$35 Trillion National Debt: How Green Energy Subsidies Are Fueling the Crisis

The Inflation Reduction Act’s unclear timelines, high costs, and market imbalances could significantly exacerbate the U.S. national debt potentially pushing it beyond $45 trillion in the coming decade if not reformed.

Green Energy Subsidies Are Fueling the National Debt Crisis

Last week, the national debt in the U.S. went over $35 trillion which breaks down to around $100,000 per person. One big reason for this rising debt is the Inflation Reduction Act (IRA), a major law designed to support green energy. Originally, it was estimated that the IRA would cost about $391 billion over ten years but would save over $200 billion. However, new estimates suggest that just the clean energy tax credits could cost up to $663 billion. The total costs might even reach $3 trillion due to the act’s unclear timeline and unlimited provisions.

The IRA’s financial impact is worsened by its unclear end dates. It offers tax credits for green energy until the U.S. cuts emissions by 25% from 2022 levels or until 2032, whichever is later. Since reaching such high emission cuts is very challenging, these credits might last into the 2040s or even the 2050s, meaning taxpayers could continue to fund these subsidies for many years. Moreover, the IRA favors renewable energy projects with big subsidies while placing heavy regulations on fossil fuels, leading to market imbalances.

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(photo: the United Nations)

How Outdated Rules and Unchecked Spending Threaten the National Debt

Another issue is the “80-20” investment rule which pushes companies to make costly upgrades to get more tax credits. This rule adds to the financial burden and could make the national debt grow even more. If Congress doesn’t fix the problems and inefficiencies in the IRA, the national debt could climb past $45 trillion in the next decade making the IRA a major factor in future debt increases.

According to the report of AIER, the IRA’s complicated rules and unclear end dates along with its uneven treatment of energy sources create a confusing and expensive situation. The “80-20” rule also encourages costly updates making the financial strain even worse. Without changes to address these issues, the IRA could significantly increase national debt possibly exceeding $45 trillion in the 2030s and adding to future economic challenges.

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