Climate Initiatives in Biden’s Inflation Reduction Act
Higher Cost Estimates for Climate Initiatives
The Inflation Reduction Act (IRA) proposed by President Joe Biden includes climate initiatives that come with a larger price tag than initially anticipated. The latest estimates reveal that these initiatives would cost over $400 billion more than originally projected.
The Congressional Budget Office (CBO) has disclosed the increased cost of $428 billion in its budget and economic outlook for the next decade. However, the agency acknowledges that these projections are subject to change due to various factors such as the pace of deploying low-emissions technologies, the use of electric vehicles, and the number of taxpayers claiming specific tax credits introduced in the IRA.
The CBO stated, “The budgetary effects of energy-related tax provisions remain highly uncertain.”
Varying Cost Estimates
The CBO’s initial estimate in 2022 was around $400 billion for the climate and energy provisions of the IRA. However, other corporations and organizations argued that this number was significantly underestimated.
Shortly after the CBO’s estimate, Credit Suisse, a global investment banking company, estimated that the climate initiatives would cost over $800 billion, which aligns more closely with the CBO’s recent estimate.
Furthermore, a recent report from the University of Pennsylvania Wharton School of Business predicted that the IRA’s climate and energy provisions would cost taxpayers over $1 trillion.
Reasons for Higher Projections
The CBO explained that technical revisions led to significantly higher projections. The majority of the increase ($224 billion) stemmed from clean vehicle tax credits and revenues generated from excise taxes on gasoline. Out of this total, $151 billion resulted from reductions in projected revenues, and $73 billion came from increases in projected outlays.
The Environmental Protection Agency’s proposal to impose more stringent vehicle emissions standards starting from the 2027 model year contributed significantly to the higher cost projections.
Implications for the Economy
In addition to the cost of Biden’s climate initiatives, the CBO report does not paint a positive outlook for the nation’s economy.
The CBO projects that the nation’s deficit will steadily increase, reaching $2.6 trillion in 2034 from $1.6 trillion in this fiscal year. The deficit is projected to reach 6.1% of GDP in 2034, a level comparable to those experienced during some of the greatest national crises.
Debt held by the public is expected to rise to 116% of GDP by 2034 ($48.3 trillion) and is projected to grow further to 172% of GDP in 2054, up from the 99% projected for the end of this year ($26.2 trillion).
According to the CBO, the estimate of 116% of GDP in 2034 will mark an all-time historical high for the nation, primarily driven by increases in mandatory spending and interest costs outweighing declines in discretionary spending, revenue, and economic growth.
Read More of this Story at www.dailywire.com – 2024-02-10 17:37:13
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