Despite several private analyses suggesting the opposite, the White House stands by President Joe Biden’s initial assertion that the Inflation Reduction Act (IRA) will cut the federal deficit, according to Reuters Friday.
Kent Smetters, faculty director of federal budget watchdog Penn Wharton Budget Model, said he now estimates that the bill will add roughly $750 billion to the national deficit over the next ten years — a cost increase of roughly $1 trillion from Penn Wharton’s initial estimates — joining analysts at Credit Suisse and Goldman Sachs who believe that the government dramatically underestimated the cost of tax credits, according to Reuters. Nonetheless, an unnamed White House official told the outlet that there was “pretty good certainty” that the bill would “reduce the deficit in the long run.” (RELATED: Biden Bragged About Building A Solar Farm In Africa. Taxpayers Are Fronting $900 Million For It)
However, reductions to the deficit “may not start hitting the deficit until year eight or nine, not year four or five,” as was originally forecasted, the official told Reuters. The bill will also have “more deployment and achieve more emissions reductions than we initially thought,” the official said.
The Inflation Reduction Act will lower costs for families, tackle the climate crisis, reduce the deficit, and ensure the wealthy and corporations pay their fair share.
Every single Republican in Congress voted against it. pic.twitter.com/c3t5z71IBL
— The White House (@WhiteHouse) August 28, 2022
The White House bases its optimism on the surging popularity of the climate law’s tax credits, which it says will ultimately result in greater revenue than originally estimated, Reuters reported. The White House on Wednesday announced several ways for even tax-exempt entities, such as nonprofits and tribal governments, to apply for cash payments equal to the full value of the tax credits they would have received for developing green projects, had they been a taxpaying entity.
Smetters’ analysis is the most recent private analysis to indicate that the IRA will cost much more than initially advertised, after the government underestimated demand for tax credits, the cost of which could continue to grow, as there is no cap on most credits, Reuters reported. White House adviser John Podesta, who heads the implementation of the IRA, claimed in a May Reuters interview the increased costs were a sign that the law was working to attract private investors.
The White House did not immediately respond to a Daily Caller News Foundation request for comment.
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