Trump: Changes to IRA Possible but Complete Repeal Difficult

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Former U.S. President Donald Trump has pledged to repeal the Biden administration's Inflation Reduction Act (IRA) if he re-enters the White House, but U.S. online media Axios predicted on the 28th (local time) that it would not be easy.

Trump has repeatedly called the IRA, a key economic stimulus and climate change response measure of the Biden administration, the "Green New Scam" and vowed to repeal it if elected. Furthermore, he plans to recover the entire budget of the IRA that has not yet been executed. Trump has also expressed negative views on providing subsidies such as electric vehicle tax credits to encourage clean energy investment.

2024 U.S. Presidential Election Republican candidate former U.S. President Donald Trump
[Photo by Reuters]

The implementation of clean energy tax credits falls under the jurisdiction of the Treasury Department. Therefore, the administration can change the regulations, but Axios predicts that doing so could lead to prolonged litigation. Regardless of the ruling, attempts to change the regulations themselves could delay additional budget execution and create uncertainty for companies planning projects related to tax credits.

Recovering unexecuted IRA funds is also expected to be difficult. According to senior White House officials, approximately $92.5 billion, about 80% of the funds allocated for the 2024 fiscal year, have already been assigned. Legal experts believe it would be difficult to recover these funds.

Even for funds without finalized contracts, the administration is prohibited from withholding budget execution allocated by Congress due to opposition to specific policies under the Impoundment Control Act (ICA). Trump, who previously faced the ICA, raised legal issues with the ICA immediately after taking office last year and stated he would do everything possible to have Congress repeal the ICA if necessary.

Republican internal and corporate responses also appear unlikely to be favorable toward repealing the IRA.

Axios noted that companies have already adapted to the IRA, and if Trump attempts to repeal it, he could face resistance similar to when he tried to repeal the Affordable Care Act (ACA, Obamacare) during his first term.

Although Republican lawmakers did not vote in favor of the IRA at the time of the vote, public opinion on the IRA has since softened. According to Bloomberg, IRA funds allocated to districts with Republican House members amount to $161 billion, about four times the $42 billion allocated to Democratic districts.

In August, 18 Republican House members sent a letter to House Speaker Mike Johnson urging the retention of the IRA energy tax credits.

According to a Wall Street Journal (WSJ) report, major oil companies such as ExxonMobil and Occidental are also favorable toward the IRA as they invest in low-carbon energy businesses. The automotive industry also hopes to maintain the IRA, with GM's Chief Financial Officer stating earlier this month that the company would gain about $800 million through the IRA.

Neil Bradley, Chief Policy Officer of the U.S. Chamber of Commerce, said, "The likelihood of completely repealing the entire IRA seems low," adding, "There is growing interest in reviewing IRA regulations individually and approaching them with a scalpel rather than an axe."