One Year Later, Inflation Reduction Act Implementation Remains A Mess

Today marks the one-year anniversary of President Biden signing the Inflation Reduction Act (IRA) into law. Despite the misleading name—the law was never about reducing inflation—the IRA is a quintessential example of Democrats’ vision for industrial policy, redistributing wealth away from disfavored parts of the energy sector, like oil and gas, toward favored sectors like solar, wind and electric vehicles.

“Industrial policy” is merely corporate welfare by another name. It’s about politicians picking winners and losers in the marketplace, assuring the politically connected and privileged maintain a leg up over those who play it straight. The IRA includes $391 billion in energy and climate spending over 10 years, with much of the “spending” coming in the form of tax credits, deductions, and rebates. That’s according to Congressional Budget Office (CBO) estimates, but the real cost could be be far higher. Credit Swiss says the climate and clean energy provisions will cost more than double what CBO estimates, around $800 billion, and an analysis from Goldman Sachs says the true cost is closer to $1.2 trillion.