[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
MANDATES, MEDDLING, AND
MISMANAGEMENT: THE IRA'S THREAT TO
ENERGY AND MEDICINE
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON ECONOMIC GROWTH, ENERGY
POLICY, AND REGULATORY AFFAIRS
AND THE
SUBCOMMITTEE ON HEALTH CARE AND FINANCIAL
SERVICES
OF THE
COMMITTEE ON OVERSIGHT AND
GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
MAY 20, 2025
__________
Serial No. 119-26
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov, oversight.house.gov or docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
60-448 PDF WASHINGTON : 2025
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Gerald E. Connolly, Virginia,
Mike Turner, Ohio Ranking Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Michael Cloud, Texas Raja Krishnamoorthi, Illinois
Gary Palmer, Alabama Ro Khanna, California
Clay Higgins, Louisiana Kweisi Mfume, Maryland
Pete Sessions, Texas Shontel Brown, Ohio
Andy Biggs, Arizona Melanie Stansbury, New Mexico
Nancy Mace, South Carolina Robert Garcia, California
Pat Fallon, Texas Maxwell Frost, Florida
Byron Donalds, Florida Summer Lee, Pennsylvania
Scott Perry, Pennsylvania Greg Casar, Texas
William Timmons, South Carolina Jasmine Crockett, Texas
Tim Burchett, Tennessee Emily Randall, Washington
Marjorie Taylor Greene, Georgia Suhas Subramanyam, Virginia
Lauren Boebert, Colorado Yassamin Ansari, Arizona
Anna Paulina Luna, Florida Wesley Bell, Missouri
Nick Langworthy, New York Lateefah Simon, California
Eric Burlison, Missouri Dave Min, California
Eli Crane, Arizona Ayanna Pressley, Massachusetts
Brian Jack, Georgia Rashida Tlaib, Michigan
John McGuire, Virginia
Brandon Gill, Texas
------
Mark Marin, Staff Director
James Rust, Deputy Staff Director
Mitch Benzine, General Counsel
Kim Waskowsky, Senior Professional Staff Member
Reagan Dye, Senior Professional Staff Member
Daniel Flores, Senior Counsel
Kyle Martin, Counsel
Peter Spectre, Professional Staff Member
Charles Donahue, Professional Staff Member
Mallory Cogar, Deputy Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Jamie Smith, Minority Staff Director
Contact Number: 202-225-5051
------
SUBCOMMITTEES
----------
Subcommittee on Economic Growth, Energy Policy, And Regulatory Affairs
Eric Burlison, Missouri, Chairman
Gary Palmer, Alabama Maxwell Frost, Florida, Ranking
Clay Higgins, Louisiana Minority Member
Byron Donalds, Florida Yassamin Ansari, Arizona
Scott Perry, Pennsylvania Dave Min, California
Lauren Boebert, Colorado Ro Khanna, California
------
Subcommittee on Health Care and Financial Services
Glenn Grothman, Wisconsin, Chairman
Paul Gosar, Arizona Raja Krishnamoorthi, Illinois,
Pete Sessions, Texas Ranking Member
Anna Paulina Luna, Florida Emily Randall, Washington
John McGuire, Virginia Wesley Bell, Missouri
Brandon Gill, Texas Lateefah Simon, California
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Eric Burlison, U.S. Representative, Chairman................ 1
Hon. Maxwell Frost, U.S. Representative, Ranking Member.......... 3
Hon. Glenn Grothman, U.S. Representative, Chairman............... 4
Hon. Raja Krishnamoorthi, U.S. Representative, Ranking Member.... 6
WITNESSES
Mr. Ben Lieberman, Senior Fellow, Competitive Enterprise
Institute
Oral Statement................................................... 8
Dr. Erin Trish, Ph.D., Co-Director, USC Schaeffer Center,
Associate Professor, Department of Pharmaceutical and Health
Economics, USC Mann School of Pharmacy
Oral Statement................................................... 10
Dr. William McBride, Ph.D., Chief Economist and Stephen J. Entin
Fellow in EconomicsTax Foundation
Oral Statement................................................... 11
Dr. Emily Gee (Minority Witness), Senior Vice President for
Inclusive Growth, Center for American Progress
Oral Statement................................................... 13
Written opening statements and bios are available on the U.S.
House of Representatives Document Repository at:
docs.house.gov.
INDEX OF DOCUMENTS
* Article, EnergyTalkingPoints, Alex Epstein, ``Why Congress's
New Budget Should Eliminate All IRA Tax Credits''; submitted by
Rep. Burlison.
* Letter, May 1, 2025, to Chairman Smith, re: IRA Repeal;
submitted by Rep. Burlison.
* Report, CATA, ``Budgetary Cost of the Inflation Reduction
Act's Energy Subsidies''; submitted by Rep. Burlison.
* Statement from Independent Women's Forum, May 20, 2025;
submitted by Rep. Burlison.
* Article, Tax Foundation, ``Big Beautiful Bill House GOP Tax
Plan Preliminary Details and Analysis''; submitted by Rep.
Frost.
* Article, CNBC, ``How the Inflation Reduction Act Sparked a
Manufacturing and Clean Energy Boom''; submitted by Rep. Frost.
* Press Release, ``Joint Statement on Clean Energy Tax Credit
Reform''; submitted by Rep. Frost.
* Article, Politico, ``Senate Republicans House GOP's Energy
Tax Credit Cuts Won't Work''; submitted by Rep. Min.
* Report, Joint Economic Committee Minority, ``Recent Clean
Energy Programs Lower Costs for Families and Are Vital'';
submitted by Rep. Min.
The documents listed are available at: docs.house.gov.
ADDITIONAL DOCUMENTS
* Questions for the Record: to Mr. Lieberman; submitted by Rep.
Gosar.
* Questions for the Record: to Dr. McBride; submitted by Rep.
Gosar.
* Questions for the Record: to Dr. Trish; submitted by Rep.
Grothman.
* Questions for the Record: to Dr. Trish; submitted by Rep.
Gosar.
These documents were submitted after the hearing, and may be
available upon request.
MANDATES, MEDDLING, AND
MISMANAGEMENT: THE IRA'S THREAT TO
ENERGY AND MEDICINE
----------
TUESDAY, MAY 20, 2025
U.S. House of Representatives
Committee on Oversight and Government Reform
Subcommittee on Economic Growth, Energy Policy, And Regulatory Affairs
Subcommittee on Health Care and Financial Services
Washington, D.C.
The Subcommittees met, pursuant to notice, at 10:51 a.m.,
in room HVC-210, Capitol Visitor Center, Hon. Eric Burlison
[Chairman of the Subcommittee on Economic Growth, Energy
Policy, and Regulatory Affairs] presiding.
Present: Representatives Burlison, Grothman, Palmer, Gosar,
Higgins, Perry, McGuire, Boebert, Gill, Frost, Krishnamoorthi,
Ansari, Min, Bell, and Simon.
Mr. Burlison. The joint hearing of the Subcommittee on
Economic Growth, Energy Policy, and Regulatory Affairs and the
Subcommittee on Health Care and Financial Services will come to
order.
Welcome, everyone, to this hearing. And thank you for your
patience. Turns out, when you are in the room with the
President, you are not allowed to leave, and security will not
let you.
So, I want to recognize myself for the purpose of an
opening statement, but first I am going to say, without
objection, the Chair may declare a recess at any time.
OPENING STATEMENT OF CHAIRMAN ERIC BURLISON, REPRESENTATIVE
FROM MISSOURI
Mr. Burlison. Today we are here to provide critical
oversight of the policies and subsidies instituted through the
Inflation Reduction Act, or the IRA. Signed into the law under
the Biden Administration in 2022, this misleadingly named
legislation passed with zero Republican votes. Three years
later, the projected costs continued to balloon, with rounding
errors in the billions, all while creating runaway subsidies
and unnecessary distortions within energy and the health care
markets.
In January of this year, the Director of the Congressional
Budget Office (CBO) estimated that the IRA's energy subsidies
would increase U.S. budget deficits by $825 billion over the
next ten years. That is more than three times the initial 10-
year estimate, which was roughly about 270 billion that was
determined by CBO when the bill was passed.
How did the CBO and the Joint Committee on Taxation (JCT)
get these numbers so wrong? Other estimates show an even
grimmer picture of the IRA's long-term economic impacts on the
Federal budget. Recent analysis by the Cato Institute shows
that energy subsidies included in the IRA may cost between 936
billion and $1.9 trillion over the next ten years and between
two trillion and 4.7 trillion by 2050.
These are chilling estimates that extend far beyond what
was previously projected. I would like to enter this report
into the record entitled ``The Budgetary Cost of the Inflation
Reduction Act's Energy Subsidies'' from the Cato Institute into
the hearing record so that others may review these findings.
Without objection, so ordered.
These subsidies did not just happen to create distortions
in the energy markets. They distorted markets by design. The
IRA funnels money to so-called clean energy organizations that
would not be able to compete on their own without these
subsidies.
The Biden Administration was blatantly picking winners and
losers in the economy. The Federal government slammed a fist on
the economic scale to stifle free market competition that
allows for the most reliable cost-effective sources to compete
on an open playing field, all in the name of unproven,
hyperbolic, and extreme climate alarmism.
The kicker: these IRA subsidies coming from the party that
purports to be against the oligarchy and fighting the
billionaires created tax loopholes that carved out $11,000 on
average for the top one percent through tax credits while
failing to demonstrate tax savings of more than 100 for the
bottom line quintile of the American taxpayers.
The IRA paid out the rich all under the guise of climate
change. There are also implications for the future of our tax
code and prescription drug costs. The IRA has already led to a
more convoluted web of tax subsidies, creating additional
burdens for compliance. For health care under the IRA, the
Biden Administration's Pill Penalty will ultimately increase
drug costs and Federal expenditures on Medicare.
We have an opportunity to take a hard look at these
provisions to carefully evaluate whether these tax credits and
programs are achieving their intended results and whether
taxpayer dollars would be better spent elsewhere. Doing so has
the potential to save taxpayers over $1 trillion, ease
inflation, stimulate economic growth by allowing for free
market competition, and make energy affordable again.
This Republican Majority is committed to protecting
taxpayer dollars, instituting necessary health care reforms,
and stopping wasteful green new deal energy policies that are
out of touch with the everyday needs of Americans.
And with that, I yield to Ranking Member Frost for his
opening statement.
Mr. Frost. Thank you so much, Chairman Burlison. And thank
you so much to the witnesses for being here this morning.
OPENING STATEMENT OF RANKING MEMBER
MAXWELL FROST, REPRESENTATIVE FROM FLORIDA
Mr. Frost. The Inflation Reduction Act, or IRA, was an
historic investment in battling the climate crisis and creating
good-paying American jobs, and it was designed to achieve these
goals by investing in our communities and in our families.
The IRA provided a score of tax credits that lowered energy
costs for working families by allowing them to make their homes
more energy efficient and invest in clean energy. Shifting to
clean energy and reducing emissions means reduced air pollution
for all of us, for all of our communities, which protects us
from illnesses and early death.
IRA tax credits include $14,000 in direct consumer rebates
for families to buy heat pumps and other energy efficient home
appliances, providing families with savings of at least
350,000--or $350 per year. These tax credits also include a 30
percent tax credit for solar panels that will allow 7.5 million
more families to install solar panels on their roofs by saving
at least $300 per year.
In my district in Florida, affordable access to solar
panels, thanks to the IRA, has helped thousands of my
constituents lower their energy bills and reduce their reliance
on fossil fuels. This has actually helped many folks during
hurricane season.
The IRA has not just been good for families and
individuals' pocketbooks. It has also created economic growth
in communities across the Nation.
Since the passage of the IRA, we have seen a domestic
manufacturing renaissance and boom with 340 major clean energy
projects announced in 41 states and Puerto Rico, including many
of my Republican colleagues' districts. More than $522 billion
is planned for investments in these clean energy projects. In
fact, the top ten congressional districts with the highest
investments in clean energy technologies during the first ten
months of the IRA, eight of them were Republican districts.
This includes $1.9 billion in Representative Andy Biggs'
district in Arizona. As of last summer, the IRA had created
more than 300,000 good-paying, clean-energy jobs, many of which
do not require 4-year degrees. And projections indicate that
the IRA could create nearly 850,000 jobs annually across
industries.
But despite the enormous economic benefit of the IRA and
its various energy tax credits, many Republicans want to repeal
those key provisions. We should be doing more to make sure that
working families can take advantage of these opportunities to
lower costs and to reduce their exposure to harmful air
pollution, not eliminating these opportunities completely.
As a part of the House Republicans' Big Ugly Bill, their
budget betrayal of the middle class and working class, which
would put additional costs on Americans in order to provide tax
cuts to billionaires and mega corporations, Republicans on the
Ways and Means Committee added language that would increase
energy costs for American households as much as seven percent,
or $290 per year, by cutting tax incentives for advanced
manufacturing, clean vehicles, and clean energy production.
Gasoline prices could increase by 25 to 27 cents per gallon
due to these cuts and determination of fuel economy and
tailpipe emission standards.
This is all against the backdrop of President Trump's
promise to cut energy prices in half within 18 months of him
taking office. And as of today, he has 428 days left to make
good on his promise.
But it is not looking good. In fact, it seems that energy
costs are increasing for Americans across the board. I do not
know about all of you, but I know that my utility bill, my
constituents' utility bill has only gone up since January 20th
of this year. And this will be made worse by Republicans'
blanket rollbacks of the key Inflation Reduction Act
provisions.
Even many Republicans are not on board with the IRA
rollbacks that their colleagues are attempting to pass. I ask
unanimous consent to enter into the record this statement by 14
House Republicans, talking about cuts to the IRA.
Mr. Burlison. Without objection.
Mr. Frost. Fourteen House Republicans have argued, ``We
need to ensure certainty for current and future energy
investments to meet the Nation's growing power demand and
protect our constituents from higher costs.'' And they are
right when they say that. And not only that, but the Inflation
Reduction Act--and we have talked a lot about this on this
Committee over the last several hearings. The IRA has been key
in pushing our Nation to diversity our energy mix, which is a
worthwhile investment both for our national security, but also
to ensure that we are cutting costs for Americans across the
board. And every other major country in the Nation are making
the same moves to diversify their energy mix as well.
The real threat to energy costs for working families are
the Republican policies that prioritize tax cuts for
billionaires, huge corporations, and polluters over people, not
the Inflation Reduction Act, which invests in our communities,
our families, and our future to lower costs and improve our
health.
Thank you so much, and I yield back.
Mr. Burlison. Thank you, Ranking Member Frost.
I now recognize Chairman Grothman for the purpose of making
his opening statement.
Mr. Grothman. Thank you. It is a great hearing, great idea
for a hearing. Thank you for thinking of that up.
OPENING STATEMENT OF CHAIRMAN GLENN GROTHMAN, REPRESENTATIVE
FROM WISCONSIN
Mr. Grothman. Welcome to this joint hearing of the
Subcommittee on Economic Growth, Energy Policy, and Economic
Affairs, and the Subcommittee on Health Care and Financial
Services.
This is a great opportunity for us to address one of the
most catastrophic pieces of legislation from the Biden era, the
Inflation Reduction Act, or the IRA.
Despite its name, the Inflation Reduction Act did not curb
the brutal inflation caused by President Biden and the
congressional Democrats' spending sprees. It actually
exacerbated the problem. The CBO is even admitting that. In
reality, it was never about reducing inflation. It was about
pushing a green agenda to the benefit of the big businesses
that benefit the Democrat allies.
The IRA expanded government, which we should not be for,
hindered innovation, and increased costs for Americans.
According to my buddies at the Cato Institute, the bill may
cost the taxpayers almost $2 trillion over the next ten years.
This will increase the deficit by $300 billion by 2033.
Some people may ask, why does it cost so much? The IRA
contains billions of dollars for subsidies and so-called green
energy projects, for elites, it is corporate welfare for the
elite climate radicals. The beneficiaries of tax subsidies are
overwhelming Democrat donors.
And, you know, the press has got to point that out, do a
better job of pointing it out and following, where does this
money come from? People like Al Gore, who is invested in green
energy businesses, like those being propped up by IRA, and they
turn around and make money off of it.
The IRA's--what you got to do is you got to let the free
market control, right? And the free market will promote
automatically the cheaper energy and benefit money for all
Americans. The green energy tax credits do not benefit the
average American. They go to high income earners who are
already planning on and could already afford installing solar
panels or buying an electric vehicle. Right? We just want to
let the market--the market out. Plus, it only worsens our
overcomplicated tax system. Any tax credits--and there are
other ones I do not like around here. Any time you see tax
credits sticking their nose in things, you are complicating the
Internal Revenue Code and, really, probably up to something no
good.
With the additions made in the IRA, the tax code exceeded
four million words and cost Americans $300 billion annually in
compliance.
I am pleased that many of these wasteful subsidies are
being eliminated or phased out in the Republican bill. As our
witness, Mr. Lieberman said, these green subsidies deserve a
sledgehammer, not a scalpel.
Proponents of the IRA claim that it makes health care more
affordable to seniors. Ha. Balderdash. Making Medicare Part D
premiums higher for seniors is not a way to do that. The IRA
does just that. And we just heard from President Trump, by the
way. He is bringing down drug prices big time. But the IRA
makes--results in a more expensive Medicare plans and less plan
options for seniors.
The IRA also extended pandemic era Obamacare subsidies. Due
to this extension, American taxpayers are now subsidizing a
family of four making 128 grand a year. These subsidies should
not exist at all, let alone for families who are well off. As
the economist--although, actually, subsidies should be the same
for everybody, otherwise we wind up penalizing people for
making more money, which is not good either. As the economist
Milton Friedman said, ``nothing is so permanent as a temporary
government program.'' Remember that. These Obamacare subsidies
are currently set to expire at the end of the year, and
Congress should let that happen. Last November, our
constituents sent us a clear message that it is high time to
leave the Biden Administration's reckless spending permanently
in the past.
Today's hearing is an opportunity to dissect the harm done
by the Inflation Reduction Act and understand why many of its
provisions should be repealed.
And with that, I lead to my good buddy, Ranking Member--my
good friend--we just got done listening to President Trump,
right? So, my good friend--you might say ``my good friend'' all
the time. With that, I yield to Ranking Member and my good
friend, Krishnamoorthi, for his opening statement.
Mr. Krishnamoorthi. Thank you, Mr. Chair, and thank you to
all of you for attending.
OPENING STATEMENT OF RANKING MEMBER
RAJA KRISHNAMOORTHI, REPRESENTATIVE FROM ILLINOIS
Mr. Krishnamoorthi. Before I begin, I must address DOJ's
announcement of charges against our colleague, Congresswoman
McIver, related to a recent visit to an immigration detention
center in Newark. I have watched the video of her multiple
times. The charges of assault and impeding law enforcement are
outrageous on their face and appear to be designed to silence
criticism and deter congressional oversight of the Trump White
House. That will not happen. And we will stand with the
Congresswoman as she confronts these absurd charges from the
Trump DOJ.
Now, to the topic at hand. While I appreciate the
opportunity to discuss the Inflation Reduction Act, I must
express concern with the framing of today's hearing. Rather
than taking a balanced look at a law that has already helped
lower prescription drug prices and sparked major investments in
American clean energy, we are once again returning to overly
simplistic narratives that do not reflect the full picture.
The IRA finally allowed the government to negotiate high
drug prices with drug companies, something that should have
happened decades ago. The IRA enabled investment in American
clean energy, not foreign oil. And it is already helping
working families in blue and red states alike. That is why even
Republicans like much of the IRA. As evidence, Republicans, as
part of the reconciliation package, have kept very influential
pieces of the drug pricing provisions intact, such as the $35
monthly cap on insulin for seniors and a $2,000 annual cap on
costs at the pharmacy for Medicare beneficiaries. They also
kept the Medicare drug price negotiation authority for high-
cost drugs.
Additionally, in early March, 21 Republicans sent a letter
expressing support for IRA's energy tax credits. One could not
be criticized for thinking that outrage about the IRA appears
performative.
The title of this hearing, ``Mandates, Meddling, and
Mismanagement,'' is an alliterative distraction from what is
really being threatened today. Let me be clear: this has
nothing to do with energy or medicine and everything to do with
the special interests that have been getting a free ride for
too long.
For the past few months, House Republicans have been
debating within their caucus how deeply they can slash critical
services for working people in order to fund their tax plan for
the wealthiest among us. If the reconciliation bill is allowed
to go into effect, CBO estimates that almost nine million
people--nine million people, folks--will be thrown off
Medicaid, all in order to help fund tax cuts.
To illustrate a real-life consequence of this proposal,
cutting Medicaid, specifically, I would like to share Julia's
story. Julia happens to be one of our constituents, and I want
to tell you what her mother, Joan, said: ``Because of funding
for Medicaid, our 43-year-old daughter, Julia, has had the
opportunity to live a life of independence and happiness. Her
job training program funded through Medicaid gave her the
ability to learn the tasks she is expected to perform at
work.'' Joan then shares, ``My biggest fear about cuts in
Medicaid is the very real possibility that Julia will not have
anyone to care for her after her father and I are gone.''
Julia's experience is not unique. Pregnant women, children,
seniors, and individuals with disabilities will lose their
livelihoods if Medicaid is cut by the hundreds of billions.
Adding to the cruelty, one in four families will lose their
SNAP benefits. That is literally taking food out of the mouths
of babies. And I know a lot about SNAP because its predecessor
program, food stamps, was critical to my family when my parents
fell on hard times and we needed help to get back on our feet.
Food stamps sustained us until my parents were able to get good
quality jobs. My parents realized the American dream, and they
never took it for granted. And neither have I.
From destroying the safety net to polluting our air and
water, this Administration is jeopardizing every single
community in America. Red states and blue states, large cities
and small towns, manufacturers and farmers--no one will be left
unharmed.
These cuts are not about reducing waste, fraud, or abuse.
They are about making room for tax breaks for the wealthy at
the expense of hardworking Americans. The Inflation Reduction
Act has strengthened the health care system of our country
while also expanding opportunity and boosting our economy in
the process. That is what government should be about. I will
not stand idly by while House Republicans dismantle the IRA
safety net programs and other initiatives their donors dislike.
I yield back.
Mr. Burlison. Thank you.
Before we begin, I want to enter into the record a letter
dated May 1st, 2025, to Chairman Smith and to the Speaker and
to the President, signed by 38 members requesting for a full
repeal of the IRA.
And with that, I am pleased to welcome our expert panel of
witnesses. I am supposed to--without objection--to myself,
right? So, ruled.
Mr. Burlison. With that, I am pleased to welcome our expert
panel of witnesses. I would first like to welcome Mr. Ben
Lieberman, who is a Senior Fellow at the Competitive Enterprise
Institute.
Next, we have Dr. Erin Trish, who is the co-director of the
USC Schaeffer Center and an associate professor at the USC Mann
School of Pharmacies Department of Pharmaceutical and Health
Economics. That is a lot. That is a lot.
Next, we have Dr. William McBride, who is the Chief
Economist and Stephen J. Entin Fellow in Economics at the Tax
Foundation.
And last, we have Dr. Emily Gee. Is that correct?
Dr. Gee. That is correct.
Mr. Burlison. Okay. Who is the Senior Vice President for
Inclusive Growth at the Center for American Progress.
I thank each of you today. And with that, I look forward to
hearing your testimonies.
Pursuant to Committee Rule 9G, the witnesses will please
stand and raise their right hand. If you want to raise your
right hand.
Do you solemnly swear or affirm that the testimony that you
are about to give is the truth, the whole truth, and nothing
but the truth, so help you God?
Let the record show that the witnesses answered in the
affirmative.
We appreciate you being here today. You may be seated.
Let me remind the witnesses that we have read your written
statements, and they will appear in full in our hearing record.
Please limit your remarks to 5 minutes. As a reminder,
please press the button, and please speak directly into the
microphone so that we can hear what you have to say.
I now recognize Mr. Lieberman for his opening statement.
STATEMENT OF BEN LIEBERMAN
SENIOR FELLOW, COMPETITIVE ENTERPRISE INSTITUTE
Mr. Lieberman. Chair Burlison, Grothman, Ranking Members
Frost and Krishnamoorthi, and Members of this Committee, thank
you for the opportunity to testify today. My name is Ben
Lieberman, and I am a senior fellow at the Competitive
Enterprise Institute, a nonpartisan public policy organization
dedicated to advancing the principles of free markets and
limited government.
CEI has been critical of the Green New Deal since it was
first advanced in 2019. We were particularly concerned about
the burdens its many climate-related measures would place on
the American people in the form of costlier energy,
transportation, and housing. Unfortunately, our concerns are
being realized now that these Green New Deal-style provisions
have been incorporated into the badly misnamed Inflation
Reduction Act, which was enacted into law in 2022.
When the IRA was under consideration by Congress, the
Congressional Budget Office and Joint Committee on Taxation
released cost projections of its energy-related tax credits and
other subsidies. At the time, the price tag for the energy
provisions in the IRA was estimated at about $370 billion for
the 10-year period from 2022 to 2032. And this was a score that
informed the debate over the bill. Only two years after
passage, CBO and JCT more than doubled this estimate. Other
projections see costs potentially reaching into the trillion-
dollar range, including Goldman Sachs, University of
Pennsylvania, and the Cato Institute.
The Cato reports notes that the upper bound of these
estimates is complicated by the fact that several provisions do
not set dollar limits or deadlines. Most notably, the clean
electricity tax credits for wind and solar can be used by as
many project developers that want to claim them, and they do
not sunset until US greenhouse gas emissions have been reduced
to 25 percent of baseline 2022 levels, a target unlikely to be
met for many decades, and possibly never.
The high and rising costs of the Inflation Reduction Act
are all the more objectionable given the deceptive title of
this bill. The American people were not informed that this was
a massive climate bill, and they never agreed to any such
thing. The fact that the price tag is likely north of $1
trillion makes this perhaps the costliest example ever of
congressional bait and switch.
But the costs do not end there. Nearly every alternative
energy source and technology favored under the Inflation
Reduction Act has shortcomings that are not likely to go away
no matter how many subsidies are given to them. First and
foremost, in contrast to electricity generated from coal,
natural gas, nuclear, or hydroelectric, intermittent renewable
electricity sources, like wind and solar, are not reliably
available 24/7. Experts at organizations like the North
American Electric Reliability Corporation, NERC, are warning of
an increased risk of blackouts this summer. And the report
specifically mentions the risk from periods of low wind and
solar output.
Note also that we are adding to electric reliability risks
at the same time electricity demand is on the rise, due, in
part, to other provisions in the IRA, favoring electric
vehicles over gasoline powered ones as well as electric
appliance over natural gas versions. Thus, we face the double
whammy of provisions in the IRA reducing the reliability of the
grid while other provisions seek to make Americans less energy
diverse and more dependent on electricity. In other words, we
are trying to put more of our eggs in one basket while
switching to a flimsier basket.
Subsidies beget subsidies, and the buildout of wind energy,
for example, will likely necessitate major investments in
transmission lines; by some estimates, into the trillions of
dollars. We will likely see more lobbying for subsidies to do
so. The American people do not want yet another potential
trillion-dollar climate bill any more than they wanted the
first one.
The provision for consumers, such as the tax credits for
electric vehicles (EV) and certain appliances, may make
costlier alternatives somewhat less so, but they are not for
the things most of us want. And these provisions are highly
regressive as they simply do not make economic sense for most
lower-income households, even with the subsidies.
In conclusion, the tax credits and other subsidies for
alternative energy sources and technologies in the Inflation
Reduction Act will likely exceed $1 trillion in costs to the
American people. The distortions to energy markets will impose
further burdens. Consumers will bear the brunt of these
impacts, and disproportionately lower-income ones. For these
reasons, all of these provisions should be repealed. Thank you.
Mr. Burlison. Thank you.
I now recognize Dr. Trish for her opening statement.
STATEMENT OF ERIN TRISH, PH.D.
CO-DIRECTOR, USC SCHAEFFER CENTER,
ASSOCIATE PROFESSOR, DEPARTMENT OF PHARMACEUTICAL
AND HEALTH ECONOMICS, USC MANN SCHOOL OF PHARMACY
Dr. Trish. Thank you.
Chairman Burlison and Grothman, Ranking Members Frost and
Krishnamoorthi, and distinguished Members of the Subcommittees,
thank you for the opportunity to testify today. My name is Erin
Trish, and I co-direct the Leonard D. Schaeffer Center for
Health Policy and Economics at the University of Southern
California. The opinions I offer today are my own.
Biomedical innovation is an American success story. We have
seen incredible progress in our ability to treat diseases that
used to be death sentences. I have seen this firsthand. I
started my career as a biomedical engineer working in a
research lab where we modeled human disease and screened
potential therapies. The science was remarkable. But it was
there that I realized that policy decisions were going to be
the difference between whether patients ultimately got these
therapies or not.
Why? Because biomedical innovation is inherently costly and
risky, so we need to get the policy incentives right.
Innovators and investors need stable and transparent markets if
they are going to keep making those investments.
Unfortunately, the Inflation Reduction Act is a step in the
wrong direction. One of the marquee provisions in the IRA
tasked Centers for Medicare & Medicaid Services (CMS) with
negotiating prices for certain drugs covered in Medicare each
year. So far, one round of these negotiations has taken place.
A recent GAO report found that CMS is spending about $3 billion
on this effort, and for what? The prices they settled on for
those first ten drugs were basically the same as the net prices
that Part D plans were already negotiating with drug
manufacturers in this program.
But what did we get? We got an opaque process. We got
uncertainty; two things that send investors running in the
other direction.
But let us consider the alternative. What if, this year or
next year, or under some Administration in the future, CMS does
actually dramatically reduce drug prices? There is no doubt
that we are going to lose out on innovation. My Schaeffer
colleagues have shown that a ten percent reduction in expected
U.S. pharmaceutical revenues leads to a 2 1/2 to 15 percent
decline in pharmaceutical innovation. The evidence is clear: we
are going to miss out on new drugs, including clinically
meaningful ones.
The consequences of this lost innovation are real. For
example, one estimate shows that widespread drug price
negotiation could reduce life expectancy by two years for 35-
year-olds. The IRA sends the wrong signals to the market. We
are telling companies to think twice before bringing drugs that
could treat orphan diseases to market quickly. We are telling
companies to turn investment away from small molecule drugs,
like the pills you pick up at the pharmacy counter. These are
steps in the wrong direction that will have real consequences
for the patients of tomorrow.
Another key provision in the IRA was a significant redesign
of the Medicare Part D benefit. Medicare Part D provides drug
coverage to 53 million Americans. Since its inception in 2006,
the program has operated on the premise of delivering value to
patients and taxpayers by harnessing competition between
private insurers. But the program and its benefit design had
become outdated. Plans had too little skin in the game. And, in
principle, the types of reforms included in the IRA were a step
in the right direction to restore competition in the market.
But the abruptness of the change and its implementation has
created market instability and considerably increased Federal
spending. First, Part D plans are exiting the market. There is
a 35 percent reduction in the number of plans offered this
year. Today, beneficiaries have the fewest options ever in the
program's 20-year history.
Second, taxpayers are paying more. Historically, taxpayers
have subsidized about 75 percent of premiums in this market.
But thanks to provisions in the IRA, as market instability
grows, so too does the bill. This year, taxpayers are picking
up 83 percent of the tab, and that does not even count an
estimated $5 billion in additional subsidies that CMS
unexpectedly added.
Third. What is worse is that many beneficiaries are seeing
their prices go up at the pharmacy counter. Now, it is true
that the IRA added a cap on patient out-of-pocket costs for
each year. And this is a really important insurance protection.
But most beneficiaries do not reach that cap. My colleagues and
I are finding that Part D plans are responding to the IRA's
changes by increasing patient costs earlier in the year. For
example, among Medicare advantage plans, the average drug
deductible increased 273 percent this year. Imagine the
frustration your constituents must feel when they see news
headlines that CMS is lowering drug prices and yet they find
their costs are going up.
Clearly, this is not working. It takes me back to what I
learned in the lab. Making this work for the patients and
taxpayers of today and tomorrow is going to come down to
getting the policy incentives right.
Thank you.
Mr. Burlison. Thank you.
I now recognize Dr. McBride for 5 minutes.
Dr. McBride. Thank you, Chairman Burlison and Grothman,
Ranking Members Frost, Krishnamoorthi, and distinguished
members of the subcommittees. I appreciate the opportunity to
speak with you.
STATEMENT OF WILLIAM MCBRIDE, PH.D.,
CHIEF ECONOMIST AND STEPHEN J. ENTIN FELLOW
IN ECONOMICS TAX FOUNDATION
Dr. McBride. My testimony will lay out how and why the
budgetary costs of the Inflation Reduction Act tax credits has
grown, who benefits from the tax credits, and options for
reform.
The IRA's green energy tax credits may be the most
egregious, but certainly not the only example of a budget
estimate that did not match reality. In this case, it is mainly
the result of rushed legislation containing complicated novel
features targeting new and evolving technologies with an
uncertain future.
Fundamentally, even industry experts have a difficult time
forecasting sales of electric vehicles with the development of
other niche technologies targeted by the credits, even from one
year to the next, much less ten years into the future as
required by the budget process.
The uncertainty is compounded by complicated features of
the credits, including bonus credits for meeting various
conditions such as domestic content, prevailing wage, and
apprenticeship requirements, and transferability and the direct
pay option.
Last, the statute granted significant authority to the
Treasury Department to fill in many of the details, with more
than 400 pages of guidance issued in the first year alone,
changing the law over time often in ways that increased the
cost.
The initial budget estimate from the Joint Committee on
Taxation, JCT, indicated that IRA credits would cost about 271
billion over the period 2023 to 2031. Soon after the IRA was
enacted, several outside groups, including Goldman Sachs and
scholars of the Brookings Institution, began providing
estimates indicating the cost of the credits would be much more
than originally expected, roughly $1 trillion over a decade.
JCT provided an updated estimate in May 2023--that is nine
months after enactment--indicating the cost of the credits had
roughly doubled over the original estimate for the same years.
The cost of some credits more than quadrupled, such as those
for EVs, advanced manufacturing, and carbon sequestration.
JCT attributed the cost growth to several factors,
including increases in anticipated production capacity for
batteries and renewable energy as well as expansive guidance
from the Treasury Department, which allowed taxpayers to avoid
income restrictions and domestic consent requirements for other
EVs and other technologies.
JCT's analysis had not factored in regulatory efforts by
the Biden Administration that would further increase the costs
of the credits, such as the tailpipe emissions rule that was
scheduled to go into effect in 2027.
The latest tax expenditure estimates from the Treasury
Department and JCT indicate the cost of the credits has grown
to about $1.2 trillion over the next decade, including IRA
additions and preexisting renewable energy credits.
A recent study by the Cato Institute finds the cost of the
credits ranges considerably, depending on assumptions about the
underlying technologies, from about $900 billion to $2 trillion
over the next decade, and about $2 trillion to almost five
trillion through 2050.
The primary beneficiaries of the credits are businesses
that specialize in renewable energy and higher-income consumers
with preferences for EVs, solar panels, and other green
technologies. For example, a recent study finds that the top 20
percent of individual taxpayers by income receive more than 80
percent of the EV credits.
JCT found that the largest corporations receive more than
half of the investment and production tax credits, two of the
largest business credits that were extended as part of the IRA.
Economist Jason Furman estimated the IRA credits will provide a
benefit of more than $11,000 for the top one percent of earners
in 2027 versus a benefit of less than $100 for the bottom 20
percent of earners.
Regarding broader economic benefits, the IRA credits reduce
the cost of investment in the targeted technologies, but the
investment impacts are reduced by high compliance costs,
permitting and other constraints, and the degree to which the
credits subsidize activities that would have occurred anyway.
Furthermore, because the targeted areas are a small portion
of the economy, we should not expect, nor do we find in the
latest data, any measurable increase in investment overall.
In general, the IRA credits should be repealed or, at a
minimum, substantially curtailed to bring the costs down closer
to the original estimates. This could be done by streamlining
and shrinking the credits or potentially capping their annual
costs. Currently, only one of the credits is capped. My written
testimony provides our analysis of a few options for reform
that would generate hundreds of billions of dollars in savings.
Policy-makers should pursue neutral policy to boost energy
production that is treating all investment equally, which is
best achieved by allowing a full and immediate write-off for
all investment, a policy known as ``full expensing.''
Thank you for your time and attention. I am happy to answer
any questions you may have.
Mr. Burlison. Thank you.
I now recognize Dr. Gee for her opening statement.
Dr. Gee. Thank you, Chairman Burlison, and to you and
Chairman Grothman, Ranking Members Krishnamoorthi and Frost.
Thank you very much for inviting me here today to talk to you
about the Inflation Reduction Act.
STATEMENT OF EMILY GEE (MINORITY WITNESS),
SENIOR VICE PRESIDENT FOR INCLUSIVE GROWTH,
CENTER FOR AMERICAN PROGRESS
Dr. Gee. Today I want to talk about how the IRA has made
historic investments in clean energy and took aim at high
health care costs. The law's landmark health care provisions
have lowered prescription drug costs for seniors and others on
Medicare. It included multiple measures to protect Medicare
beneficiaries from high out-of-pocket costs; notably, the new
limit on out-of-pocket drug spending, which took full effect
this year.
That $2,000 limit is estimated to save $600 on average for
the 11 million beneficiaries who would have otherwise had
spending above that level.
The law capped cost sharing for insulin at $35 per month,
and it made recommended vaccines available at no cost.
The law expanded the low-income subsidy program for Part D,
and it made other changes to enable beneficiaries to spread
costs out over time instead of facing high upfront costs at the
beginning of the year.
The IRA is generating savings by requiring that drug
companies rebate for price hikes above the level of inflation.
For example, in the first quarter of this year, there were 64
Part B relatable drugs with coinsurance amounts per day up to
$10,000, lower due to rebates.
And last, the law empowers the Federal government, for the
first time, to negotiate lower drug prices for Medicare.
This year, the list of 15 drugs under negotiation includes
medications to treat asthma, breast cancer and prostate cancer,
and diabetes.
The IRA extended insurance coverage by enhancing financial
assistance available to people who purchase insurance on their
own, helping drive uninsurance rates to historic low. However,
absent action by Congress, the enhanced subsidies for the
health insurance and marketplaces will expire at the end of
this year, meaning the consumers will see higher premiums for
2026 coverage when they shop for plans this fall.
The Inflation Reduction Act has also put America on track
to be a leader in clean manufacturing energy and technologies.
To date, $321 billion of private investment has already been
invested, and over 2,300 new facilities have opened up across
the United States. But another 522 billion of clean energy
investment commitments has not yet gone out the door and is at
risk of being canceled depending on whether this Congress
allows the IRA tax credits and programs to continue.
The projects that have been completed to date have already
created over 300,000 jobs, but there are another 600,000
potential jobs for projects that have been announced but are
still outstanding.
The budget reconciliation bill being considered by the
House would roll back the progress made by the IRA. First, it
would make the largest cut to Medicaid in the program's
history. As a result of that, the expiration of the premium tax
credits and other changes in marketplace rules, this
Congressional Budget Office estimates that 14 million more
Americans will be uninsured by 2034.
To put it plainly, the bill would attain hundreds of
billions in savings for Medicaid only by taking away health
coverage for millions of people. Notably, the bill imposes
burdensome work reporting requirements on enrollees even though
previous experience from states shows that red tapes trips up
those eligible for Medicaid.
Medicaid cuts would also have consequences beyond the
program itself, including jobs lost in communities throughout
America and strain on the Nation's rural hospitals who already
face tough financial circumstances.
Second. The reconciliation bill would undo IRA provisions
aimed at growing clean energy. If the proposals from the Ways
and Means Committee are passed, annual home electric bills
would increase $70, on average, in the next five years.
Analysis by the Rhodium Group found that gasoline prices would
rise 25 cents to 37 cents per gallon by 2035 as demand for oil
increases due to the termination of the Federal electric
vehicle affordability programs, fuel economy standards, and
tailpipe emission standards.
Overall, the reconciliation bill would add threats to the
U.S. economy, coming at a time when decades-high tariffs are
already driving up policy uncertainty and depressing consumer
sentiment. By cutting Medicaid and SNAP, the bill makes
devastating cuts to countercyclical programs that help
Americans meet their basic needs during recessions. And over
the longer run, by adding 2.7 trillion to the deficit over the
next decade, the bill will drive up interest rates, driving up
the cost of borrowing for businesses and consumers for things
like mortgages, credit card loans, and student loans, while
driving down wage growth.
This attack on working Americans could not be starker. The
bill takes away food and health care for millions of low-income
Americans while giving 1.5 trillion tax cuts to the top five
percent while still driving up the debt.
In conclusion, the IRA's making costs lower for American
families and improving competitiveness. That progress should
not be squandered.
I look forward to your questions.
Mr. Burlison. Thank you.
I now recognize myself for 5 minutes of questions.
Mr. Lieberman, when the IRA was originally sold, it was
sold to the American people as a legislative vehicle for
reducing inflation and for stimulating the economy and creating
lots of jobs, lots of new, clean-energy jobs. But what has the
actual result of the legislation been?
Mr. Lieberman. Well, there are a lot of jobs right now. I
think we are going through the sugar high phase of the
Inflation Reduction Act. Sure, you can create a lot of jobs if
you throw a lot of money at just about anything, especially
lots of Federal dollars. The question is, do these alternative
energy sources have any lasting power?
The American people are not pounding the table, demanding
higher utility bills and more expensive transportation. And so,
these alternatives need to become cost competitive to have any
real future. And I just do not see that happening with most of
the alternative being subsidized right now.
And I would say there is a long history with this, and it
does not bode very well. Congress is not nearly as good as it
thinks it is in figuring out what the next big thing in energy
is. It has been trying this since the oil shocks of the 1970s.
But there has been a lot of boondoggles on the way. Not very
much in the way of alternative energy success stories that we
could point to.
One example I could mention from when I was a staffer ten
years ago when the next big thing was cellulosic biofuels--I do
not know if you remember cellulosic--but there were all sorts
of tax credits and other incentives adding up to dollars per
gallon, very similar to what you see for other things in the
Inflation Reduction Act. The facilities were built. And it
turned into a boondoggle, including a lot of communities that
felt cheated because the permanent jobs never materialized.
I fear that if we come back in five years, we will be
talking about a number of clean energy ghost towns as a result
of the Inflation Reduction Act.
Mr. Burlison. Yes. In 1850, the economist Frederic Bastiat
wrote, I think, about this scenario back then and recognized
that you could make the argument that you are creating a lot of
jobs by going down the street and breaking windows, right?
Because somebody has to be employed to replace those windows.
But there is a fallacy with that because of the destructive
nature and the wealth that is destroyed in that process. Would
you agree that this holds true with the IRA today?
Mr. Lieberman. Yes. When you are creating jobs only because
of subsidies, that means that money and jobs has to be siphoned
away from the rest of the economy. So, there is always two
sides of the jobs ledger when government subsidies are involved
and we are talking about, you know, potentially a trillion
dollars.
Plus, if, at the end of the day, you have more expensive
energy, that also suppresses economic activity and jobs.
Mr. Burlison. Thank you.
Dr. McBride, your organization, the Tax Foundation, it is
not partisan, correct? There is no--it is nonpartisan
organization.
Dr. McBride. That is correct.
Mr. Burlison. So, in 2023, you coauthored a piece published
by the Tax Foundation which included several key findings
which, I think, are relevant to today's debates. You stated in
that piece that the IRA does not reduce deficits and may
substantially increase deficits. The energy credits drive the
out of control costs of the IRA, and the energy credits are a
boon for wealthy individuals with a preference for climate-
oriented luxury goods, including expensive EVs and solar
panels.
So, my question is this: do those findings that you wrote
originally, do they still hold true today?
Dr. McBride. Yes, absolutely, as far as we can tell.
We lack good estimates from the committees that do this and
from the agencies, the CBO and JCT. I went through the latest
estimates we have from JCT and other groups, outside groups
indicating the costs the IRA credits is something like three to
four times what they originally were estimated at. So, that was
the--you know, that is one side of this bill.
The other side is the tax increases. One is the drug
pricing measure. That is actually the result of a tax change,
excise tax on drug companies.
But some of the others are the Corporate Alternative
Minimum Tax and the stock buyback tax. So, these are brand new
taxes that were introduced as part of the IRA. We do not know
how much those are raising, honestly. We have done a lot of
research to try to build out our understanding of how much
revenue is raised by those taxes. But they were originally
estimated to raise on the order of 300 billion between those
two tax increases.
If that is still the case today--which is questionable for
many reasons, I can go into in more detail--it may be much less
than 300 billion that is raised there, compared to the trillion
dollars that is the rough cost of the IRA credits. We can see
that this is a big deficit to increasing bill, completely
contrary to the way it was sold originally.
Mr. Burlison. Thank you. My time has expired. I did have
questions for Dr. Trish, but hopefully someone will yield me
time.
And with that, I turn to Ranking Member Frost for his
questions.
Mr. Frost. Thank you, Mr. Chairman.
So, smart policies mean a good return on investment. And
the Inflation Reduction Act is made up of the necessary
investments for a cleaner, healthier future that--it is paying
off for our country right now. Let us talk about the IRA's
returns.
Dr. Gee, the IRA became law less than three years ago.
Could you talk about some of the law's successes when it comes
down to investments and jobs?
Dr. Gee. Thank you for that question, Ranking Member Frost.
The IRA was an investment in--historic investment in
climate change that specifically made investments in improving
American competitiveness in clean energy and creating jobs and
allowing America to better compete in jobs of the future.
To date, the projects from the IRA on clean energy have
created about 300,000 jobs. There are many more in the
pipeline, but many of those are in jeopardy if the changes in
the reconciliation bill go forward. These projects are
happening all across America.
Just one example--let me give you one down in Louisiana, in
Iberia Parish, as an example of jobs created from the bill.
First, Solar is a solar panel manufacturing facility. First
Solar said that their commitment was catalyzed by the Inflation
Reduction Act and is expected to create about 700 new jobs down
there.
Mr. Frost. Thank you.
I ask unanimous consent to the record an NBC news article,
``How the Inflation Reduction Act sparked a manufacturing and
clean energy boom in the U.S.''
Mr. Grothman. [Presiding.] Yes. Without objection.
Mr. Frost. Thank you.
Smart policies create supply and demand, and new solar and
wind power plants can be built and operating in under two
years, while natural gas power plants can take twice as long,
and coal can take about four times as long. Sometimes the
critics of clean energy try to sidestep the positive effects of
investments like those in the IRA, and then they will grumble
that the Federal government is ``picking winners and losers,''
as if the Federal government for generations have not been
giving massive subsidies to oil companies and polluters in this
country. But complete crickets from them then.
Dr. Gee, how do the clean energy incentives of the
Inflation Reduction Act compare to the subsidies currently
enjoyed by the fossil fuel industry?
Dr. Gee. So, first, let me just note that I agree with you
that solar and wind are much faster at coming online. In fact,
clean energy attempts for about 90 percent of new capacity
being added right now. Solar and wind are deployed faster than
all other types of energy combined, including hydroelectric,
nuclear, coal and gas power plants. Solar farms can be
operational about two years compared to about four years for
gas-powered power plants.
I would, you know, remind everyone here too that fossil
fuel companies also enjoy subsidies. They enjoy about $15
billion in tax breaks every year. And it is also a highly
profitable industry. The five largest oil and gas companies
made more than $100 billion in profits last year in 2024. And
big oil also spends a lot to influence elections.
Mr. Frost. I really appreciate you bringing that up because
we do not hear about that from my Republican colleagues.
I also want to talk about the Inflation Reduction Act's
effects on the national level to a personal level. Central
Floridians love home solar and home energy storage not only
because it lowers the electric bill but because it keeps us
safe.
How will people's daily lives and daily costs increase if
we reverse the progress made in the IRA, Dr. Gee?
Dr. Gee. So, reversing the IRA's investments in clean
energy and the tax credits will increase costs for American
families. American families will see higher electric bills
because the United States is producing less energy, and
American families will also face higher gas bills. By 2035, gas
prices will be about 25 to 37 cents higher, according to
Rhodium Group.
And the other effect for American families too is the
environment that is less clean, water and air that are more
polluted. And so, these are investments not just in cheaper
energy but also a better climate.
Mr. Frost. I really appreciate you bringing this up. I
mean, what we have heard and will continue to hear in the basis
of this hearing is the pushback on a piece of legislation which
is really delivered for working people for this country, and
pushing us to do what we need to do to have cleaner air, better
communities, and actually bring back manufacturing in a way
that makes sense.
And, you know, we hear these tired talking points from my
Republican colleagues all the time, and we heard one too from
Dr. Trish. I think it is laughable that--you know, we have
heard this tired talking point that if the government does
anything to help bring down pharmaceutical costs for seniors or
for anyone, that pharmaceutical companies will stop, you know,
putting money into R and D, in research and development.
Not only does the CBO estimate on the Inflation Reduction
Act push back on this, but Big Pharma pulled in about $600
billion in 2023. And so, it does not sound just like a talking
point. It sounds like a threat. I care more about what seniors
in my district are paying for pharmaceutical drugs than what
pharmaceutical executives are raking home.
So, thank you so much. I appreciate it. And I yield back.
Mr. Grothman. Thank you very much.
Was just looking at all the birds who are killed by
windows. Just horrible. I like the little birds.
Okay. We will start with Dr. McBride. We were told the IRA,
Inflation Adjustment Act, was a deficit-reducing bill. I think
the Republicans knew all along it was questionable. It went
from reducing the deficit by billions of dollars to increasing
the deficit by hundreds of billions of dollars.
Why is the CBO now reversing course on the estimated cost
of the Inflation Reduction Act?
Dr. McBride. Well, they have not released a complete
reanalysis of the Inflation Reduction Act. I would love it if
they did. We have been pushing for that ever since enactment of
the bill in 2022 because, as I mentioned in my testimony, a lot
of questions right out of the gate about the cost of the
credits. And over time, we have gotten--you know, every element
of the IRA actually has a lot of uncertainty about it, a lot of
novel stuff going on in that legislation.
I can talk at great length about the various things
involved in the Corporate Alternative Minimum Tax, the buyback
tax. Again, that was where the revenue was supposed to be
raised along with the drug pricing provision.
The best indication we have is that the Corporate
Alternative Minimum Tax and the buyback tax in particular are
so complicated and so difficult to implement, they actually
just did not implement them. The IRS allowed taxpayers to not
pay the tax for the first two years after enactment. That does
not mean they are off the hook. It means that they have not yet
finalized the regulations, actually, to implement the Corporate
Alternative Minimum Tax in particular. It has turned out to be
so complicated to sort out.
And so, this is the big revenue raiser in the bill,
particularly over the first few years and in the first decade,
the Corporate Alternative Minimum Tax. It is not raising
revenue, apparently, just yet. So, what we have is very little
revenue coming in the door but a tremendous amount going out
the door, tremendous amount of spending going out the door in
the form of these credits. And that has been the general
dynamic of this legislation ever since it was enacted.
So, yes, we do need a more complete reanalysis of the bill.
We have not gotten it from the CBO. We are getting bits and
pieces about it over time. And as part of the legislation going
through the House now, we are getting a rescoring of the
credits in particular, and that is showing that yes, there is a
lot of money that is going out the door with these credits. The
current House bill rolls them back and saves about $515 billion
over a decade from that measure alone.
Mr. Grothman. Thank you.
I hate it when legislators use the tax code to try to
influence public policy. They ought to just, you know, put
appropriations out there rather than try to play around with
this. Nevertheless, it does bother me over time that the tax
code does--their provisions that seem to benefit the ultra-
wealthy at the expense of the common man.
Could you describe who is largely getting the benefits of
these tax credits in the so-called Inflation Reduction Act? Who
is paying the price here? Who is paying the price? And who is
getting their taxes reduced, Mr. McBride--Dr. McBride.
Dr. McBride. Sure.
Well, as we discussed in our testimonies here and--it is
very clear. In both just anecdotal evidence, you look around;
you know, who is buying solar panels? Who is buying electric
vehicles? You know, those are high-income people. You can see
that with your own eyes. The data and the studies support that.
And, for that matter, a lot of the credits go to
businesses. And again, this is an area of uncertainty. We have
tried to identify what types of businesses exactly. And
honestly, it is not very clear. But I mention the statistic in
my testimony that the largest corporations--I believe that is
those with more than 25 billion in revenues--receive more than
half of the major----
Mr. Grothman. Largely, this is a tax cut for the rich, you
think.
Dr. McBride. I--that is what it looks like to me, yes.
Mr. Grothman. I think so. And I am running out of time, so
I got to go quick to Dr.--to Mr. Lieberman.
These energy subsidies are responsible for enormous costs.
Overall, insofar as it drives up cost, who is going to pay the
price for that? Is this another thing that is kind of a
regressive tax on the average guy? Or how would you describe
who is paying--who is paying the price for this?
Mr. Lieberman. There is almost nothing in the Inflation
Reduction Act that is geared toward lowering energy prices, so
energy prices will go up.
One thing I would add, for example, is that there is a lot
of provisions in there geared toward discouraging use of
natural gas and making homes all electric. Well, natural gas is
three times cheaper than electricity on a per unit energy
basis. So, it is one example where climate policy is very much
at odds with pro-consumer policy.
Mr. Grothman. Well, if you are a well-off person, I suppose
it does not matter. It only affects the average guy.
I thank myself. Now we are calling on, here, Mr.
Krishnamoorthi.
Mr. Krishnamoorthi. Thank you, Mr. Chair.
Mr. Lieberman, you work for the Competitive Enterprise
Institute. CEI, right? You have to audibly answer.
Mr. Lieberman. Yes.
Mr. Krishnamoorthi. Okay. And CEI's website--we went onto
the website. It says, ``CEI has been instrumental in fighting
decades of climate alarmism.'' That is what it says, right?
Mr. Lieberman. Yes.
Mr. Krishnamoorthi. Okay. And in a 20---in a paper that you
wrote, you said, quote, ``Global warming is clearly not a
crisis,'' right?
Mr. Lieberman. Sounds like me.
Mr. Krishnamoorthi. That sounds like you, yes, because it
is you.
Let me tell you what some other folks around here say.
Republican Senator Lisa Murkowski said, ``Climate change is
real. It is happening. It is now.''
You do not dispute she said that, right?
Mr. Lieberman. No.
Mr. Krishnamoorthi. Senator Lindsey Graham said in a panel
moderated by CNBC that, quote, ``Climate change is real.''
You do not dispute that he said that either, right?
Mr. Lieberman. No.
Mr. Krishnamoorthi. And even the Pope Leo from Chicago has
said, ``It is time to move from words to action.''
You do not dispute he said that either----
Mr. Lieberman. Same as the last Pope.
Mr. Krishnamoorthi. Mr. Lieberman, with members of both
parties increasingly in agreement, worsening disasters--we had
a ``Grapes of Wrath'' dust storm in Chicago just this past
weekend--and even the head of the Catholic church sounding the
alarm, your position and CEI's position sound increasingly
fringe.
Let me turn to the next topic.
Dr. McBride, on May 8th, NBC News reported that on a phone
call with Speaker Johnson, President Trump suggested raising
the tax rate for those making $2.5 million or more. You do not
dispute that NBC reported this, right?
Dr. McBride. No, I do not.
Mr. Krishnamoorthi. And just this morning--and, by the way,
this--there is no tax increase in the reconciliation bill,
correct? On people earning more than $2.5 million.
Dr. McBride. That is correct.
Mr. Krishnamoorthi. Okay. And just this morning--this is
what Donald Trump told the GOP conference. He tells the House
GOP conference not to ``F'' around with Medicaid.
You do not dispute he said that, do you?
Dr. McBride. Well, that is news to me. But I believe you.
Mr. Krishnamoorthi. And, Dr. Gee, there are cuts of
hundreds of billions of dollars in the reconciliation bill to
Medicaid, correct?
Dr. Gee. That is correct. This is a reverse Robin Hood bill
that will give tax cuts to the rich while cutting over $600
billion from Medicaid and $300 billion from----
Mr. Krishnamoorthi. I think they are violating--the House
GOP conference is violating, I think, what Donald Trump is
trying to convey in this headline.
Look. The CBO estimates that the debt of this bill will
total at least $4 trillion. Is that not what the CBO has
scored, Dr. Gee?
Dr. Gee. That is correct. It will add trillions of dollars
to the debt and even more if temporary provisions in the bill
for tax breaks----
Mr. Krishnamoorthi. And at the same time that Republicans
are adding trillions in debt, Moody's, the major credit rating
agency, downgraded America's credit rating, citing the deficit.
You do not dispute that, Dr. McBride, do you?
Dr. McBride. No, I do not. That is correct.
Mr. Krishnamoorthi. And this is the first time all three
major credit rating agencies have downgraded America's debt,
correct?
Dr. McBride. That is correct.
Mr. Krishnamoorthi. So, instead of taxing the wealthiest
among us, as Donald Trump has suggested, and contrary to his
suggestion not to ``F'' around with Medicaid, which he just
said this morning to the House GOP, the House Republicans are
instead slashing Medicaid, slashing SNAP, adding trillions to
debt, and in the process, hurting America's credit.
Let me turn to another topic.
Dr. Gee, just to reiterate, Republicans are planning to cut
at least $625 billion from Medicaid. The level of cuts will be
absolutely devastating to the health care system. In fact, let
me just show you a map of rural hospitals throughout the
country that will be at immediate risk of closure.
As you can see in Illinois, there are eight rural hospitals
that will be immediately at risk of closure. And, Mr. Grothman,
in Wisconsin, there are five hospitals that are at immediate
risk of closure. And, Mr. Burlison, there are nine in Missouri.
Now, when rural hospitals close because of these massive
cuts to Medicaid, Dr. Gee, those closures will lead to layoffs,
correct?
Dr. Gee. That is correct. Loss of health care jobs as well
as other jobs in communities.
Mr. Krishnamoorthi. And when those hospitals close, not
only will people with Medicaid be denied access to medical
care, but people with private insurance as well as Medicare
will also be denied care, correct?
Dr. Gee. That is correct.
Mr. Krishnamoorthi. And so, we will be creating medical
deserts throughout the country, right?
Dr. Gee. That is correct. People will have to travel
further to emergency rooms or to deliver babies or be seen for
trauma.
Mr. Krishnamoorthi. Thank you. And I yield back.
Mr. Gill. [Presiding.] Thank you.
And I now recognize the gentleman from Arizona, Mr. Gosar.
Mr. Gosar. Thank you, Mr. Chairman.
Today, this hearing is examining the devastating economic
effects of the Inflation Reduction Act. But let us remember,
the IRA was Joe Biden and the Democrats' version of a
reconciliation bill. House Republicans are working diligently
on One Big Beautiful Bill because we received a mandate from
the American people to learn from the mistakes of the IRA and
to save our Nation from the crippling debt.
American seniors should not be made victims by these
policies. In the IRA, the other side of the aisle took money
from Medicare and funded 21 greenhouse tax scams like electric
vehicle credits, carbon sequestration, and clean hydrogen. And
now Republicans are the bad guys for repealing these green
energy credits to reclaim the funds for the people.
Dr. McBride, in your testimony, you talk about caps on IRA
subsidies. Congress needs to enforce caps in a lot of places
like immigration, Medicaid, green new tax credits.
Generally speaking, how would you define a cap in Congress?
Dr. McBride. Thank you for that question.
It is very important. I believe what I have observed over
the years I have been doing tax analysis--since about 2011--is
an increasing tendency to spend through the tax code.
Okay? We have something that is required by the Treasury
Department and the Joint Committee on Taxation every year. They
produce estimates of tax expenditures. There is more than 200
of them now. These are tax credits, deductions, exemptions,
various loopholes. Not all of them are agreed to be
unjustified. There is some subjectivity to that. We
particularly take issue with a set of those.
But the point is these are pretty well estimated, the cost
of these things. And they have grown over time. The IRA
contributed greatly to the cost of these tax expenditures. They
are called ``tax expenditures'' because it is spending through
the tax code.
And I want to point out, in particular, that the--about 300
billion--about a third of the costs of the trillion-dollar IRA
tax credits is technically scored as spending outlays, Okay? As
far as we can tell, that is spending by--received by tax-exempt
entities using the direct pay option. So, now we have literal
spending through the tax code. It is a way to get around the
constraints on proper spending that goes through the
appropriations process, in my opinion.
Mr. Gosar. Well, I want to hit you--and I want to hit you
with that. Surprise, surprise. The IRA also extended COVID
funding, believe it or not.
Now I am the guy that killed the COVID funding for the
emergency spending. It was terminated April 10th of 2023. So,
90 days after that, any outstanding money had to come back to
the Treasury. Okay? So, we ought to be looking at the COVID
spending as well. And we have not done that yet, have we?
Dr. McBride. No, not--not completely. That is for sure.
Mr. Gosar. This is unbelievable.
Now, we are not really comparing apples to apples, right?
You know? So, we just saw the poster board over here talking
about cuts to Medicaid. But populations are very different, are
they not, Dr. McBride?
Dr. McBride. I think so.
Mr. Gosar. I will explain. So, the traditional Medicaid
population of women, single women, children, those individuals,
for every dollar the state puts in, the Federal government puts
$1.37 roughly that. Okay. But the expansion that occurred
during this COVID emergency there is for every dollar the state
put in, $9, $9 was given to the state from the Federal
government. And these were, my understanding able bodied
individuals with no children. Would you say.
Dr. McBride. That is my general understanding. You are
getting a little bit out of my wheelhouse here.
Mr. Gosar. Where is the parity on this one? Tell me, women
and children so you take a backdrop, a backseat to a well abled
and well abled bodied person who you can get to contribute
somewhere else. This is unbelievable fathoming that I cannot
seem to fathom all these problems.
Mr. Lieberman, the previous Administration used the IRA to
fund non-governmental organizations (NGO) and American tax
dollars to promote Biden's radical environmental agenda.
I introduced the Putting Trust in Transparency Act which
would require NGOs to receive a penny either directly or
through a pass through, must bring their big--whole donor list.
Is this something that you estimate could really help us out?
Mr. Lieberman. I very much think so, and it maybe the most
disturbing part of the Inflation Reduction Act were these
organizations that were is set up, created new just for the
purpose of receiving, multibillion dollar grants.
And I do think this has relevance, the spending in the IRA
has relevance to the climate change issue, so much of the
climate activists' argument is to protect future generations
from climate harm. Well, if you are genuinely concerned about
future generations, the last thing you would want to do is to
saddle them with a mountain of debt, which makes it harder to
deal with whatever challenges the future holds, whether climate
change or otherwise, most likely something we do not even see
coming. That is why I think these free spending climate bills
are especially self-defeating.
Mr. Gosar. Seriously the COVID national emergency states
that between 4.8 and $7 trillion so the spending goes on.
Thank you.
Mr. Gill. Thank you. And I now recognize the gentleman from
Missouri, Mr. Bell.
Mr. Bell. Thank you, Mr. Chair, Ranking Members, and
witnesses for being here today.
Today we are discussing the Inflation Reduction Act, a key
piece of legislation that was geared toward moving our Nation
forward, legislation aimed at providing millions of jobs,
increased access to affordable healthcare and a historic
funding for clean energy infrastructure to improve the overall
quality of life for Americans. And yet my Republican colleagues
have set out to reverse this legislation and with it the
potential improvements it was set to bring for the average
person. Reversing real benefits that we already are seeing
today and that we hope to benefit from in the future, reversing
investments in affordable healthcare and clean energy.
In my state of Missouri alone, we have benefited from the
investments streaming from the IRA with the potential to
receive continued investments, totaling over billions of
dollars over the next ten years. In my district more than $35
million have been invested in assisting the improvements of
over 700 mixed income units for more energy-efficient living.
These improvements range from enhancing new builds through the
use of sustainable materials, to replacing outdated utilities
and structures on older homes, to energy efficient equivalents.
These enhancements work toward ensuring these homes are able to
withstand the growing hazardous weather conditions they are
faced with, which I would be remiss if I did not mention this
past weekend St. Louis experienced one of the most devastating
storms in our history. A powerful tornado tore through the
city, damaged an estimated 5,000 buildings, leaving much of our
infrastructure in shambles. The effects of this disaster are
being felt across the entire community with countless residents
displaced and tragically more than two dozen lives lost. The
impact of this storm will be felt for years to come. Many of
the areas impacted are amongst our most vulnerable communities
who rely on these programs offered through the IRA through
affordable and sustainable housing and healthcare. We must
ensure we are doing everything in our power to protect these
individuals during these times of tragedy.
The IRA is not limited in its use. In my district thousands
of citizens continue to benefit in healthcare from it as well,
through providing caps on prescription drugs, the IRA has
allowed access to lifesaving prescriptions by making them more
affordable. In these times of tragedies, individuals should not
also have to worry about how they will afford their medications
on top of trying to survive.
It is estimated that 348,000 Missourians will save an
average of $462 per year through the decrease in prescription
drug costs, allowing individuals to receive a better quality of
life because we know that access to healthcare saves lives.
The IRA continues to serve as the catalyst to move this
Nation forward in a sustainable way and the reversal of it puts
American lives at risk. Plain and simple, we need to be focused
on saving lives, not harming them.
Dr. Gee, can you tell us how the IRA has impacted
healthcare and the predicted impact it is set to have over the
next ten years.
Dr. Gee. Yes, thank you for that question. The IRA has
lowered healthcare costs in at least a couple of different
ways. One is through the prescription drug provisions at the
IRA, which create an out-of-pocket cap of $2,000 for Medicare
beneficiaries, meaning that there is now a limit for the first
time what they owe from their own wallets for prescriptions at
the pharmacy.
The bill is also saving the Medicaid program and the
government money through drug negotiation for lower prices
for--by 2030 it will be 80 drugs through rebates that are paid
out when drug companies hike prices above the rate of
inflation. And it also made vaccines available at no cost, so
that vaccines--like, for example, the shingles vaccine, which
used to cost about $200 out-of-pocket are now free and those
will keep people healthier and save lives in addition to saving
costs.
The Inflation Reduction Act extended subsidies for health
insurance marketplace plans, lowering costs about $800 per
person, but that will be discontinued at the end of the year if
Congress does not extend those subsidies.
Mr. Bell. I think that is my time. Thank you. I yield back.
Mr. Gill. Thank you. And I now recognize the gentleman from
Virginia, Mr. McGuire.
Mr. McGuire. Thank you, Mr. Chairman. Thank you to our
witnesses for being here today. The Inflation Reduction Act is
a bloated, misnamed boondoggle that did anything but reduce
inflation. In February, EPA administrator Lee Zeldin found $20
billion in taxpayer money that the Biden Administration parked
at a financial institution in an apparent effort to prevent
Trump Administration from cutting grants to far-left activist
groups. They wanted that money for the far left. Some of these
groups power forward communities, which has ties to Democrat
activist Stacey Abrams were seemingly created out of thin air
just to take the money. In fact, her nonprofit brought in $100
the year before and then went to $2 billion with no
explanation. They had no track record of success. In fact, they
had no track record at all, yet Joe Biden gave them billion
dollars of taxpayers' dollars. I am thankful that Administrator
Zeldin is working to get this money back. And I hope that the
Committee continues to look into this matter.
In addition to the fraud, the law has created devastating
policies which will cripple our energy reliability, devastate
pharmaceutical research in America and cost taxpayers a
fortune. I talked to the Secretary of the Interior. He said,
today in the United States, 70 percent of our energy comes from
fossil fuels and while China is opening up coal plants every
day, we are shutting ours down. It makes no sense, we cannot
compete. And 30 percent of our energy comes from nuclear, so if
you figure 30 percent fossil fuels, 30 percent nuclear, that
leaves next to nothing for wind and solar.
On the Green New Deal, often called the green new scam, you
can see why because they are putting money where it does not
make sense and they are picking winners and losers.
Mr. Lieberman, the original estimates put IRA subsidies
costing the American taxpayers around $370 billion. However,
recent estimates from Goldman Sachs and the Cato Institute
suggest the total cost of IRA subsidies could be between $1.2
and $1.7 trillion over the next 10-years. How were the cost
projections so wrong?
Mr. Lieberman. Well, there are a lot of factors that go
into that, including estimates of how many people would be
buying electric vehicles. I said the one mitigating factor is
that EV sales seem to be stagnating, so maybe the outlays will
not be so much on that front. But one of the problems with it
is that some of the provisions are virtually uncapped. There is
no dollar limits, there is no real deadlines. So, while I favor
repeal, I do not favor phaseouts, because phaseouts tend to be
extended. But I do think a big problem with that is some of the
provisions, especially the provisions for clean electricity,
solar, and wind are virtually limitless and it is hard to
figure out how many companies would take advantage of them
because they are very generous.
Mr. McGuire. What wind and solar companies would be able to
survive without these subsidies?
Mr. Lieberman. It would be hard to imagine any of them. And
I think that raises a good point, companies can get invested
when they can invest in solar, they can invest in EVs or all
these things. I just think they should do it with their own
damn money.
Mr. McGuire. If you want to do it, you pay for yourself.
Mr. Lieberman. Yes.
Mr. McGuire. The taxpayer should not be burdened.
Dr. Trish, you coauthored a white paper which concluded
that without reform the IRA may result in a decline in new drug
innovation, as well as a decline in research on new indications
and evidence for long-term effectiveness and safety outcomes.
Very briefly, what reforms are necessary to undo the harmful
consequences of the Inflation Reduction Act.
Dr. Trish. I mean especially we need reforms that realign
the pricing incentives so that we are rewarding manufacturers
when they produce drugs that have high value for patients in
society. That is the opposite of the set of reforms that we see
in the IRA and so we need to fundamentally shift the incentives
there.
Mr. McGuire. Because what gets rewarded gets repeated.
Dr. Trish. Exactly.
Mr. McGuire. And picking winners and losers means everyone
loses.
Dr. McBride, and by the way, we mentioned earlier Medicaid
nowhere--I was on the campaign trail with President Trump all
over the country and he never once said he was going to cut
Medicaid. He just wanted to eliminate waste, fraud, and abuse.
I do not think any American wants illegal aliens getting
taxpayer dollars illegally. Waste, fraud, and abuse. I think
you guys would be very pleased if you looked accurately and
honestly at the One Big Beautiful Bill.
Dr. McBride, your analysis shows that up to one percent of
earners stand to gain $11,000 of benefits from IRA credits in
2027, while the bottom quantity receives under $100. Is it fair
to say that the IRA's climate credits are effectively a subsidy
for the wealthy?
Dr. McBride. Yes, yes, absolutely. It is a--as I mentioned,
it amounts to spending, even though these are labeled credits,
it amounts to spending to a large degree. And these are
spending subsidies, running through the Tax Code. And they are
primarily benefiting high income consumers, as well as
businesses. The businesses, you know, what individuals then in
the end benefit from the businesses that are using these
credits well that is usually attributed to the shareholders of
those businesses. Well, who are the shareholders? They tend to
be high income folks as well. So, the distributional analysis
that we and others have done does find that these business
credits that represent most of the dollars in the IRA credits
ultimately benefit the shareholders of these companies and they
tend to be savers, investors, that tend to be high income
folks.
Mr. McGuire. Thank you. I yield back.
Mr. Gill. And I now recognize Ms. Simon from California.
Ms. Simon. Thank you, Mr. Chair and Ranking Members. And
thank you witnesses for being with us today.
In 2022, we saw the birth of the Inflation Reduction Act,
which made healthcare more affordable to Medicare patients,
capping insulin at $35 a month, limiting annual out-of-pocket
prescriptions to $200 and negotiating the price of prescription
medication, including diabetes and cancer and autoimmune
diseases.
We have been talking a lot about the big and beautiful
bill. For folks who have battled sickness and some of us who
have battled death right in front of us, we know that what is
in the big beautiful bill for some of us we are thinking of it
as cold and cruel.
Democrats expanded access to essential healthcare and
lowered healthcare costs for millions of Americans, our elderly
neighbors, our community members and not a single Republican
voted for the Inflation Reduction Act. But now, but now, today,
Republicans want to pretend that they care, they care about the
woman right now who is sitting at Seattle Children's Hospital
who had to quit her job because her baby has lymphoma, that
baby is dying. She gets Medicaid for herself, her child, her
child is waiting for her to deliver a message that she may have
more months. I have got to tell you, this cold and cruel bill,
ma'am, these folks do not care about you. You are the able-
bodied adult that they are saying does not deserve healthcare.
I can go on and on. And we saw just this week that President
Trump said that he would reduce prescription drug costs. And I
just want to say for those of us who have been at death's door
with either ourselves or our family members, our children and
like myself, my husband, I think we want that. But we know with
this cruel and cold bill over ten million Americans will no
longer have health coverage and they are not going to be able
to see that doctor or get that prescription drug that they so
need, that home healthcare worker, that daycare worker who was
able bodied but is barely making the minimum wage to pay her
rent. They do not care about you. That is why, this is why any
reduction in Medicaid or Social Security, any net decrease is
the difference between life and death for poor Americans. And I
am talking about working Americans. You cannot deny it, it is
clear, it is clear. And so, for those folks who are taking care
of your elders and you are only working half time because you
are trying to lift the spirits of the weak, the widow, the
sick, the child who is getting chemotherapy at this very
moment, they are people who care about you and we are fighting
for you.
I have a question for you Dr. Gee. And as a disabled
American myself and a mother who I was a preemie, she took care
of me while she went to college, she struggled. We grew up
poor. She took care of veterans for over 30 years as a
physician's assistant, as an LVN. I thank God for her and for
so many others like her who have been fired by this
Administration. Have mercy on them, but my question for you
quickly is what would cuts to Medicaid mean for vulnerable
populations, that includes seniors, I am talking about people
with disabilities who are now covered by both Medicaid and
Medicare? Give me a story.
Dr. Gee. Sure, the cuts in the reconciliation bill will be
extremely harmful for vulnerable communities all across
America. About ten percent of Medicaid enrollees are seniors.
Medicaid is also crucial for providing home and community-based
services for disabled people, enabling them to live in homes
and get services in the community, rather than being
institutionalized settings.
The work requirements in the bill are especially worrying.
Supposedly they are aimed at increasing work, but what we
really know they do is increase administrative burden making it
harder for people to get coverage.
Georgia is one state that implemented a similar program. In
that state, only about three percent of people who would be
eligible based on income were able to get through that red tape
to enroll in Medicaid.
When people lose coverage it disrupts their care. It means
that they might have to discontinue medications with access to
doctors, specialists they might be seeing. And it also puts
strain on hospitals. Rural real hospitals are at risk, as the
Ranking Member Krishnamoorthi noted and it could have
repercussions for other clinics in the community, for
substantive treatments----
Ms. Simon. Those rural hospitals will close and folks will
die. And I apologize for cutting you off. And I want to thank
all of you all for being here and to Representative Frost, I
apologize. I wanted to yield you time. Thank you and I yield
back, Mr. Chair. Thank you all.
Mr. Gill. Thank you.
And I now recognize myself for 5 minutes.
Thank you to the witnesses for taking the time, we really
sincerely appreciate it.
Mr. Lieberman, the One Big Beautiful Bill phases out the
IRA and its harmful green energy subsidies. While phasing these
subsidies out, I think it is a great start. I think ideally we
would repeal these immediately. We ran on repealing the New
Green Deal. Every single Republican ran on repealing the Green
New Deal. I think it is about time that we actually execute on
that promise. Can you elaborate on the importance of repealing
IRA green energy subsidies?
Mr. Lieberman. Yes, the same army of lobbyists who gave us
the Inflation Reduction Act will be back whenever those
phaseout deadlines come asking for extensions.
I was on the Hill for several years. I had dozens and
dozens of meetings with lobbyists for subsidized alternative
energy companies always asking for more, raising the caps,
extending the deadlines. It never happened that one of them
came to me and said, ``We are not an infant industry anymore,
you can end the subsidy.'' There is always a demand for more
and it is very tough to stop these things, as you know full
well. There are so many must pass bills that these things can
be slipped into every year. So, phasing them out is really not
phasing them out. So, repeal would be far and away the best
option.
Mr. Gill. Government handouts are like a drug. Once you
give them out, it is very, very hard to pull them back. And we
have seen the army of K Street descending upon Washington to
keep these handouts in place. Could you just help us understand
a little bit more about how much we might be able to save by
repealing the Green New Deal?
Mr. Lieberman. Well, I think Dr. McBride has the numbers a
little bit better than me, but it is certainly well into the
hundreds of billions of dollars in terms of reduced tax credits
and other subsidies. And then there is the additional effect,
so many of the favored energy sources and technologies have
problems of their own that will impose costs. So, best to stop
these bad ideas in the bud.
Mr. Gill. Right. Could you walk us through how some of
these subsidies have distorted the energy market.
Mr. Lieberman. Well, for Example, when wind and solar are
very heavily subsidized, that is what is going to be built. And
that is fine on a sunny day, on a day when the wind is blowing
at an ideal speed. But there will be those times when you need
backup power. But there is no incentive really for that backup
power. Who wants to spend on a natural gas plant that has to
sit idle and yield to wind and solar and only turn on and be
able to sell energy for those moments where a blackout needs it
be avoided. It is not a winning economic business model. And
that is I think something that is true throughout the Inflation
Reduction Act. It does not ban gasoline-powered vehicles. It
does not ban natural gas facilities, but it so heavily
subsidizes the alternatives that it greatly discourages these
things. And as you said it distorts the market.
Mr. Gill. Have you seen similar dynamics where Washington
began spending money or doling taxpayer dollars out to
different private entities or special interests? And then once
we tried to pull them back, you saw that same dynamic of
special interest lobbying Washington to keep their handouts in
place.
Mr. Lieberman. Well, you see it in the Inflation Reduction
Act. Many of the tax credits were ones that in some cases began
in the 1990s and have been extended many, many times. So, there
is a long history of these tax credits. Once they are
established and once there's a concentrated group of companies
that benefit from them, they are going to lobby hard to keep
them. So, yes, there is a long history of it being difficult to
ever phase something out unless you repeal it when the
opportunity arises.
Mr. Gill. Yes. And Democrats love to claim that these
subsidies benefit working class Americans with IRS data that
found that $5.5 billion of the approximately $8.4 billion in
tax credit claims doled out for residential energy tax credits
came from filers earning more than $100,000 a year annually. I
would love to hear your opinion again. Do you believe that
these tax credits benefit wealthy Americans at the expense of
our working class?
Mr. Lieberman. The priorities in the Inflation Reduction
Act are simply not the priorities of most working Americans.
The bottom 60 percent of households take advantage of ten
percent of the tax credits. And with regard to something like
electric vehicles, keep in mind upwards of 40 percent of
American households are single vehicle households. They either
do not want or most likely cannot afford multiple vehicles. Ask
yourself, can an EV really be that one go-to vehicle? And the
answer is no. Upwards of 90 percent of EVs are part of
multivehicle and wealthier families. And a lot is true of many
of these other subsidized appliances and other things that just
do not make sense for most working folks, which is why they
need to be subsidized.
Mr. Gill. Thank you, Mr. Lieberman.
I now recognize the gentlelady from Arizona, Ms. Ansari.
Ms. Ansari. Thank you. It is so funny to me colleagues
across the aisle love to vote against their districts and their
constituents' interests. They are sitting here railing against
the Inflation Reduction Act, legislation that has launched $130
billion in private investments and created 400,000 jobs in
Republican-held districts since it was passed. If the planned
investments are kept in place, it would create 90,000 more jobs
and bring in $70 billion more in planned investments. When we
are talking about these jobs as well, when I have spoken to
pretty much every single labor union working class people who
very much actually are majority Republican, sheet metal
workers, electricians, plumbers and pipe fitters, they are
thrilled about the investments in the Inflation Reduction Act
because of the jobs they have created. Eighteen of the 20
districts who have received the most funding from the IRA are
in Republican held districts, accounting for 78 percent of the
total IRA spending to date.
But I guess they do not want those investments in their
districts anymore, although I know they attending the
groundbreakings and the ribbon cuttings. In Mr. Gosar's
district, which borders mine in Arizona, a project was
announced that would bring in $1.25 billion in investment, and
created an estimated 6,400 jobs, thanks to the funding
opportunities and the tax credits made possible by the IRA.
That project has since been canceled due to financial
uncertainty because of President Trump's attacks on the IRA and
House Republicans promised to repeal it.
Dr. Gee, question for you, how would the repeal of these
tax credits stifle innovation? I want to talk about innovation
because in so many of the Committees I am on in Congress we
talk about energy dominance and wanting to be at the forefront
of innovation and the threat of China, but we are actively
deciding to stifle that.
Can you talk about what kind of risk that would pose to
companies here in the U.S. and the threat that they may move
out of the country?
Dr. Gee. So, the investments that Inflation Reduction Act
is making in manufacturing and new technology is really a key
to us being able to compete with China on high-tech
manufacturing and also breaking the strangle hold that China
has on mineral processing, which is critical for batteries and
other technologies.
Repealing these investments would create an estimated $80
billion of energy investment opportunities that goes to other
countries not the U.S., including China, the EU, Japan, South
Korea and Mexico. We have already seen investments canceled
because of the policy uncertainty created by discussions of
this bill as well the Trump Administration's efforts and
cancelations of projects. And so, this investment as well as in
things like the National Science Foundation are key to
improving sciences and also investing application of
technology.
Ms. Ansari. So, $80 billion in missed investments, that is
devastating. It is not just about that, the effects of the IRA
repeal will also have an impact on hardworking, everyday
Americans in this country. We know that Rhodium, a nonpartisan
independent research group found that a repeal of the IRA would
increase the average household's energy expenses by over seven
percent over the next ten years. This means higher energy bills
and higher gas prices for everyone.
Dr. Gee, how will Republicans' plans to repeal the IRA's
tax credits and energy subsidies raise costs for American
families?
Dr. Gee. So, the tax credits go to the clean energy
economy, which lowers energy prices and benefits everybody. If
these provisions were to be repealed as Rhodium Group estimates
about $70 more per year is what Americans would pay for
electricity bills. It also means that oil and gas need to fill
the gap, which will be an increase in gas prices that we could
see in the future.
Ms. Ansari. So, in my district--I represent Phoenix,
Arizona--many of my constituents already experience
disproportionately high energy costs because keeping your AC on
in the summertime is incredibly expensive. Can you talk to us
about how the IRA's investments in clean energy help in the
face of growing energy demands?
Dr. Gee. Yes, so we are facing increased energy demand,
luckily 90 percent of what is coming online these days is clean
energy. And the IRA is not just about energy production; it is
also about energy storage. Let me give one example of energy
storage actually from Arizona which is the Scatter Wash battery
storage complex in Phoenix. That is one that involves $559
million in financing thanks to the IRA for making those
investments possible. And it will be able to store enough
electricity to power 50,000 Arizona homes during peak summer
conditions for 20 years.
Ms. Ansari. Thank you. I yield back to our Ranking Member.
Mr. Frost. Thank you. Really quick, earlier Dr. McBride,
one of the Chairs asked you to confirm an updated CBO score for
the Inflation Reduction Act. You mentioned that there is not
one. We also do not have a final CBO score for this big
beautiful bill act that they want to vote on, which will be the
largest transfer of wealth from working class Americans to the
wealthy in this country's history.
Does the Tax Foundation believe that we should even have a
vote on a big bill like this when we do not have a final CBO
score?
Dr. McBride. Well, we do our own scoring, and we use
essentially a lot of same methodologies as CBO and JCT does to
estimate the tax side in particular. But we as well do a
deficit impact that impacts accounting for the spending. We
have not yet done that in total. This is a very big bill--that
is in the title, that is very accurate, there is a lot in
there.
Mr. Frost. You think we should vote on it before we know
the impact to our Nation's national debt.
Mr. Burlison. [Presiding.] Answer this, but the gentleman's
time has expired.
Dr. McBride. Thank you.
Mr. Frost. Yes or no? He said he could answer it.
Dr. McBride. I believe that is up to you. That is your job
to decide that.
Mr. Burlison. All right. Thank you.
I recognize the gentleman----
Mr. Frost. I ask unanimous----
Mr. Burlison. Okay.
Mr. Frost. I ask unanimous consent to enter into the record
the Tax Foundation's ``House GOP tax plan preliminary details
and analysis,'' which states that the big beautiful tax bill
will result in wages shrinking.
Mr. Burlison. Without exception--without objection.
I now recognize the gentleman from Louisiana, Mr. Higgins.
Mr. Higgins. Mr. Chairman is it okay to move forward here?
All right. Thank you.
Mr. Chairman, I would strongly oppose the so-called
Inflation Reduction Act. When Democrats were in the majority in
2022, they jammed this bill through Congress. Conservatives
very clearly stated at the time that the bill would increase
deficit spending and have very negative impact on inflation. It
would impose new and oppressive mandates and we would end up
investing money that we do not have. All deficit spending, 100
percent of the deficit spending, investing hundreds of billions
of dollars into fanciful ideas of energy production that would
ultimately fail. And that is exactly what has happened. So, you
are damn right, we would repeal. I would repeal the entire
thing if I could, every word of it. That is not where we are
with our bill because with the current bill under consideration
as has been referenced here because in the spirit of compromise
you know we have not been able to get to 100 percent repeal.
The arrogance, the disconnect from some of my colleagues across
the aisle is really stunning.
Mr. Chairman, every American family imagines the wondrous
things we could do if we had unlimited money. Great things no
doubt if we had unlimited money. In this town, in D.C., the
Federal government sells Treasury bonds to finance deficit
spending. America, especially your uncles out there, listen to
your uncle clay. We do not have the money. Your Nation, this
generation right now, this Congress and congresses past in
modern history is spending money we do not have at a rate that
is going to collapse your country upon your head. We are $37
trillion in debt. That is 37,000 billion dollars. This body is
a long way from balancing the budget. But if we were to balance
the budget, and run a $1 billion surplus and a billion of the
thousand million, if we were to run a $1 billion surplus, it
would require 37,000 years to address a $37 trillion debt.
My colleagues across the aisle are just unbelievably
supportive of spending more and more and more money that we do
not have. And our country is careening toward bankruptcy. We
face insolvency right now and we must take courageous
corrective action, regarding the incredibly misguided and ill-
advised IRA.
Mr. Lieberman, as compared to affordable and abundant
energy, how has the IRA subsidies impacted investment in so-
called sustainable energy, have we stacked the deck? Have we
put our thumb on the scale, sir?
Mr. Lieberman. Oh, definitely. There are a lot of projects
underway, only because of the generous subsidies.
Mr. Higgins. Only because, not market driven, not because
of the energy that they will provide, not because it is
affordable and abundant and transportable and works well with
our grid. But because this town, this Federal government has
put our thumb on the scale. Am I correct?
Mr. Lieberman. That is correct. I would also add there is
an energy success story that did not require any type of tax
credits and that the fracking----
Mr. Higgins. So, let's shift to that, let's shift to that.
I am going to ask Dr. McBride because my Democratic colleagues,
they act like no refineries or no plants were ever built before
2022. It is insane. I do not know how we powered the entire
20th century in the first quarter of this century, but we did.
We managed to do that without IRA subsidies spending money that
we do not have. Is it safe to say that private investments and
alternative energy will continue with or without taxpayer
subsidies, sir?
Dr. McBride. Yes, absolutely. Certification, look at EVs,
we know EVs have been around for many, many years. My household
we actually own a hybrid purchased, like, 15 years ago or
something. So, these technologies, the batteries that go into--
--
Mr. Higgins. That is going to grow.
Dr. McBride. This actually goes back decades. The
development of the battery technology that we are enjoying now
goes back decades. This stuff was happening with subsidies to
some degree, but also due to private market forces, long before
the IRA.
Mr. Higgins. I concur. Thank you, ladies and gentlemen, for
appearing today.
Mr. Chairman, my time has expired. I yield.
Mr. Burlison. Thank you.
I now ask unanimous consent to enter the following
documents into the record, first is a statement prepared for
this hearing by Gabriella Hoffman who is the Director of Center
for Energy and Conservation At the Independent Women's Forum in
support of cutting the IRA's green energy subsidies. And then
this article by Alex Epstein titled Why Congress' New Budget
Should Eliminate All IRA Tax Credits.
Without objection, so ordered.
And with that, I recognize Mr. Min from California.
Mr. Min. Before I begin--and thank you, Mr. Chair--before I
begin my remarks I would ask unanimous consent to include in
the record a report from the Joint Economic Committee's
Minority staff titled Recent Clean Energy Programs Lower Costs
for Families and Are Vital to U.S. Manufacturing Jobs and
Energy Security.
Mr. Burlison. Without objection.
Mr. Min. And if I could have my clock reset, since I have
not started yet. All right.
As a Member, first I just want to appreciate my colleagues
from Louisiana's point about the national debt and our deficit.
Just note that the big beautiful bill has been estimated that
it will double our national debt by the year 2054. So, if we
care about fiscal responsibility, obviously we owe an
obligation to our future generations to not vote on that bill--
to vote no. Now as a Member of Congress' Joint Economic
Committee I have seen firsthand how the IRA has created massive
new investments in the U.S. economy, including in
infrastructure and manufacturing.
President Trump has repeatedly stated that his goal is to
try to create more manufacturing jobs in the United States. His
tariffs, which cause massive turmoil and led to the destruction
of trillions of dollars of American's savings hard earned
retirement savings, were a misguided attempt to try to bring
manufacturing back to the United States. Well, the IRA has been
extraordinarily successful in doing just this, and you do not
even need to take my word for it, just about a month ago this
same Subcommittee held a hearing on the topic of how to bring
manufacturing back to the United States titled ``Made in the
USA: Igniting the Industrial Renaissance in the United
States.'' And if you go back to the transcript of that hearing,
you will see that I asked every one of those witnesses whether
the IRA's clean energy tax credits were incentivizing
manufacturing in the United States. And every single witness,
including all three Republican witnesses said yes. The IRA was
good economic policy and was creating manufacturing jobs here.
In fact, one Republican witness stated that IRA was
incentivizing more jobs and creating more innovation in the
United States.
Since the IRA was signed into law in 2022, it has led to
over 2,000 new clean energy facilities opening and the creation
of a million new jobs. Additionally, 3.4 million Americans have
used clean energy tax credits for home energy improvement,
saving between $460 to $1,000 per year in annual energy costs.
Looking forward, the IRA energy tax credits are expected to
generate over $1.9 trillion in economic growth over the next
decade, resulting in 13.7 million manufacturing jobs, that will
boost employment across the energy sector as a whole.
At the same time, we are seeing massive costs that are
accruing our economy from climate change, which is expected to
cost an estimated $38 trillion each year by 2049. Transitioning
to clean energy is not just a massive jobs creator. It is also
something that will help us avoid massive negative costs to our
economy.
It is also worth noting that clean energy is seen by
countries around the world as the future of economic growth,
which is why China is investing so heavily in subsidies for
clean energy technologies, ten times as much as the United
States according to some estimates.
Now, Dr. Gee, in terms of jobs and economic growth, do you
see more growth potential in clean energy in the future or do
you see more growth potential in fossil fuels?
Dr. Gee. Absolutely there is a lot of unpacked potential in
clean energy. In fact, to date about $800 billion in private
investments have been announced for clean energy.
Mr. Min. A lot of manufacturing.
Dr. Gee. Yes. This spurred by the Inflation Reduction Act
and that is 300,000 jobs created to date, and another 600,000
in the pipeline. Although those are in jeopardy if the
privileges of the IRA are repealed.
Mr. Min. Now I recently went on a congressional delegation
to Korea and talked to a number companies that had invested
heavily in the United States in manufacturing, Hyundai, LG,
solar panels, electric cars, all manufactured right here in the
United States. Many billions of dollars, thousands of jobs. And
what they told me is that if the clean energy tax credits are
repealed, those projects do not pencil out. They will have to
cut thousands of jobs. This is what we are talking about.
And I want to get to Dr. Trish's testimony. Dr. Trish, am I
summarizing your testimony correctly, just yes or no, if I say
that your main point is that the IRA stunts innovation in
pharmaceutical and medical devices industries by capping the
costs for Medicare recipients. Is that basically the thrust of
it?
Dr. Trish. That is part of it.
Mr. Min. And at the same time, I want to make clear that
even if I agree with you that we are talking--that these do
result in less innovation, we are talking about a tradeoff
here, right? Medicare patients get lower costs and more access
to drugs. And that this may reduce, according to you,
innovation by lowering the profit motive for pharmaceutical
companies. Now, Dr. Trish you may know, I represent quite a lot
of life sciences companies in my district, including Irvine and
Newport Beach, among other cities. And in recent months these
companies and many like them have repeatedly reached out to me
with huge concerns about reduced innovation due to Federal
policies. You want to guess how many of those talked about IRA
or the clean energy tax credits or Medicare negotiations?
Dr. Trish. I will let you tell me.
Mr. Min. Zero, Zero. Would that surprise you?
Dr. Trish. There is a lot of discussion going on about
different types of----
Mr. Min. Guess what they are talking about. Do you want to
take a guess? Dr. Gee, guess what these companies are talking
about?
Dr. Gee. I guess they are talking about the cuts made to
basic science by the Trump Administration and DOGE.
Mr. Min. The National Institutes of Health (NIH) and
National Science Foundation (NSF), yep, cuts to Food and Drug
Administration (FDA) staff which there were increased patent
approval times, approval times generally for devices. They are
also worried about the illegal arrests and deportation
proceedings for graduate students which has led to enormous
fears of the top scientific minds in the world will stop coming
to the United States. In fact, just the other day I was having
dinner with a friend of mine who is the leading cancer
researcher at University of California, San Francisco. And he
told me that his top graduate student candidate had just
emailed him to tell him she was not coming to the U.S., even
though UCSF was her top choice, because of concerns about the
anti-immigrant rhetoric and actions under the Trump
Administration.
Now, Dr. Trish, you did not mention any of these things,
NIH cuts, FDA cuts, effects of anti-immigration policies. Is it
your opinion that these are just not important when we are
talking about innovation?
Dr. Trish. No, that is not my opinion. In fact, my
colleagues at the Schaeffer Center have published on the impact
of NIH cuts----
Mr. Min. I am reclaiming my time.
If we are talking about innovation then, would these not be
much bigger? Are these life sciences companies misleading me
when they do not talk about IRA and they only talk about the
Trump Administration's policies.
Dr. Trish. No, there is--you know, the fundamental math----
Mr. Min. Reclaiming my time.
Would you agree with the statement that the Trump
Administration----
Mr. Burlison. The gentleman's time has expired.
Mr. Min. Would you agree with the statement that the Trump
Administration's policies are having a much more inhibiting
effect on innovation in life sciences and pharmaceuticals than
IRA?
Dr. Trish. There is a lot to unpack there.
Mr. Burlison. Thank you.
We now recognize Mrs. Boebert from Colorado.
Mrs. Boebert. Thank you, Mr. Chairman. And thank you for
being here to our witnesses. I just want to start by saying
that the Inflation Reduction Act, the idea of it creating jobs
is a myth. This is something from the Federal government and it
is actually destroying our grid and it is harming every
American with inflation and less economic opportunity. The IRA
is actually diverting investments to uncompetitive businesses
and jobs. These businesses cannot compete in our market; it is
literally one side of the government choosing winners and
losers. And we are paying millions for EV jobs that pay less
than the national average. The IRA disproportionately benefits
China by increasing the demand for Chinese companies. And they
really dominate the solar and wind supply chains and directly
subsidize Chinese-owned solar and wind projects, operating in
the U.S. So, I just wanted to clear that up. It was never about
reducing inflation. The American people were lied to. It was an
inflation expansion act, not reduction.
On to our witnesses, Dr. McBride, do you know how much CBO
originally said how much the Inflation Reduction Act would cost
in renewable subsidies?
Dr. McBride. Yes, in total, including the tax side and the
spending side, $370 billion for the climate programs.
Mrs. Boebert. $370 billion as we are over $367 trillion in
debt.
And we know that the original estimates were not correct,
that we were given. So, what is the real cost of the green
energy tax credits?
Dr. McBride. Well. The credits alone, that was about $270
billion originally estimated. Now looks to be about a trillion
or $1.2 trillion, that will include the interactions with
regulations like the tailpipe rules.
Mrs. Boebert. Absolutely incredible. Mr. Lieberman, these
renewable energy tax credits will cost the American people
approximately $4.6 trillion by the year 2050. Will the green
energy sources by themselves support the current energy
requirements of the United States?
Mr. Lieberman. I do not know if I would go as far as some
people who say they are parasitic energy sources. That might be
a little too far. But we know that wind and solar are just not
available 24/7. There will always have to be a need for other
energy sources to make sure that we have reliable electricity
and policies like those in the Inflation Reduction Act make it
very hard to ensure reliability.
Mrs. Boebert. Absolutely. And I think there are many of us
here who are for that all of the above energy approach, but it
is when we are subsidizing and promoting China lifting them up,
using the American tax dollars to pay for this. That is where I
have a problem with it.
Mr. Lieberman, giving the growing demand for power in the
U.S., what are the unintended risks to our electric grid that
we are facing with these displacing proven energy methods?
Mr. Lieberman. The North American Electric Reliability
Corporation or NERC just recently released their summer
assessment. They are warning about the potential blackouts in
the U.S. and North America over the summer. And they
specifically mentioned times of low wind and solar, they also
mention bringing coal offline and not replacing it with
anything that is as reliable. And having followed these NERC
studies for a number of years, their warnings are getting
stronger and stronger, and the links that they are drawing to
wind and solar are also being strong and stronger. This is
real. We saw in Spain and Portugal very serious blackouts. They
are being studied, we do not have definitive answers yet, but
those are two countries with a lot of wind and solar. We cannot
draw conclusions yet, but there are some real reliability
risks.
Mrs. Boebert. Right, yes. And their energy sources are
unreliable. We have seen it in California. We have certainly
seen brownouts there. In Colorado, they have begun to shut down
our coal fired energy plants. And they want to stop mining the
coal. Arguably the cleanest coal in the world right there in
Colorado. And our communities are being regulated into poverty
because of it. This so-called Inflation Reduction Act, it is a
disaster for our energy and the cost and the economy. It is
really--this act is what has caused so many problems and
increased energy prices. It was a shameful boondoggle and it is
pushing this unreliable sources, wind and solar, while taxing
our dependable oil and gas. So, I want to thank the witnesses
for being here and I yield.
Mr. Burlison. Thank you. I now recognize Mr. Palmer from
Alabama.
Mr. Palmer. I thank the Chairman.
It is interesting listening to my Democratic colleagues
defend the so-called Inflation Reduction Act. I often refer to
it as the income reduction act. One of the things that I think
gets lost in this is how much energy costs went up during the
Biden Administration and there was--by the end of the Biden
Administration electricity costs had gone up 29.4 percent. That
is after the IRA, that is after a massive investment in the
Green New Deal resources. So, how do you think the Biden
Administration could explain that, Mr. Lieberman?
Mr. Lieberman. Energy fluctuates, but things are made worse
by bad policies and are made better by good policies. And this
was an Administration that prioritized the climate change
agenda over the affordable energy agenda. There is no question
about that. The Inflation Reduction Act is part of that.
Mr. Palmer. In the first three years, residential
electricity prices went up 23 percent, industrial electricity
prices went up 19 percent, home heating oil prices increased 69
percent, oil prices increased 52 percent, natural gas prices 32
percent. Gas at the pump. Just in terms of how does that impact
a household, for those using home heating oil, it was $3,000 a
year. Now the reason I bring that up is because how higher
energy costs impacted the health of the people in Europe. And I
think most people realize The Economist magazine is not some
right-wing publication. They found that because of higher
energy costs in Europe they attributed that to 68,000
additional excess winter deaths. People simply could not afford
to adequately heat their homes. 68,000 is almost 9,000 more
than died from COVID during the same time period. That came out
in 2023. So, there are consequences for these decisions.
It is also interesting that Europe is finding out that
renewables are not reliable. For the first time Germany is now
looking at nuclear power generation. That is an area where, Mr.
Chairman, I think we need to really be focused, particularly
small modular nuclear reactor area.
So, what I would asking you, Mr. Lieberman, is given that
we know that renewables are not reliable, they do not produce a
consistent base load and the need to have a consistent base
load and considering that we are in an arms race for artificial
intelligence with China, should not we be looking at rather
than investing in more renewables, investing in nuclear or
maybe more hydrocarbon, power generation so that we will have
the ability to power the data centers that we are going to need
to compete in AI.
Mr. Lieberman. The energy mix and electricity mix is best
determined by energy markets. Renewables will have a role in
those energy markets, but so will dispatchable sources that are
available can be ramped up when are needed. So, the free market
has done a remarkable job solving our energy challenges. And we
should never stray too far from free markets.
And Europe, as you say, really should be a warning for us.
They are further down that road than we are. It is not working
well, they are not leaving us in the dust because they have
embraced clean energy, just the opposite. And I think we can
look at these European countries as a warning sign.
Mr. Palmer. You know the National Electric Reliability
Corporation puts out a risk analysis, for several years in a
row and I honestly do not,--cannot remember what the last one
said, but I think it is consistent.
The number one risk to our power grid is not a cyber-
attack, it is not an electromagnetic pulse (EMP) attack, it is
changing the resource mix. To put that in layman terms, as we
have shut down hydrocarbon facilities and tried to replace
those with renewables, we have not met the power demand. We
have not been able to fill that gap. And it has put us, I
think, not only in an economic security--created an economic
security problem, but potentially a national security problem
for us.
Mr. Chairman, I yield back.
Mr. Burlison. Thank you Mr. Palmer----
Mr. Min. Mr. Chair, I ask unanimous consent to introduce
this article in Politico from just a couple days ago Senate
Republicans call in House GOP's energy tax credit cuts will not
work where a number of Senate Republicans are quoted----
Mr. Burlison. Without objection, without objection.
Mr. Min. Thank you.
Mr. Burlison. I now recognize Mr. Perry.
Mr. Perry. Thank you, Mr. Chairman.
Dr. McBride, just listening to some of my colleagues, I am
just going to give you a vignette here. If the--we will start
with this, how much did the CBO, if you know, score the IRA at
regarding the subsidies that would be given to these so-called
renewable energy sources. Do you recall?
Dr. McBride. In total $370 billion. Two-hundred-seventy
billion of that was from tax--tax credits.
Mr. Perry. Right. And do you remember what the outside
organizations, other than the CBO, scored it at shortly
thereafter?
Dr. McBride. Closer to a trillion. It was a range of
estimates, they talked about the uncertainty, but----
Mr. Palmer. I think it was over $1 trillion, $1.2 trillion
or something like that. So, let us just say if the Federal
government decided to give tax credits for manufacturing dog
crap. Do you think that there would be an interest in companies
to manufacture dog crap for tax credits especially if it
equated to $1 trillion?
Dr. McBride. Yes, sir.
Mr. Palmer. Of course they would, right? And we could all
sit up here and say, manufacturing is growing, there are all
these manufacturing jobs associated with this new bill and the
tax credits and the subsidies to manufacture dog crap. Well
quite honestly, Dr. McBride, I do not see what we have done
here is very much different. Because I think this is a dog crap
or as--well, this is garbage, it is distorting the market, it
is destroying the energy grid. It is--well, this is my opinion.
In your opinion are these subsidies encouraging the
construction, manufacturing, placement of inefficient,
unreliable energy sources at the peril of reliable base load
energy sources?
Dr. McBride. In general, I am not an energy expert. But
that is what I understand, in general there is a problem here
of the--the general problem is subsidies for particular
technologies. Now some of these credits do try to go to a more
neutral approach, which is good, but the most neutral approach
is going to be to remove the subsidies entirely.
Mr. Perry. Let the----
Dr. McBride. Allow the market to sort out what is the
future. This is an area where there is a lot of uncertainty
about the future. The technologies are evolving every day, the
companies are coming online changing every day, trying to get
into that space and specify this or that technology as these
credits do is a proven way to waste a lot of resources
actually.
Mr. Perry. Mr. Lieberman, do you have a comment on my
question?
Mr. Lieberman. I think you hit on something that so many of
these subsidized alternative energy jobs are just pushing
aside: unsubsidized conventional jobs. One example I recently
learned about there were two refineries in California that used
to refine oil and gasoline and diesel fuel. They shut down and
they were rebuilt making renewable diesel and sustainable
aviation fuels. And that is happening across the country, not
surprising renewable diesel and sustainable aviation fuels
currently get tax credits of $1 per gallon on up. And, you
know, conventional gasoline and diesel gas gets nothing. Now
you could visit those two facilities and say look at the new
jobs, look at the new activities but nothing really new, they
used to make gasoline.
Mr. Perry. Right.
Mr. Lieberman. And incidentally, the alternatives are more
expensive even with the----
Mr. Perry. Right. They are more expensive, they are less
efficient. I mean, if you lived in California in the eighties,
you did not think about brownouts or blackouts at all. But if
you live in California today where they do all this
subsidization and have all this green energy or actually do not
have it, it is a way of life and it is going to come across the
country and it is because of these subsidies that are not only
inefficient and ineffective, but they are also bankrupting the
country, right? I mean, these subsidies, my friends over here
say--on the other side of the aisle say the One Big Beautiful
Bill is going to increase the debt and the deficit. And I am
not necessarily in disagreement with them because--and that is
why I have some concerns about voting for the bill. But they
fail to recognize or acknowledge that they blew a huge hole in
the budget with these tax credits and subsidies for nothing. We
are actually charging consumer--have electricity bills gone up
or gone down on average since the enactment of the IRA, Mr.
Lieberman?
Mr. Lieberman. According to U.S. Energy Information
Administration, electric rates, electric bills have been going
up faster than the rate of inflation since 2022.
Mr. Perry. I wonder why that is.
The Inflation Reduction Act is dog crap, and it should be
repealed entirely.
I yield.
Mr. Burlison. Thank you.
And thank you to our witnesses. I think this has been a
very enlightening and educational hearing, and really
appreciate your service to our country.
And without objection, all Members will have five
legislative days within which to submit materials and to submit
additional written questions for the witnesses, which will be
forwarded to the witnesses for their response.
If there are no further business, without objection, the
Subcommittee stands adjourned.
[Whereupon, at 1 p.m., the Subcommittees were adjourned.]
[all]