GOP Risks Economic Gains by Repealing Vital Energy Tax Credits
Republicans won in November because Americans were fed up with a far-left administration whose only impact on the daily lives of Americans was to hike their taxes and preside over rampant inflation that gouged their wallets at the grocery store and the pump. Inflation is decreasing under the Trump Administration, but now Congressional Republicans are on the precipice of frittering away this victory by repealing four energy tax credits that benefit their constituents and home states. Right now, we have several tax credits that promote American jobs and help lower energy prices: 45x, 45Y, 48E, and 45V. Repealing these tax credits would kill jobs and spike energy prices, while harming America’s ability to compete with the Chinese Communist Party and their near-total monopoly on critical minerals and electrical production equipment.
The cuts would be an immediate and unmitigated disaster for red states, including crucial battlegrounds. A study by the nonpartisan Clean Energy Buyers Association found that Arizona would see a rate increase of 12.7% for households and lose 6,700 jobs, North Carolina would see a 13% rate increase and lose 3,000 jobs, Kansas would experience a 14.3% rate hike while losing 5,250 jobs, and Nebraska household electricity prices would jump by 15.5%; Iowa would get off “lightly” with just a 5.3% increase. The Brattle Group estimated that nationwide, Americans would lose $270 billion to higher household energy prices, and employers would fire 3.8 million employees to be able to pay for their spiking rates.
Some Republicans have made the argument that this is all fine because renewable energy is artificially subsidized by these tax credits, and without it, natural gas and coal plants would make up an increased share of the market, without any meaningful impact for the rates consumers pay. However, natural gas plant construction is in a full-blown supply chain crisis. A new natural gas power plant costs 2.5 times as much to build today as it did several years ago.
And despite President Trump’s moves to expand coal mining, decades of left-led assault on the coal industry have made a pivot back to coal expensive and slow. Even if renewable energy is subsidized, global economic reality shows that natural gas and coal cannot pick up the slack. This is why Secretary of Energy Chris Wright has supported extending the tax cuts in order to maintain stability in the energy market, and why Dan Brouillette, Secretary of Energy under Trump’s first administration, supports a continuation of these credits.
Moreover, the tax credits have allowed us to begin decoupling from CCP-controlled battery factories. Repealing them immediately would destroy America’s ability to produce electric cars and their components, ceding a major front of the trade war to China. Over 70,000 Americans, mostly concentrated in red states or battleground states, are currently employed building EVs and lithium batteries. Beyond this, thousands more Americans will lose jobs from the domino effects of EV manufacturing collapse, hollowing out towns in Middle America that have gotten a new lease on life as a result of the tax credits.
If these credits are repealed, every American electric vehicle would run on Chinese batteries and components, rendering consumers vulnerable to sabotage and disruption. Moreover, the 45X tax credit supports the domestic production of critical minerals, which have uses for EVs and solar panels but are also crucial to produce smartphones and semiconductors. China currently controls 70% of the global critical minerals market, and without protection for the nascent American industry, the United States will not be able to reshore production.
Some Republicans have recognized the danger. Four Republican senators, including crucial swing votes Lisa Murkowski and John Curtis, sent a letter to Majority Leader John Thune, objecting to the broad cuts that the House GOP proposed. Thirteen House Republicans also sent Thune a letter, making a near-identical argument: if the Senate GOP removes these credits, the reconciled Big Beautiful Bill will struggle when it goes back to the House. Without their votes, the Big Beautiful Bill and the President’s agenda will stall.
If the credits are axed, battleground Republicans will not be able to explain to their working-class constituents why they put petty politics above their constituents, especially after promising to fix the economic disaster inflicted by the Biden administration. Republicans will struggle to explain why they ceded crucial ground in our economic and trade war with the Chinese Communist Party. Standing up to unfair Chinese trade practices and lowering the cost of living are the two key aspects of President Trump’s agenda. Repealing the tax cuts is a betrayal of it. At the very least, Republicans should extend the tax cuts so domestic manufacturers and energy producers have a gradual off-ramp to save their businesses.
