Senate Republicans must save America from harm caused by the expensive ugly Trump tax bill

Save Us, Senators, From a Very Expensive Mistake

Medicaid will be cut in this terrible legislation but the rich will be given a tax cut.  This makes no sense! #ReverseRobinHood

Echo New York Times opinion by Robinson Meyer*

Every so often, Americans rely on the Senate to save us from the more ill-considered urges of the House of Representatives. 

That time has come again. House Republicans sent an abysmal reconciliation bill to the Senate that would wreak particular havoc on the country’s energy policy and undermine America’s industrial strength. But the Senate can (and must❗) fix it❗

The bill would gut the clean-energy tax credits established in the Inflation Reduction Act to fund tax cuts that would largely benefit high-earning households. The energy tax credits, which were passed under President Joe Biden in 2022, were meant to increase the country’s electricity supply, reinvigorate its battery and electric vehicle supply chains and cut its carbon pollution. They have helped drive a clean-energy manufacturing boom across the country.

Republicans are making a mistake by trying to repeal much of the Inflation Reduction Act, though I understand why they’ve been frustrated with Democrats’ sometimes contradictory energy policy. Too often, state and local progressives have called for climate action, but then fought off, shut down or lamented the energy sources — especially hydroelectricity and nuclear power — that until recently generated the bulk of America’s clean electricity.

But Republicans are now the ones pursuing a nonsensical energy strategy. The Inflation Reduction Act improved on decades of failed policy by going technology-neutral — its tax credits support any new power plant that doesn’t generate greenhouse gas emissions. That means technologies that Republicans like, including nuclear fission, geothermal power and even nuclear fusion, could benefit.

By unwinding these tax credits in such a ramshackle and disorganized way, Republicans would undermine many of their own goals. Senate Republicans can still salvage a sensible energy policy from the House’s mad dash.

First, they should preserve tax credits that support innovation and recognize the fact that the United States is currently seeding the next generation of world-leading energy technologies.

Take the new class of nuclear startups that are finally ready to deploy their first power plants. Or the entrepreneurs who have figured out how to use fracking equipmentto deliver cheap, zero-carbon electricity by drilling new geothermal wells. Fervo Energy, one of these geothermal startups, has shown that its drilling tiunes are falling, suggesting that its technology can rapidly take off in the same way that fracking, solar and batteries have. There’s even been recent encouraging news on the nuclear fusion front.

These and other clean-energy developments are the reason there’s the potential for a boom in U.S. electricity. For the first time in decades, American electricity demand is soaring, driven by electric vehicles, data centers and manufacturing.

Without a burst of new supply on the market, this demand will drive up power prices. Low electricity costs have long been a strength of American economic competitiveness that we are now at risk of losing.

Like with any new technology, these next-generation American nuclear and geothermal power plants will be hard to plan and hard to finance. That’s why the government should give them a leg up — much like it once helped the solar, wind and fracking industries — with tax incentives that support early projects. But the G.O.P. reconciliation bill would will make this impossible.

If the Senate follows the House and cuts off the clean-electricity tax credits, it will hurt these next-generation technologies most. Nuclear and geothermal developers in the first stages of building cannot rush their early projects to completion. Even if the Senate adopts the House’s provision to allow nuclear plants to use the tax credits until 2028, it will still not be enough — the procedural hurdles will prevent banks from financing nuclear plants. The Senate should give nuclear and geothermal developers the same long-term certainty it once extended to solar and wind developers.

Second, Republican senators should pay particular attention to the risk of a coming electricity and energy price shock. Today, natural gas provides about a third of America’s primary energy, and it is the country’s No. 1 source of electricity generation. But the country’s gas supply is about to come under more pressure. From 2024 to 2028, 10 new liquified natural gas terminals are expected to open across North America, which would roughly double the United States’ export capacity of the fuel. This would, in turn, increase demand for domestic natural gas supplies.

It’s possible that energy companies would respond to this higher demand by drilling for more gas. But if natural gas supply doesn’t rise as fast as demand, then U.S. natural gas prices will rise to something closer to their global average. Natural gas is three to five times more expensive in Europe than in the United States, so there’s a real chance that American consumers will get soaked.

A monster price shock could also hurt American manufacturers and hold back the artificial intelligence industry. This scenario would worsen if new renewable-energy or zero-carbon power plants — which had been planned under the assumption the tax credits would stay on the books — get canceled.

Finally, Republican senators should be careful not to pull the rug out from under electric vehicle factories that have set up shop in their states.  (Maine Writer IMO "Telsa" should not be the trademark associated with all electric vehicles.)

Over the past few months, Republicans have seemed dead set on ditching any policies that help support demand for E.V.s — whether they do so through subsidies, such as the $7,500 tax credit for personal E.V. buyers, or through regulations such as California’s 2035 E.V. rules. At the same time, they have mostly left the supply-side subsidies for E.V. and battery manufacturing in place, although they have still made them harder to access.

But Princeton University’s energy modeling shows that yanking away these supports would ultimately kill the economic case for the hundreds of new E.V. and battery factories under construction nationwide. That’s because the demand- and supply-side incentives are designed to work together. By killing the personal E.V. tax credit, lawmakers would also kill demand for the creation of a domestic critical mineral supply chain — even though reshoring mineral production is a Trump administration goal.

So far, batteries have been this century’s essential energy technology. They will be core to the most important industries of the future in information technology, transportation and warfare. Just look at how battery-powered drones have transformed the Ukraine war. American policymakers would be foolish to give up on the industry for essentially ideological reasons. There is plenty of room to improve America’s battery policy — we should ensure that next-generation batteries are developed and made here — but simply surrendering current technology is misguided.

Donald Trump understands the importance of cheap electricity. During his Inaugural Address, he bragged that the United States can flex its manufacturing muscles because energy is so much cheaper here than elsewhere. Now his policies risk making energy much more expensive while surrendering any leadership in energy technology whatsoever. It is time for senators to act responsibly — to set a long-term strategy for the country’s energy future. Senate Republicans understand that energy abundance is the essential input for the economy, national security and America’s well-being. Now they must act — and save us from the idiocy that would otherwise result.

Robinson Meyer is a contributing Opinion writer and the founding executive editor of Heatmap, a media company focused on clean energy and climate change.