Daily Missive

The Inflation Reduction Act’s Uncertain Future

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November 13, 20243 minute, 1 second read


The Inflation Reduction Act’s Uncertain Future

James West, The Midas Letter

 

Trump’s stance on renewable energy and climate change is clear: Climate change is a hoax and any barriers to growth at any cost of the US oil and gas industry will be eliminated.

But one has to wonder, with the recent nuptials of bros Trump and Musk now consecrated in victory, how does that jive with the electric car business of the First Laddie?

One might assume that, among the victims of Trump’s newly sharpened axe, would be the Inflation Reduction Act of 2022 – Joe Biden’s signature accomplishment in the clean energy sector.

Within the Act are numerous projects that are funded by the Energy Infrastructure Reinvestment Program, which has $5 billion earmarked for clean energy projects that re-vitalize existing energy facilities that have passed out of service, with a total zero percent loan guarantee program of $250 billion available.

Matthew Daly, in a comment to PBS stated, “Basically everything that President Biden has tried to do, President Trump is going to try to undo. And you mentioned the Inflation Reduction Act, which is a terribly named law, but it’s a very wide reaching law that basically tries to spend hundreds of billions of dollars to promote clean energy and has a lot of tax credits in there.”

Never a nation to dilly dally when the federal government is handing out free money, numerous projects have already been approved and are underway. Most of these are in Republican jurisdictions, so there will be significant internal resistance should Trump wish to unilaterally cancel the Act.

Trump is more likely to dismantle pieces of the Act that benefit Democratic sponsored projects while leaving the Republican beneficiaries unscathed. You might think there is no way to do that legislatively, but Trump has demonstrated a persistent ability to rewrite the rulebook when it comes to targeting his enemies.

The Economic Case for Preservation

The IRA has spurred significant investment and job growth in the clean energy sector, with over $500 billion in planned investments and a growth rate twice that of the overall US employment market ¹. Repealing the law would undermine private investments and halt ongoing development, ultimately costing taxpayers billions of dollars.

Harry Godfrey, head of Advanced Energy United’s federal investment and manufacturing working group, notes that the IRA’s tax incentives align with Trump’s goals of energy independence and onshoring manufacturing.

Arguments Against Repeal

  • Bipartisan Support: 18 House Republicans have expressed opposition to repealing the IRA’s clean energy and manufacturing tax credits, citing the law’s benefits in their districts ¹.
  • Economic Interests: The IRA has driven economic growth in states with significant Republican representation, making a full repeal politically challenging
  • Global Competition: The US needs to maintain its competitive edge in the clean energy sector to counter China’s dominance

Arguments For Repeal

  • Trump’s Campaign Promises: Trump has pledged to repeal the IRA and halt offshore wind development ;
  • Ideological Opposition: Some Republicans may seek to dismantle the law due to ideological differences ;
  • Alternative Priorities: The GOP may redirect funds allocated to clean energy toward other priorities, such as tax cuts ¹.

The Way Forward

While the IRA faces uncertainty, experts like Gina McCarthy, former national climate advisor, remain optimistic: “The shift to clean energy is unstoppable… Our coalition is bigger, more bipartisan, better organized, and fully prepared to deliver climate solutions”.

So its pretty clear that, despite Trump’s idealogical opposition to anything to do with clean energy, he may find more immediate gratification for his revenge porn fantasies tea-bagging on the foreheads of less popular policies. We will have to wait and see what happens on January 6th….if he even makes it to that date.


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As time unfolds, the US federal government’s tentacles burrow ever-deeper into the economy. In the 2008 crisis, banks deemed “too big to fail” received a government bailout. The following year, automobile firms GM and Chrysler were saved from bankruptcy. When the Treasury exited GM in 2013, taxpayers were left with a loss of more than $10 billion. Ten years later, the federal government forbade Nippon Steel to acquire US Steel, in a merger they both desired. Instead, the government settled for Nippon Steel to invest in US Steel alongside its own direct ownership of the firm via a “golden share.” Just this past week, the US federal government announced its 10 percent stake in Intel, the struggling US semiconductor giant. On top of the $7 billion Intel had already received from the 2024 CHIPS Act, Commerce Secretary Gina Raimondo called Intel “America’s champion semiconductor company.”

Stefan Bartl: From Draining the Swamp to Owning Intel: Is the Right Becoming What It Feared?
When the Ballast Shifts

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At 2 p.m. today, the Fed will release its rate decision and quarterly projections. Most expect a 25-basis-point cut.

Bond traders are betting more will come before the year’s end. At 2:30 p.m., Jerome Powell will face the press, and investors will parse every word for hints of further easing.

Trump is appealing to the Supreme Court to fire Governor Lisa Cook, after a lower court ruled she could stay while her lawsuit proceeds.

If successful, he’ll gain another seat to fill — tightening his grip on the Fed.

“Officials are expected to lower rates today in an attempt to backstop a shaky U.S. labor market,” Bloomberg reported this morning, “after unrelenting pressure from the president for a ‘big cut.’”

When the Ballast Shifts
It’s Still Early Days for Gold

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With gold prices continuing to push higher – and with central bankers buying hand over fist – gold miners should continue to see expanding profits.

That’s in sharp contrast to the rest of the market, where any potential slowdown in AI could cause a break lower.

The Fed, bending to political winds, is likely to join its global counterparts in cutting interest rates today. There’s more yet to the story for gold and the gold miners – as we forecast a year ago.

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Our fiscal reality is clearly unsustainable. With the passage of the “Big Beautiful” budget reconciliation bill, Congress has already given itself permission to grow the national debt to $41 trillion. Interest payments on the national debt are already the second-most-expensive item on the federal budget, behind only Social Security (and ahead of defense spending). As the national debt continues to grow, debt service will become our number one spending obligation. History suggests it’s only a matter of time until we hit that limit and, unless things change, once again raise the debt ceiling. This cannot continue indefinitely.

Dave Hebert: How Long Could That $1.8 Billion Powerball Jackpot Fund the Government?