by WorldTribune Staff, March 18, 2025 Real World News

On Aug. 16, 2023, the one-year anniversary of his signing the Inflation Reduction Act, Joe Biden declared it was “one of the most significant laws I think has ever been enacted.”

Kamala Harris cast the tie-breaking vote in the Senate to pass the Inflation Reduction Act.

He was right … but not for the reasons he meant, according to a new study by the Cato Institute.

Not only did it not reduce inflation, but the Inflation Reduction Act could end up costing U.S. taxpayers as much as $4.67 trillion by 2050, the study said.

In 2022, when the legislation passed without a single Republican voting for it, the Democrat-controlled Senate summarized the law as costing taxpayers $369 billion, based on Congressional Budget Office (CBO) estimates.

The Cato Institute’s study puts the cost at roughly 12 times what the Senate estimated.

“The government should not have a hold on the economy in such a way that it can truly distort entire markets, and that’s what the Inflation Reduction Act is,” said Joshua Loucks, research associate with Cato Institute and co-author of the study.

The study’s authors argue Congress should take a hard look at fully repealing the law, or Congress should place limitations on the subsidies, which the law mostly lacks.

The study states that the Inflation Reduction Act’s subsidies come in two forms — production tax credits (PTC), which provide tax credits per unit of energy produced, or investment tax credits (ITC), which provide tax credits for various investments in carbon-free energy. With the ITC, the subsidies provide an infusion of cash up front, whereas the PTCs provide payouts over time.

Some of these subsidies are not capped, and others are only phased out when certain greenhouse gas emission reductions are met. Using models from the U.S. Energy Information Administration, the study shows there’s little likelihood that these reductions will be met in the next 25 years, meaning the subsidies have no meaningful end date.

Over the next 10 years, according to the study, the Inflation Reduction Act could cost taxpayers anywhere from $936 billion to $1.97 trillion, the study said. By 2050, it will cost between $2.04 trillion and $4.67 trillion.

Among the law’s stated goals, the study notes, was to create domestic supply chains feeding the so-called green energy transition. The law includes a manufacturing tax credit. The 45X tax credit, as it’s designated, has a sub-component for the mining of critical minerals needed to make batteries, solar panels and wind turbines. That credit has no end date, so even if greenhouse gas emissions reductions were somehow met, the production tax credits continue so long as the mine produces minerals.

“The real nightmare scenario for taxpayers is that these credits are stackable,” Loucks said.

As an example, the study’s authors propose a mining company that produces lithium. It receives PTCs for the lithium it produces. That lithium is then used in a battery storage facility, which is only eligible for the ITC. If that battery facility provided energy storage for a solar farm, the solar farm would get production or investment tax credits. Then if that solar farm was used to produce green hydrogen, the company would get another PTC for the hydrogen.

“There’s just endless ways to stack this, and that’s going to result in taxpayers paying massive amounts of the burden,” Loucks said.

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  Report: Biden’s ‘Inflation Reduction Act’ may end up costing taxpayers $4.67 trillion, WorldTribune.com