The House Republican Plan to Slash One of Democrats’ Signature Laws

With their party now claiming control of the U.S. House, top Republicans are eager to cut government spending, including by scaling back the Inflation Reduction Act—the sweeping climate and tax law President Biden signed earlier this year.

Their chances of doing that were complicated last week when Democrats managed to maintain a majority in the Senate. Now, political observers say that whether GOP lawmakers will push Democrats to pull back money from one of their signature legislative achievements will hinge on budget negotiations next year, when Republicans are planning to threaten to not raise the nation’s debt ceiling unless cuts are made in federal spending.

“What we want to do is to find the unspent funds in IRA and to bring those back, and put those toward paying off the debt,” Rep. Buddy Carter, a Georgia Republican in the running to be the next chairman of the House budget committee, told Route Fifty on Wednesday. 

Carter also introduced a bill in May that would divert $100 million in unspent pandemic aid from the American Rescue Plan Act toward reducing the nation’s more than $30 trillion debt.

His push to shrink Inflation Reduction Act spending was echoed by Rep. Jason Smith of Missouri, currently the top Republican on the Budget Committee, who is in line to head tax policy as chairman of House Ways and Means, as well as Rep. Kay Granger of Texas, who is expected to lead Appropriations. 

“The Republican House Majority will use every tool at our disposal to halt the reckless spending that has occurred under one-party Democrat rule in Washington and created the worst inflation crisis in 40 years,” Smith said in an emailed statement.

Granger, currently the top Republican on the Appropriations Committee, said in a statement that, as leader of the panel, she plans to “work with my colleagues to reduce wasteful spending like we saw in the Inflation Reduction Act.”

The way the Inflation Reduction Act was written, hundreds of billions in discretionary spending, including around $370 billion for climate and energy programs, was appropriated in the fiscal year 2022 budget. But while the budget year ended Sept. 30, the legislation gave federal agencies several years to spend the money. 

What House Republicans can do now is try to rescind any money that hasn’t yet been spent or restrict its use, said Richard Stern, a former House Republican policy staffer and now a senior policy analyst at the conservative Heritage Foundation.

As for what Republicans could target, Smith pointed to a provision in the Inflation Reduction Act that extended an expansion of the Affordable Care Act in ARPA, allowing those making more than four times the poverty rate to get health insurance subsidies. The IRA extended the broader subsidies through 2025. 

Smith also put a bullseye on Inflation Reduction Act tax credits that will give consumers a $7,500 subsidy for buying new electric vehicles and $4,000 for purchasing used ones. Those tax breaks would complement state efforts to encourage more people to buy EVs. 

Smith, however, sees it as wasteful spending that benefits those who don't really need the help. 

“Instead of throwing more and more money out the door, Congress should roll back the billions of dollars in handouts for the wealthy that Washington Democrats have pushed, like $248 billion to extend Obamacare subsidies to families making over $300,000 and nearly $9 billion to help rich people sell their luxury electric vehicles and purchase new ones,” his statement said.

Republicans have also complained about several Inflation Reduction Act climate provisions, including $1.5 billion in grants for states, localities and nonprofits over the next decade to plant trees. To supporters, increasing the number of trees, particularly in minority communities in cities, would provide more shade and relief from rising temperatures due to climate change.  

Republicans, however, have said that’s just too much to spend on trees.

“Don’t we have enough trees around here?” Herschel Walker, a Georgia Republican U.S. Senate candidate now headed for a December runoff, said on the campaign trail in August, according to The Atlanta Journal-Constitution.

Sen. John Thune, a South Dakota Republican, also criticized the tree program during Senate floor debate before the law was approved with Democrats’ unanimous support. Thune criticized $3 billion in spending in the bill for neighborhood access and equity grants that can be used for a wide range of purposes, including improving walkability, safety and affordable transportation in communities and to identify gaps in tree coverage.

Carter, Smith and Granger also all oppose the $45.6 billion the Inflation Reduction Act will send to the Internal Revenue Service to help with hiring more agents and other tax enforcement efforts. Although the financial publication Kiplinger said the added enforcement would likely focus on taxpayers like higher-earners and corporations, Republicans have voiced concerns it will target lower and middle-income people who’ve traditionally faced a disproportionate share of audits.

U.S. Rep. Cathy McMorris Rodgers, a Washington state Republican likely to head the House Energy and Commerce Committee, declined to specify parts of the Inflation Reduction Act she’d cut. But McMorris Rodgers said in an interview she would hold oversight hearings to “better understand what was put in the bill and how it's being spent. And then we'll use that to inform the policy.”

President Biden has said cutting back the IRA’s climate spending is not an option. “I’m not going to walk away from the historic commitments we just made to take on the climate crisis,” he vowed at a press conference the day after the election. “I won’t let it happen.”

Still, winning even a slim majority in the House gives Republicans leverage during budget negotiations next year, said Stern, who headed budget policy for the Republican Study Committee, a group of conservative House Republicans. 

Congressional leaders are about to attempt negotiating a fiscal 2023 spending bill. The government is now operating under a stopgap law (the fiscal year began Oct. 1). But Republicans are likely to push for another temporary funding measure in December that will last only until early next year when they take control of the House, Stern said.

Giving House Republicans added leverage is that the nation is expected to hit its borrowing limit sometime next year. Even though Democrats will hold a Senate majority, raising the debt limit will require a majority in the House to go along, Stern explained. 

House Minority Leader Kevin McCarthy of California, who is running to become speaker, has said Republicans could withhold approval if Democrats do not agree to reduce spending.  

“Absolutely,” Carter said when asked if he supported tying the debt ceiling to budget negotiations. “It gives you an opportunity in both parties, the majority and the minority, to get some things done that you see as being priorities. And in our case, one of those priorities would be to stop this reckless spending that this administration is undertaking,” he said.

Despite Biden’s stance, Democrats could be willing to agree to budget cuts, Stern argued. “They want the government funded and they want their debt limit raised more than they want to preserve the provisions of the IRA that they know are frivolous and unpopular” he said.

John Reuter, the League of Conservation Voters’ vice president for state and local strategies, said he doesn’t believe Democrats will cave. “I’m confident Democrats will keep standing up for climate action. The investments in IRA are already improving people’s lives,” he texted.

Carter said he believes the GOP, even with an unexpectedly slim House majority, will stick together to demand scaling back the Inflation Reduction Act, noting all House Republicans voted against the bill.

Still unclear is whether moderate Republicans will press for cuts in next year’s budget negotiations, Stern said. Instead, they could back niche spending increases that are a higher priority for them individually. A small group of centrist Republicans in the chamber could also thwart conservative attempts to use the debt ceiling as leverage to reduce spending.

“If conservatives in Congress are willing to go to bat, they could force whatever they want,” Stern said. “I think the real question, in many ways, is how much conservatives are actually willing to play hardball.”