs that
were documented in just the first 6 months since President
Biden signed the Inflation Reduction Act, we have a lot of
them--in fact, the largest numbers--are in rural states. My dad
is from Kansas. The largest number of jobs we have seen created
to date under new investments under--since the IRA was signed
is in Kansas, 20,000 jobs.
Mr. BEYER. You used up all my time, but I am grateful,
because you did a great job laying out all the positive things
that have happened, and much more that we need to do.
I believe West Virginia is still 50th out of 50 states in
per capita or family income. We would like it to be middle of
the pack, and we will keep investing in it.
With that, Mr. Chairman, I yield back.
Chairman SMITH of Missouri. Mr. Moore recognized.
Mr. MOORE of Utah. Thank you, Chairman.
Gentlemen, thank you. Thank you for sitting through this
and answering questions. Sometimes the five minutes goes by and
you don't get to answer any questions. That is the way this
place works. But welcome to the U.S. House of Representatives,
a lovely place of constant contradiction.
Just today we have seen--not related to this, but, you
know, we saw an argument about, you know, we cannot default. So
one side of the aisle says we can't default, and the other side
of the aisle says we absolutely cannot default, so let's do a
bill that ensures that we pay our bonded indebtedness to our
creditors. And then the other side will say, well, you just
want to pay our creditors only, or certain creditors more.
Like, it is just this constant back-and-forth. And I actually
relate that as an example to what we are dealing with here with
respect to trying to embrace an all-of-the-above approach
energy process, right?
I have never been against, you know, the concept of
building an all-of-the-above approach, right? And a lot of the
things in the Inflation Reduction Act were trying to get to
that. But the lead person on this--and President Biden, when he
stands in front of the entire country and says, well, yes, we
will need oil and gas for 10 more years, like, I don't--I have
never seen any type of predictions that can say that we can
meet our energy demands with just 10 more years of oil and gas.
I just met with a renewable gas organization that we are--that
are digging into this issue, and talking about all the amazing
benefits that we get from natural gas.
And so, again, H.R. 1 becomes this debate. Personally, I
hope that in this split government situation we are able to
find an opportunity from--permitting reform. I believe there
are several Democrats, many Democrats, that would be open to
the concept of permitting reform, because it is stymying
anything that they are doing on renewable technology. We can't
even build transmission lines because of NEPA and the archaic
version of how we go about that regulation.
And so with that, Mr. Horn, I kind of wanted to just hear
your thoughts on the ability to meet these demands. If there is
such a motivation to produce solar panels, wind turbines,
batteries, EVs, transformers, do we have the regulatory
environment to produce the material needed for that
domestically?
Mr. HORN. Congressman, the regulatory environment is not
easy to work with, to state the obvious. What I would say is we
have the resource and technological capability to not only meet
our own demand, but to export to the remainder of the globe if
we were to unleash those resources.
What I do believe is that there can be a truly bipartisan
agreement on common-sense regulatory reform that really looks
to prioritize what is best not only for industry, for jobs, for
possibly exploitable populations, but for the environment, as
well. Because I think when you actually contrast, you know, to
the earlier example, a copper mine in Minnesota with slave
child labor in Congo that is being propped up artificially by
our largest adversary, there is really no question as to which
of those is preferential for all of our goals.
So I would say there needs to be a hard look at regulatory
reform in terms of opening up U.S. resources. And if we do
that, we can once again lead the world in this space like we
did prior to the 1990s.
Mr. MOORE of Utah. Mr. Stein, it is easy to see why using
American minerals helps American companies. It is easy to see
why it could help produce some of this technology that so many
people want to embrace. What about the consumers?
How does it--can you describe how it will help consumers to
embrace American-made or American-produced minerals more?
Mr. STEIN. Well, I think, ultimately, consumers are
American citizens who get those jobs, and those communities,
the funds that go into those communities, that helps consumers
to purchase those products.
So I mean--and ultimately, the sorts of efficiencies that
we might look for to ultimately lower prices for some of these
things like EVs that are still very expensive, that sort of
innovation might happen in the United States in a capitalist,
you know, economy, but if it was allowed for the market itself
to actually take that action. This is part of the problem when
you have government subsidies creating things. They prop up
existing technologies, existing ways of doing things because
companies chase the money instead of innovating and looking for
the next big thing, something that might actually lower costs.
Mr. MOORE of Utah. Thank you. And I will just quickly make
a comment to Mr. Turner.
Your comment earlier about the 9,000 leases is something I
have dug into. I have actually put legislation that would
require a specific timeline and process that you need to follow
for things that are, like, are existing.
So the Biden Administration says, okay, we are going to
stop doing it entirely, Federal lands, secretarial order, all
that stuff. And then, oh, but we have all these leases
available, and then the slow-playing happens. And that is the
most fundamentally difficult thing for our industry to actually
navigate, and I think it is one of the most disingenuous
things. So I appreciate you highlighting it.
And if the leases are available, well, then let's embrace
it. Let's continue to do it. But then it is more of the slow-
playing and the constant--you know, all the roadblocks that get
put in the way, and we are left with an impossible environment
to navigate. So thank you.
Chairman SMITH of Missouri. Mrs. Steel is recognized.
Mrs. STEEL. Thank you, all the witnesses, today, and thank
you, Chairman Smith, for hosting this hearing.
It should be alarming to all of us that Chinese Communist
Party now develops a majority of the world's nickel, cobalt,
lithium, graphite, and manganese, and rare earth minerals.
Manufacturers need these raw materials to produce the clean
energy future. But the United States has tied its own hands
with restrictions that make it impossible to access our own
natural resources.
The Inflation Reduction Act has forced our allies to make
difficult decisions about investments in the United States, and
many are being forced out of the United States market because
the Administration has not included a realistic transition
period for implementation.
Mr. Turner, we have heard today about significant
investments being made and jobs created to be able to claim the
tax credits available through IRA. But how can this growth be
sustainable if we are missing the first step, having the
natural resources available to continue to produce the products
American and international customers need?
Mr. TURNER. Thank you, Congresswoman. It is a wonderful
point. It is the equivalent of celebrating the fact that we are
opening up lemonade stands, but we don't have any lemons,
right? And so saying we are going to have all this processing,
manufacturing, very good. I want manufacturing in America. I
want processing in America. But if the rare earths, if the
metals, the minerals are all found in other countries, then how
valuable, how sustainable is that manufacturing?
And to highlight that, all of these metals, rare earths,
metals, materials, et cetera, are found in America. As my
colleague right to my left just said, we could sustain our own
economy and export to our allies, if only we were allowed to
unleash the fullness of our potential.
Mrs. STEEL. Thank you for that. In California we have over
1,000 applications to drilling in California. Twenty percent of
the oil is actually coming from Russia. And since 1994, not
even 1 permit were given out.
So in my home state the California Air Resources Board last
year approved a new rule that would require 100 percent of new
light and medium-duty vehicles sold in--within California to be
zero-emission vehicles by 2035. And now the EPA has announced
that up to 60 percent of 2030 models and two-thirds of 2032
models sold nationwide need to be zero emissions. California's
electrical grid cannot provide enough electricity to power all
these vehicles because we have rolling blackouts.
Do you have any concerns that these progressive zero
emissions proposals from the EPA and California Air Resources
Board?
Mr. TURNER. Yes, Congresswoman. And these goals are so far
in the future--that is because they are absolutely not
achievable. They are not achievable by market forces. They are
not achievable by technological forces. And we do not have the
grid infrastructure to have a ``electric vehicle fleet.'' And
so that is why they are 5, 10, 15 years, because then it will
be someone else's problem.
A lot of what governments sometimes, sadly, does is create
problems for future generations to deal with. And what--doing
this is going to have huge market implications for the
combustion engine vehicles. It is going to be a huge burden on
rural and lower-income Americans, but it is also going to be a
problem that future legislators and governors will have to deal
with.
Mrs. STEEL. Yes. How it is low-income families, that they
can afford to buy those vehicles?
The CCP has misreported its carbon emissions, and continues
to open new coal plants. Yet the Inflation Reduction Act will
pour American taxpayer dollars into their green companies. Can
you explain how the CCP-backed companies will benefit from the
taxpayer-funded credits, and can you share how this could make
the CCP even more dominant in the supply chain?
And we want to be dominating those supply chains. But as of
now the CCP has been, and they are very aggressive about that.
Mr. TURNER. I could definitely answer that, but I think Mr.
Horn is more qualified, if that is okay with you.
Mrs. STEEL. Sure, thank you.
Mr. HORN. Thank you.
It is really quite clear, unfortunately, that the CCP knows
exactly what our playbook is. They know exactly how to exploit
it, and we make it incredibly easy for them. So they have
realized that they can essentially create a shell company or
entity that meets whatever loose criteria we currently have,
and completely exploit it, and crush any legitimate American
competition in the process.
Mrs. STEEL. Thank you for all those answers, and thank you
for coming today.
I yield back, Mr. Chairman.
Chairman SMITH of Missouri. Thank you. Kind of what is
going on in Michigan.
Mr. Schneider?
Mr. SCHNEIDER. Thank you, Mr. Chairman, and I want to thank
the witnesses for being here today, for your patience, and
sharing your perspectives.
Mr. Horn, I appreciate your optimism, and I share your view
that we would be well served by a bipartisan approach to
addressing our challenges and pursuing our opportunities. I
think it is also critical. I spent my whole career in business
before coming to Congress doing strategy, planning for the long
term. I know if we are going to be successful in leading the
world in the next generation and the generation after that, we
need to have a long view, but also with a sense of urgency.
The Inflation Reduction Act made historical and critical
investments in our country's future, both from a climate
perspective and in our economy. Heeding scientists' warning,
the Biden Administration in the 117th Congress set our country
significantly down a path towards net zero emissions by 2050
through the passage of the IRA and the Infrastructure
Investment and Jobs Act.
A study by the National Renewable Energy Laboratory
evaluated the impacts of these two laws and what they will have
on our utility sector, and demonstrated that clean electricity,
thanks to the efforts of the prior Congress, would represent as
much as 90 percent of total generation in the next decade.
I ask unanimous consent that this NREL report be submitted
for the record.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
I have also heard from renewable energy companies in my
district who, with assistance from the Illinois state
legislature, have spent years making progress deploying
renewable energy in our state, including more than $3 billion
in solar development last year alone. We will see this progress
rapidly increase as a result of the IRA.
These historic investments, and the positive advancements
and quality jobs that follow are directly at risk from the
Republican political attempts to derail the IRA. According to
the American Clean Power, in a mere 8 months since we passed
the IRA, more than $150 billion in utility scale renewable
energy projects have been announced. That investment is only
going to continue growing.
I could speak for hours here about the critical climate
investments that the IRA will make, but what I want to talk
about today is the tens of thousands of jobs that these
investments are creating. The $150 billion of investment that I
mentioned, that represents at least 18,800 jobs.
Mr. Beachy, to that end, you mentioned in your testimony a
report from the University of Massachusetts Amherst that shows
the climate investments in the IRA will create more than nine
million total jobs over the next decade.
Yes, the IRA is the most historic Federal investment to
combat climate crisis, but it is also a huge investment in
domestic manufacturing and jobs in every state and every
community. Can you expand how the IRA would improve workers'
access to these high-quality jobs and clean energy sectors, and
why it is so important?
And beyond that, beyond the context of climate, how the IRA
is fundamentally a jobs bill.
Mr. BEACHY. I am happy to. Maybe I will start by breaking
down that nine million a little bit.
I mentioned already that five million of those nine million
jobs will be going towards clean energy workers, which, for the
first time, will be paid prevailing wages and offered
apprenticeships that offer a pathway to middle-class careers.
That is because, to take it full--to take advantage of the full
extent of the tax credit, developers need to pay those wages
and offer those apprenticeships.
Clean manufacturing, 900,000 jobs; electric vehicles and
clean transportation, 400,000 jobs; energy efficient homes and
offices, another 900,000 jobs; environmental justice and
climate resilience investments, 150,000 jobs; natural
infrastructure, 600,000 jobs.
You asked about pathways to these jobs. It is critical that
apprenticeships are explicitly named as one of the criteria
that developers need to meet in order to get the full extent of
the tax credit, because apprenticeships provide an on-ramp to
high-quality jobs, a pathway to the middle class, particularly
for workers without a four-year degree. And really, for the
first time, again, we are marrying investments with that
pathway.
Mr. SCHNEIDER. Great, thank you. Let me take a little bit
further and ask about the consequences if IRA would be
repealed, whether it is a debt ceiling proposal or otherwise
removing the investments that the IRA is trying to promote,
what would be the consequences of that?
Mr. BEACHY. I mentioned earlier that I do not expect voters
to reject good jobs or clean air or investment in clean
technologies. I will just add to that.
What it would essentially mean is ceding investments in the
clean technologies of the future to those who are currently
controlling those technologies. Much has been said today about
the--that--the fact that there is such extreme concentration of
manufacturing of clean technology in China. If that is the
problem we are trying to solve for, we should try to invest in
clean domestic manufacturing and clean technologies here at
home. That is what IRA does.
Mr. SCHNEIDER. Great, thank you.
I am out of time. I yield back.
Chairman SMITH of Missouri. Ms. Van Duyne.
Ms. VAN DUYNE. Thank you, Mr. Chairman.
Last year Democrats provided hundreds of billions of
dollars in green tax credits to benefit large corporations and
Chinese-headquartered entities, even as American families,
farmers, workers, and small businesses struggled under the
weight and cost of increased cost of living under the Biden
living crisis and broken supply chains.
Democrats have prioritized their extremist climate agenda.
And yet last year, when we passed a so-called--I love what you
called it--not the Inflation Reduction Act, but the Inflation
Recession Act, not only did they claim that the bill would be
paid for, but they actually claimed it would reduce the deficit
by over $300 million.
We knew in 2019 that 83 percent of the credits were claimed
by individuals making 6 figures and above. And last year
Democrats decided that we needed to increase this credit even
further. The electric vehicle tax credits will be a whopping
$393 billion taxpayer subsidy. That is 28 times higher than the
original estimate. And on top of that, we have seen analysis
that the battery production of electric vehicle battery
production credits projects a cost to taxpayers of over $196
billion. That is a 542 percent increase from the law's original
sticker price.
This is sold as subsidizing an emergency? I am sorry, an
emerging industry? But this bill was propping up an entire
industry.
Mr. Ginn, you have analyzed this bill and the credits on
this bill. Can you talk about how these numbers got so
inflated, and how this bill is even worse than we thought?
Mr. GINN. Yes, Congresswoman, thank you. You know, a lot of
it has to do with the changes that have happened just since
last year.
Whenever you incentivize something through these tax
credits, you get more of them. And so there have been a lot
more in projections of what the costs are going to be, or the
building--the manufacturing of many of these vehicles,
therefore the batteries. And so that has contributed to many
more of the kilowatt hours--you know, the $45-per-kilowatt-hour
of these batteries of what is being produced. Multiply that by
the number of new vehicles that is expected.
That is where you get the total amount of the $196.5
billion compared to the $30 billion that was initially assumed,
along with some of--like we mentioned earlier--some of the
Treasury's rules and guidance that has been put out now that
has changed the--fundamentally changed the calculations that
were done last year. And that is one reason why we need to have
these re-estimated, so we can know what the true cost is for
taxpayers.
Ms. VAN DUYNE. Thank you for that.
Mr. Horn, do these EV credits actually increase or decrease
our dependence on China?
Mr. HORN. Without the proper amount of enforcement and
oversight, they are currently actually making the problem
worse, and emboldening the Chinese Communist Party.
So what really needs to be done is closing all loopholes,
avoiding any sort of workarounds or carve-outs, and truly
prioritizing supporting the legitimate American opportunities
that actually exist today and are not far from coming online
into full-term production.
Ms. VAN DUYNE. Thank you.
The IRA tax credit or energy credit I have seen the most
excitement for is the section 45 hydrogen production credit.
The level of the credit as--per the IRA is based on a level of
carbon intensity determined by life cycle analysis, and there
is no reference to feedstock, fuel source in the text. So
focusing on the end result, rather than the source, is the more
tech-neutral approach. However, many environmental groups are
hitting Treasury hard on this point, and trying to get any
hydrogen produced with fossil fuel disqualified now from the
credit.
So given that most hydrogen is produced from natural gas,
this would essentially nip the technology in the bud before it
even starts. So once again, we are seeing Treasury put its
finger on the scale and picking winners and losers. Mr. Stein,
can you elaborate on how Treasury guidance could shut down
hydrogen production before it even really begins?
Mr. STEIN. Well, the key is what you mentioned about life
cycle greenhouse gas analysis. That is really a bit of a made-
up science. You can decide that methane has a certain value for
greenhouse gas life cycle analysis. You can decide land use has
a certain value, and it is very easy to put your finger on the
scale if you have got--if you have the ear of the Treasury
officials that decide what counts as certain levels of
emissions.
And it is very simple to say, well, the--for instance, the
natural gas production, you say that there is a certain amount
of methane that is leaking throughout the system. We don't
really know how much, but you say X amount, and that makes it
not green enough to qualify for the credit.
Ms. VAN DUYNE. So I am going to ask you, Mr. Turner. If you
were in my position, what would your next step be?
Mr. TURNER. Congresswoman, I would look to unleash the full
potential of America's energy, and that includes all fossil
fuels. That includes all mining. If we are going to have this
green transition, and it is going to be forced by government,
then we might as well take advantage of it with the jobs and
the tax revenue here.
My organization has put out numerous studies that show how
California, Alaska have all of the metals and minerals
necessary for this green transition, yet the same people
pushing it are prohibiting us from opening up these mines. So I
would just try to get some sanity in our energy policy and say,
which one is it? Are we going to go green? Then let's do it
with American ingenuity, American resources, and American jobs
and tax revenue. Or are we going to support communist China?
Because right now we seem to be doing both.
Ms. VAN DUYNE. I appreciate that answer, and I yield back.
Thank you.
Chairman SMITH of Missouri. Mr. Feenstra is recognized.
Mr. FEENSTRA. Thank you, Mr. Chair, and thank you,
witnesses, for all your testimony. I greatly appreciate it.
[Chart]
Mr. FEENSTRA. As you can see behind me, as my colleague,
Ms. Van Duyne noted, the cost of the green tax credits far
outreached the originally-projected amounts. Goldman Sachs
noted that the advanced manufacturing credit will be about 193
million. That is five times of what it was initially, what was
noted by Joint Commission on Taxation.
Electric vehicles is going to be about 393 billion,
compared to 14 billion--again, noted by the Joint Commission on
Taxation.
I mean, this is dramatic. This is huge, especially when the
CBO said, hey, the deficit would be cut by 238 billion. Well,
if that is the case, then look at what is happening here. So
all of a sudden, we no longer have a deficit, we have a
dramatic increase.
So, Mr. Ginn, the CBO budget and the economic outlook
published in February of this year did not account for these
revised costs of these new green energy credits. So are we
likely to see deficit, debt, interest payments revised upward
in the next CBO update as of this result?
Mr. GINN. Congressman, if they take an accurate analysis of
the updated data, the new Treasury guidance that is provided
for IRA and the EV credits and everything else, it would
certainly go up. Deficits would go up, debt would go up,
interest payments would go up. And that is on top of already
the expectation of an average of $2 trillion per year of
deficits over the next decade.
Mr. FEENSTRA. And how does that affect our economy?
Mr. GINN. Yes, it is a huge cost on the economy. It burdens
us, it slows down our growth. It is higher interest rates than
we would otherwise have, higher mortgage rates, higher car loan
rates, just kind of through the process. And then, of course,
if the Federal Reserve prints it, which they probably will do
some of that, you will see higher inflation than we are already
having.
I mean, some are saying we are having disinflation now, it
has come off the peak from last year. But we still have five
percent, the highest in multi-decades. And so I don't see that
is--this is the bottom. There is still more to it, especially
with these kind of costs down the road.
Mr. FEENSTRA. Thank you, Mr. Ginn, and I agree with you 100
percent. We are not at the bottom. We are literally not at the
bottom, and we have a debt crisis right before us, and we have
got to raise the debt ceiling.
Why do we got to raise the debt ceiling? Because of this
wild spending spree that has happened in the last two years by
the Inflation Reduction Act and many other things. And we, the
people, our taxpayers, we got to pay for this. Our families
that have to go to the grocery store all the sudden are seeing
an increase in eggs and you name it. They are seeing an
increase in gas, right, because of this outlandish spending
spree that is now affecting all of us.
I want to change the topic and talk about the supply chain.
You know, the Inflation Reduction Act, obviously, as we see on
this bill--on this board--promoted tax credits for electric
cars. All right. Now, think about this. All right. Tax credits
for electric cars. The EPA also just mandated that 54 percent
of all new vehicles by 2030 must be electric. All right. All
right. So there is this thumb on the scale, the thumb on the
scale that says, all right, we are going to have electric
vehicles, all right?
Side note, that really irritates me, because I am a
biofuels guy, and they talk nothing about ethanol and
biodiesel, which just infuriates me.
But anyway, the Department of the Interior, all right, the
Department of the Interior, what do they do? They ban mining in
critical materials in public lands. Mr. Turner, you noted that,
right? This is an oxymoron. All right, we want to do electric
vehicles, but we are going to ban critical materials.
And then the Department of Energy on the other side--all
right, this is how dysfunctional this Administration is--the
Department of Energy noted that 4 out of every 5 cars by 2050
will still use liquid fuels. Well, how does this happen?
This Administration is clueless.
I want to ask Mr. Horn, and then I will ask Mr. Turner how
does this affect our economy when we can't buy critical
materials in the U.S., and we have got to go across to China to
make this all happen?
Mr. HORN. When we are forced to buy Chinese-produced
commodities, materials, resources in general, it is always
hurting American consumers and American manufacturers. And the
biggest shame, just to reiterate, is that better alternatives
exist inside the United States if we can simply get out of our
own way.
Mr. FEENSTRA. Thank you.
Mr. Turner, you got 10 seconds.
Mr. TURNER. Congressman, if I could leave the committee
with one lasting point, it is this: We are not using fewer
fossil fuels, we are just using them differently. So going
green, EVs, wind, solar, whatever you want to call it, we are
using as many and potentially more fossil fuels, we are just
using them differently, and we are making it difficult to bring
them from American markets.
Mr. FEENSTRA. I agree 100 percent. Thank you for both of
you noting that.
And we are destroying our families because they cannot
afford to buy groceries, they cannot afford to buy gasoline,
all right, because of this crazy idea of they all have to have
a $70,000 electric vehicle.
Thank you, and I yield back.
Chairman SMITH of Missouri. Mr. Panetta is recognized.
Mr. PANETTA. Thank you, Mr. Chairman.
Gentlemen, thank you for being here as long as you have
been. I appreciate all the information that you have provided.
For the past few decades, I think it is clear that we have
become dependent on China, unfortunately. And then you had a
pandemic that definitely exposed our weak supply chains. And of
course, we have the climate crisis. And so I do believe that we
were left with no choice but to make such significant
investments to show that we were serious about the direction as
to where we want to go when it comes to our energy and
decarbonization.
But obviously, in order to do this, in order to make these
advancements of what I will call an industrial policy, our
permitting needs to be streamlined. Now, in order to meet many
of the goals, the 2030 goals, we need to double our
transmission line expansion. But to do that, it will take
building massive amounts of new infrastructure on massive
amounts of land that is often undeveloped.
Now, currently, any approval of high voltage transmission
lines across multiple states is onerous, it is litigious, and
it is long, taking up to 10 years. Heck, it takes seven years
to get a permit for an onshore wind farm and five years to get
a permit for a solar farm.
Now, what we have seen is that the permitting process has
become the favored vehicle to block projects, and NEPA
challenges make up the largest proportion of Federal climate
change litigation in the U.S., taking years longer for
implementation, and making it much more expensive.
It is understandable, as you heard my colleague Blake Moore
talk about, why there is bipartisan consensus that it takes too
long to build things in the U.S., and the belief that the
permitting process is broken. That is why permit reform is a
hot topic in the 118th Congress right now, because without it
we risk losing the investments that we want to make, especially
with the IRA.
Now, Republicans and Democrats have some ideas on reforms
to permitting, such as standard timelines for environmental
reviews; regional maps of areas for development, rather than
the Endangered Species Act, on a case-by-case basis; empowering
the Permitting Council to coordinate agencies; and giving the
Federal Energy Regulatory Commission power to approve
transmission lines. Obviously, these are big things that we
have to do, though, in order to do big things, especially when
it comes to our energy policy.
Now, Mr. Beachy, don't you agree that we need to streamline
our permitting?
And if we do need to do that, how can we do it without
undermining our environmental protections?
Mr. BEACHY. Thank you for the question. I will start by
saying it is--that I agree with the problem. It is certainly a
problem, and one we must tackle.
Before this Administration, we were facing several barriers
to achieving our climate goals, while also rebuilding our
manufacturing base, while also investing in hard-hit
communities. And I have mentioned the lack of the lack of
investments was certainly one of those problems, and the IRA
stepped in to help fill that gap. It is not the only barrier
that we face, and certainly I think it is widely recognized
that permitting is a barrier.
Our union and environmental partners are deep in
discussions about the details of this right now. As you
suggested, it is a hot topic. And the details matter immensely.
What we do believe is that any infrastructure review must
have ironclad commitments to uphold public participation and
strong environmental review of those projects, no matter the
project.
We also believe that we must swiftly deploy all of this
clean energy in our economy so as to meet our climate goals,
but also so as to swiftly deliver real benefits to hard-hit
workers and communities. Marrying those two will not be any
easy task, which is why we are mired in the details right now.
So I will just say it is a critical topic of conversation.
I am very glad Congress is taking it on, and it is one that we
are also actively pursuing.
Mr. PANETTA. Good. And I look forward to continuing to have
these types of conversations on this very tough topic. But it
is something that does need to be done in order for us to take
advantage of the authorization that we passed last Congress.
And now it is time to actually get serious about the
implementation. And in order to do that, I look forward to
having these conversations.
Thank you, thanks to all the witnesses.
I yield back.
Chairman SMITH of Missouri. Ms. Malliotakis is recognized.
Ms. MALLIOTAKIS. Thank you all for being here, and I want
to thank the chairman for calling this hearing.
You know, here we are, eight months later after this bill
was jammed through--or a few months later since this bill was
jammed through, and what we are finding now is this inflation
act, as I would call it, really did create inflation. It was--
certainly put us in the situation we are right now, where we
have a debt ceiling crisis. It has crushed American energy, as
is evident by your testimonies today. And it has become a slush
fund to benefit large corporations, not just the wealthiest
corporations here, but also those in communist China.
It is really interesting to hear my colleagues, who accuse
Republicans of corporate welfare and giving out benefits to the
rich, because they have spent hundreds of billions of dollars
and provided benefits to companies where 90 percent of those
companies benefiting have sales of over $1 billion. That is who
they prioritized in this bill. Meanwhile, our constituents,
working-class Americans, are suffering greatly. They are paying
the price, both through taxes, through inflation, through high
energy costs and what not.
I want to talk about not just what this bill has done, and
also what the President's anti-policies (sic) have done, but in
my home state of New York, okay--and I fear that the country is
going the way that New York has gone, and New York has closed a
nuclear power plant, Indian Point, which provided 26 percent of
the electricity for New York City. They are now denying permits
for natural gas plants. They are banning gas vehicles, doing
what California is doing. They want to mandate those EVs that
people can't afford, because they are over $60,000 in costs.
And they also now want to move towards banning stoves.
And we are talking about communities across America, where
60 percent of Americans are living paycheck to paycheck; 42
percent of Americans say they have less than $1,000 in savings.
And individually, they hold credit card debt record highs.
I am left wondering how these green credits benefit
Americans, the American people that we represent, people in
Staten Island in Brooklyn who can't afford a 60,000, 70,000,
$80,000 electric vehicle, while these big corporations doing
business are receiving a windfall of their hard-earned money,
taxpayer's hard-earned money.
So I would like to start with you, Mr. Turner, because I
think you are a New York City native, if I am not mistaken, and
I would love to hear your thoughts on are these policies, both
the Federal and the state that I mentioned, are these policies
the reasons that my constituents are paying more for
electricity and heat?
Mr. TURNER. Congresswoman, thank you. Absolutely. The
previous governor--and carried out by the current governor of
New York--implemented a series of policies that dramatically
increased the cost of electricity by eliminating coal, by
eliminating nuclear. All what--the plans--again, the future
plans--one day we will build solar, one day we will et cetera.
But in the real time, the New Yorkers are suffering.
Case in point: in 2019 of--the height of the summer heat,
Mayor de Blasio was stuck with a grid that was faltering. And
what did they do? They turned off some specific areas of the
city to protect the overall integrity. What areas did they turn
off? Brownsville, East New York, close to where I grew up in
Queens, predominantly poor, predominantly African American
neighborhoods. The Upper East Side was fine, Soho was fine,
Tribeca was fine.
So their policies, the very people they claim to care
about, are the ones they hurt the most.
Ms. MALLIOTAKIS. Yes, and they are also seeing high food
prices as a result, high gas prices as a result. This is all a
result of the Democrat policies that we are seeing on the state
and Federal level.
In the Department of Defense space, the specialty metals
clause has required defense contractors and the suppliers to
purchase cobalt-based alloys and steel products that have been
exclusively produced here in the United States. Obviously, that
is for security reasons. Dr. Horn, this is your, I think, area
of expertise. Can you comment on that?
And should we expand that special metals clause to preclude
companies manufacturing with critical minerals outside of the
U.S. or its partners from obtaining tax incentives or credits
like this, so these jobs truly stay in the United States?
Mr. HORN. Congresswoman, thank you for raising this point.
I think it is the most ridiculous idea that we would have
critical defense components that we would rely on our biggest
adversary for, and give them the leverage that, were we to get
into a strategic conflict, which is certainly possible when you
have spy balloons and other things going on, where they would
have the ability to shut it off completely. If we don't have
the ability to source ourselves with these critical national
security and defense components, we are unbelievably
vulnerable.
Ms. MALLIOTAKIS. I appreciate this. And I will just
conclude, because I am out of time, by saying that this
Administration talks about Made in America, and then they do
the exact opposite thing. And sadly, what we are talking about
today is just another example of that. And I am glad that you
all are calling them out on it. Thank you.
Chairman SMITH of Missouri. Mr. Carey is recognized.
Mr. CAREY. Thank you, Mr. Chairman, and thank you to the
witnesses. Interesting testimony. I read through them all.
I want to point out a few facts, because those are tricky
little things, aren't they?
From 2005 to 2018, the United States reduced its emissions
by 12 percent, reduced our emissions by 12 percent. The rest of
the world increased their emissions by--guess what--25 percent.
Now, part of the reason this happened--my dear colleague
from Virginia pointed out what had happened to the coal
industry. He is partially right. But what we saw was a rise in
the use of natural gas to generate energy, so much so--because
we can burn it very cleanly here in the United States--that my
governor in the great state of Ohio, along with my colleagues
in the house and senate, actually redefined natural gas as a
green energy. So, it makes one wonder why we talk about all of
these issues.
And I pointed out at the last hearing--and I will say for
all of you guys--China granted permits for over 106 gigawatts
of capacity at 82 different sites across China. That is
equivalent to starting two new coal plants a week. To put it
another way, China has six times--six times--as many new plants
that are being built than the rest of the world combined. It
makes one wonder why this Administration has attacked the
natural gas industry so much.
I want to go on to a couple of things with--on the first
day the President canceled the Keystone pipeline, which we all
know drastically increased the price of gas. We know that. We
also know that we have more energy reserves than any other
country in the world, and we should be focused on exploring--
Mr. Turner, you brought this up--exploring our natural
resources, along with our mineable materials. But instead, the
Administration has been focused on promoting these expensive
renewable energies, which basically is giving China free reign.
So Republicans on our side have worked very hard with H.R. 1.
I do want to highlight just a couple of things, because I
thought it was important. When we were in West Virginia, we
actually--I didn't get a chance to bring this up. This
Administration has been in an all-out war or assault on
regulations. So far, and according to The Wall Street Journal,
this Administration has issued over 517 regulatory actions
which are costing all of us $318 billion. At this point in the
Obama Administration, it would be over 1 million--or 100
billion. Another 311 Biden regs are in the pipeline that will
cost another 200 billion; 23 of the 311 regs will cost a
billion a piece.
This doesn't create regulatory certainty. It creates
regulatory terror, and it kills jobs. And we have gone out
across this country under the chairman. We have been in West
Virginia. We have been in Oklahoma. We are going to be in
Georgia. And we are talking to energy producers, people that
work in the oil and gas fields, people that work in the coal
mining and mining industry. For every one mining job, there are
four spin-off jobs, domestic jobs. For every one oil and gas
job, there is another job that is related. This is what grows
the American economy.
We don't have a revenue problem in this country. We have a
spending problem. And all the charts that have shown that--we
have got to get back to basics, what works, what makes America,
and let's get this country moving forward.
I yield back the balance of my time, Mr. Chairman.
Chairman SMITH of Missouri. Thank you, Mr. Carey.
I would like to thank all of our witnesses for your
marathon hearing, and for being here.
Please be advised that members have two weeks to submit
written questions to be answered later in writing. Those
questions and your answers will be made part of the formal
hearing record.
And with that, the committee stands adjourned.
[Whereupon, at 2:06 p.m., the committee was adjourned.]
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