Predicting the ROI on the IRA

Climate change looms large in Democrats’ Inflation Reduction Act, signed into law by President Joe Biden on Tuesday. The legislation will spend $369 billion over the next decade on a portfolio of energy and climate issues, primarily in the form of new and expanded tax credits for both manufacturers and consumers—the largest federal climate investment ever, and much more than the bill’s roughly $80 billion in spending on the IRS and $64 billion for expanded health insurance subsidies ($300 billion in revenue will go toward deficit reduction).

The extent of the spending—which is projected to accelerate America’s ongoing reduction of greenhouse gas emissions—is especially significant given that Americans’ support for government action on climate change is a mile wide and an inch deep. In a Pew poll conducted before the 2020 election, 65 percent of respondents said the federal government was doing too little to combat climate change. But in a July poll from Monmouth University, only 1 percent of respondents named climate change and the environment as “the biggest concern facing your family right now.”

Americans are more concerned about immediate economic realities like inflation, leaving climate policy on the backburner. As a result, liberal commentator Matthew Yglesias argued earlier this year that climate advocacy should be seen as “an elite-driven effort to foist good ideas on a somewhat indifferent public.”

If that’s true, then it’s worth asking: What is the IRA foisting?

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