White House warns against Republican efforts to gut ‘tremendous’ IRA

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The White House on Tuesday warned against Republican efforts to derail a manufacturing boom triggered by Joe Biden’s signature climate legislation that has already brought “tremendous” benefits to the US economy.

Investors have pledged $628bn of investments into clean energy and manufacturing since the president entered the White House in 2021, most driven by the Inflation Reduction Act, senior officials said on Tuesday. More than 200,000 jobs had been added since the IRA was enacted last year.

But John Podesta, Biden’s senior adviser in charge of the IRA’s implementation, lashed out at Republicans’ efforts to roll back the bill — which provides huge tax breaks for investors and producers of clean energy over the next 10 years — saying they could undermine investor confidence.

He also accused Republicans of hypocrisy for welcoming the investment spurred by the IRA, even as they promised to scrap the bill.

“The people who are out there at the ribbon cuttings have continued to try to repeal the provisions that are really producing this tremendous story for the US economy.”

A Financial Times analysis in August found that more than 80 per cent of investment in large-scale clean energy and manufacturing pledged since the IRA and Chips and Science Act were passed was destined for Republican congressional districts. 

“Members seem to be very happy to applaud those investments . . . while they’re simultaneously ignoring the fact that the companies themselves are crediting the IRA with the reason for those investments,” said Podesta.

The Biden administration has made a renaissance in US manufacturing central to the president’s re-election effort, touting job creation and a rejuvenation of rust-belt regions as core elements of “Bidenomics”.

But there is little sign that the message is landing among voters, with the president still facing weak approval numbers just as the 2024 election campaign begins to gear up. A recent FT-Michigan Ross poll showed that just 14 per cent of voters thought they were better off under Biden.

The muted popular support for the president’s economic agenda comes even as officials say the IRA and manufacturing investments have brought measurable boosts to the US.

The manufacturing boom has spurred economic growth, accounting for an unprecedented 10 per cent of the gross domestic product expansion this year, officials said.

“Manufacturing investment, particularly in clean energy, has driven economic growth and is making its largest contribution to GDP growth in history this year,” Lael Brainard, Biden’s national economic adviser, told reporters on Tuesday. 

“So basically we’re on a path to cut emissions in half by 2030 — and we’re doing so in the context of solid growth, a two-thirds decline in inflation, a surge in clean energy investment and a surge in associated good jobs.”

The impact of the IRA is set to be a critical flashpoint in next year’s election, with opponents claiming the huge spending triggered by the law has helped to push up inflation.

Donald Trump, the clear frontrunner for the Republican presidential nomination, is expected to gut the legislation if elected again. His Republican rivals are also opposed to the IRA, saying the spending involved in the $369bn bill is excessive.