Speaker McCarthy’s Debt Ceiling Proposal Would Undo Benefits of Inflation Reduction Act

Leaders in the House Republican caucus are attempting to use the debt ceiling as leverage to strike down the Biden administration’s climate plan—calling to gut the climate and energy provisions of the Inflation Reduction Act, which create construction and manufacturing jobs, strengthen domestic supply chains, reduce household costs, and much more. Congress has regularly voted to raise or suspend the debt ceiling; in fact, many House Republican lawmakers, including House Speaker Kevin McCarthy (R-CA), voted to do so three times during the Trump administration with strong bipartisan support. However, Speaker McCarthy is now threatening to block an increase unless the Biden administration’s climate plan is gutted, which would cause the nation to default on its legal obligations and have catastrophic consequences for the global economy.

Here are five benefits of the climate investments of the Inflation Reduction Act that Speaker McCarthy’s proposal would slash:

1. The Inflation Reduction Act brings U.S. climate goals within reach

The Inflation Reduction Act is likely to cut U.S. greenhouse gas emissions to 40 percent below peak levels by 2030. This represents the largest climate investment in U.S. history and brings the country closer to meeting its Paris Agreement commitment of reducing greenhouse gas emissions by 50 percent by 2030. However, the Inflation Reduction Act does a lot more than just reduce greenhouse gases; it pairs climate action with incentives to improve job quality, expand workforce development, strengthen domestic supply chains and manufacturing capability, increase investments and improve health outcomes in low-income communities, and more.

2. The Biden administration’s climate plan spurs massive clean energy job creation

The Inflation Reduction Act has already created more than 142,000 jobs since it was signed into law in August 2022. Nearly 200 clean energy projects have been announced across the country—including new manufacturing sites for batteries, electric vehicles, and wind and solar. These new investments are thanks to growing demand for clean energy and direct financial incentives for energy manufacturing included in the Inflation Reduction Act. The economic benefits of these investments will be felt around the country, across party lines; in fact, more than half of the clean energy projects and more than 77,000 jobs are being brought to Republican-led districts. Repealing the Inflation Reduction Act incentives and investments now would stymie private investment and cut these new jobs. Indeed, a new analysis finds that if all of Speaker McCarthy’s proposal demands are met, 780,000 jobs will be lost by the end of 2024.

The Biden administration’s climate plan is expected to create at least 1.3 million new jobs by 2030. Furthermore, this clean energy job boon is accompanied by strong incentives to ensure that projects are creating high-quality jobs in the United States that pay market wages and benefits, as well as expand apprenticeship programs and domestic manufacturing content standards. These pillars will help ensure fair wages for workers, create a skilled labor pipeline, increase access for workers from all walks of life, and onshore domestic manufacturing jobs for clean energy projects.

Despite their benefits to the American workforce, Speaker McCarthy’s proposal would gut these investments and strike down requirements to ensure they create good jobs for working people.

3. Households can save money on their energy and fuel bills and receive significant rebates to switch to cleaner, cost-saving appliances

The nation’s dependence on fossil fuels allows oil and gas companies to price gouge without facing consequences—all while continuing to receive federal subsidies. In fact, big oil companies doubled their profits in 2022 to a record-breaking $219 billion, while families paid more at the pump. Speaker McCarthy’s debt ceiling proposal would merely prolong the country’s reliance on volatile fossil fuels and empower oil companies eager to profit from that dependence.

Meanwhile, the Inflation Reduction Act offers households up to $28,500 in rebates and incentives to install clean appliances in their homes and buy electric vehicles that save households money. For low-income households, these rebates can cover 100 percent of project costs, including installation costs. Such discounts increase accessibility and affordability, giving homeowners the choice and opportunity to switch to clean, cost-saving energy systems.

Households that switch to electric appliances can save $1,800 per year in energy costs, and switching to an electric vehicle can save drivers up to $2,600 per year in reduced fuel and maintenance costs. Even families that don’t switch to electric will see significant cost savings thanks to the Inflation Reduction Act, because of declining electricity rates and expanded clean energy deployment. If these cost-cutting climate provisions are repealed, the average U.S. household is estimated to spend $1,025 more on its energy bills in 2030, compared with an economy without the Inflation Reduction Act.

4. The Inflation Reduction Act is the most significant investment in clean manufacturing in U.S. history and will accelerate American innovation and global competitiveness

The Inflation Reduction Act’s innovation investments will move the United States toward energy independence and build a competitive domestic supply chain that is not reliant on other countries or global market shocks. Yet while there is bipartisan support to compete with China’s manufacturing capacity, Speaker McCarthy’s proposal deliberately strikes down the Inflation Reduction Act investments and tax incentives that would help the United States catch up. By creating domestic content requirements for electric vehicles and other clean energy systems, the Inflation Reduction Act invests in U.S. manufacturing capabilities, strengthens domestic supply chains, and bolsters our clean technology market. In doing so, it will help the United States transition to a 21st-century clean energy economy.

The legislation has already spurred $243 billion in new private investments to strengthen American clean energy innovation and manufacturing. As of January 2023, roughly two-thirds of the projects coming out of the Inflation Reduction Act were placed in Republican-led districts—despite the fact that no House Republicans voted for the Biden administration’s climate plan. For example, Rep. Marjorie Taylor Greene (R-GA) supported the $2.5 billion investment from Qcells to build a solar panel factory in her district in Georgia. As White House Press Secretary Karine Jean-Pierre noted, “Will [House Republicans] vote to kill manufacturing jobs in their own home districts and reverse the reshoring of manufacturing from China?”

Indeed, repealing these climate provisions would make the country less competitive with China and go against efforts to bring more manufacturing jobs to the United States.

5. Pollution reductions from the Biden administration’s climate plan will provide significant health benefits to Americans, especially those in low-income communities

In addition to its economic and climate benefits, the Inflation Reduction Act will yield critical benefits to public health by reducing the burning of dirty fossil fuels and the use of fossil fuel-based appliances in the home. In fact, analysis from Energy Innovation shows that the Inflation Reduction Act may save up to 4,500 premature deaths and 119,000 asthma attacks annually by 2030, which would amount to $27–$42 billion in monetized value in that year alone. Importantly, pollution-related deaths would decline even more in low-income communities and communities of color, which are disproportionately burdened by environmental harm and pollutants.

Conclusion

Despite the benefits Americans stand to gain from the Inflation Reduction Act’s new clean energy investments, leaders in the House Republican caucus are holding the debt ceiling vote hostage in order to gut the Biden administration’s climate plan. Defaulting on the nation’s debt would result in disastrous and lasting harm to the global economy and U.S. financial system, and Speaker McCarthy’s budget proposal would further harm the economy and lose out on widely beneficial Inflation Reduction Act investments. Congress must act swiftly to raise or suspend the debt ceiling and maintain the climate investments that will provide innumerable benefits to workforce development, manufacturing capability, U.S. competitiveness and innovation, and public health.