Republicans Gutting the IRA is an Attack on the Sunbelt, American Competitiveness, And Your Wallet

Congressional Republicans' budget reconciliation bill is taking direct aim at the Inflation Reduction Act’s green energy provisions. You may not realize it but this is an economic attack on the Sunbelt, on America’s competitiveness in cutting edge technologies, and on your wallet. Let me explain.

Since the passage of the Inflation Reduction Act (IRA), businesses have made plans to invest more than $840 billion in new clean energy projects. Those investments are predicated on the tax credits in the IRA. More than $500 billion of that is planned and in the works but hasn’t actually been spent yet; if Republicans’ reconciliation bill passes, companies will be forced to abandon many of these investments. That will result in job losses, a stalled manufacturing renaissance, a reduction of America’s competitiveness, and increased energy bills.

The Sunbelt Clean Energy Boom and The Republican Proposal to Gut It

The Sunbelt has emerged as the epicenter of America's clean energy revolution. Not to point out the obvious, but solar is a huge part of that revolution and….it’s called the Sunbelt for a reason. But it’s not just the weather. Quietly, a manufacturing renaissance has been quietly transforming the economic landscape across the South. As I noted in a Washington Post article yesterday, the South has become America’s manufacturing powerhouse.

That holds true for green energy manufacturing as well. Texas, a state whose very identity is connected to oil and gas, now leads the nation in wind energy; it produces more than a quarter of all U.S. wind energy, more than any other state. The state now hosts more than 15,000 wind turbines with more on the way. Arizona's vast deserts are transforming into solar farms that power homes and factories. Louisiana, historically dependent on fossil fuel exports, is diversifying into carbon capture.

The Republican budget reconciliation bill represents an economic assault on the clean energy transition and on the Sunbelt's growing prosperity. The proposal, unveiled by the House Ways and Means Committee, would dismantle the tax incentives that have fueled the clean energy boom.

The clean electricity investment and production tax credits that have driven solar and wind development would be phased out over the next few years, with full elimination by 2031. Electric vehicle (EVs) tax credits, which are crucial to making EVs affordable for middle-class families, would disappear more or less immediately. Manufacturing incentives that brought battery factories and solar panel production to Southern states would face new restrictions before terminating entirely by 2031.

Perhaps most damaging is the elimination of the "transferability" provision that has enabled smaller companies to access capital markets. As Emily Pontecorvo at Heatmap has pointed out, transferability is “the unsung hero of the clean energy economy.” Without this tool, only the largest corporations with significant tax liabilities can benefit from remaining credits which cuts out the innovative startups driving much of the clean energy revolution.

The Energy and Commerce Committee's proposal doubles down on this attack, rescinding billions from programs like the Greenhouse Gas Reduction Fund, which finances clean energy projects, and the Department of Energy's Loan Programs Office, which has financed $90 billion in innovative energy projects (and returned $5 billion in profit to taxpayers). As Politico reports, even many on the right love this program but it’s being cut because fighting “woke” is apparently the top priority.

The bill would also cut programs that help the Department of Energy site new electricity transmission lines. These cuts would directly undermine critical infrastructure needed for the Sunbelt's economic growth. Even as the region's factories are hungry for cheap electricity, Republicans would slash transmission infrastructure funding needed to maintain grid reliability.

Image Credit: The New York Times.

This is About Jobs

When I was a kid growing up in the South in the 90s, everyone knew that Dalton, Georgia was the carpet capital. The overwhelming majority of carpet in everybody’s houses all over the United States came from this one little corner of Georgia. But then a couple of things happened: the industry consolidated, it got easier to automate carpet production, and most importantly, demand for carpet went way down. If you walk into a house that hasn’t been touched since the 80s or 90s, you immediately think “Whoa, that’s a lot of carpet!” because now people like hardwood and synthetic floors a lot more than they once did. All of this walloped Dalton. No area in America, not one, had worse job losses in the early 2010s than Dalton.

But guess what? It didn’t stay that way. Hanwha Qcells has invested $2.5 billion to create the Western Hemisphere's largest solar panel manufacturing facility, in Dalton, Georgia. As Jason Mock, president of the Greater Dalton Chamber of Commerce, put it, "It's a newer technology for us, but it's one we're excited to be making right here."Green energy has economically saved what would have been a dying town. But now Republicans including Dalton’s own representative, Marjorie Taylor Greene, want to cut the legs out from under the area’s prosperity. She gets to own the libs; her constituents will get to pay the price in terms of lost jobs and lower wages.

At the other end of the state near Savannah, Hyundai poured $7.5 billion into an electric vehicle factory that's becoming a cornerstone of the region's industrial future. That facility employs thousands. But that’s at risk too now. As Bert Brantley of the Savannah Chamber of Commerce noted, "It's difficult for a company to invest somewhere and then conditions change."

And this is not just at that one factory. It is a big deal across the South.

Image Credit: The Wall Street Journal.

Ford's CEO has explicitly warned that gutting the IRA's EV incentives would force layoffs. When the economics of manufacturing these vehicles changes overnight, companies must rethink investment plans. The cuts would particularly devastate emerging supply chains for critical materials like batteries, solar components, and semiconductor chips. The competitive advantage being built across the Sunbelt would evaporate. Companies that have invested billions based on the promise of policy stability would face brutal economic whiplash, with ordinary workers bearing the consequences.

This is About Global Economic Competitiveness

The Sunbelt stands at the forefront of America's clean energy revolution, positioning itself to dominate the 21st century's most promising industries. Gutting these investments wouldn't just harm today's economy—it would surrender tomorrow's competitive advantage to foreign rivals.

To give just one example, the elimination of 45Y (Clean Electricity Production Credit) and 48E (Clean Electricity Investment Credit), would badly undermine investment in next-generation nuclear energy. Meanwhile, China just approved ten new nuclear power units. As one observer put it, “If the US loses the advanced nuclear industry to China, we can look back at these [policy changes] as the proximate cause, should they be enacted.”

While China and Europe accelerate their investments in renewable energy, batteries, and electric vehicles, the Republican proposal would deliberately handicap American manufacturers if what those manufacturers make has blue vibes. This is vandalism of the American economy for the purpose of owning the libs.

Louisiana's emerging hydrogen and carbon capture hub represents the future of American energy innovation. Regional economies are diversifying beyond traditional fossil fuels. Eliminating tax credits for these technologies sends innovative companies and their investments overseas.

Global markets are shifting toward clean energy technologies regardless of U.S. policy. By dismantling domestic manufacturing incentives, we simply ensure these products will be made elsewhere. The 45X Advanced Manufacturing Credits that helped to spark an ongoing investment boom would face unworkable new restrictions before disappearing entirely. That Loan Programs Office I mentioned earlier — gutting it would cripple America's innovation ecosystem at precisely the moment when global competition demands we strengthen it.

This is About Your Wallet

The Republican reconciliation bill isn't just an attack on jobs. It's a direct assault on family budgets across the Sunbelt. By gutting clean energy incentives, the proposal would trigger immediate cost increases for millions of American households.

Eliminating the residential energy efficiency credit (25C) means families would lose access to tax credits worth up to $3,200 for home energy upgrades. These credits can save families almost $1,000 a year on their energy bills. For Sunbelt residents facing scorching summers and high air conditioning costs, these efficiency upgrades are particularly valuable. Eliminating the New Energy Efficient Home Credit (45L) would kill a tax credit that has assisted the construction of 350,000 new homes. That obviously connects to housing supply and affordability.

The $7,500 tax credit for EVs would disappear by 2025, making cleaner transportation options unaffordable for many middle-class families. Meanwhile, the elimination of the residential clean energy tax credit would end the 30% discount on rooftop solar installations that has saved homeowners an average of $1,250 annually. It would also jeopardize tens of thousands of jobs in the solar installation sector.

Republicans also want to prevent the federal government from using the Strategic Petroleum Reserve to stabilize gas prices. This makes no sense. High gas prices are up there with mosquitoes and mealy tomatoes in terms of things Americans viscerally hate.

All of these cuts to green energy put in more pressure on natural gas, which is already getting more expensive. This past week’s newest inflation data from the Bureau of Labor Statistics shows that electricity and piped gas went up 3.6% and 15.7% just in the last month. Repealing the IRA’s green energy incentives would increase household energy costs by $32 billion from 2025-2035. For families already struggling with inflation and housing costs, these energy price increases couldn't come at a worse time.

Finally, the extent to which Republicans are hurting their own constituents is somewhat shocking. Three-quarters of the investments at risk are in Republican districts, yet their representatives seem determined to undermine their own constituents' economic prosperity.

Image Credit: New York Times.

In sum then, these proposed clean energy cuts represent one of the most self-defeating economic policies in recent memory. They sacrifice Sunbelt jobs, American competitiveness, and family budgets on the altar of culture war politics.

-GW