Like a politician talking out of both sides of his mouth, Biden claims to be against corporate welfare one minute, and then handing it out in spades the next.
During his most recent State of the Union address, Biden strongly asserted, “….the days of trickle-down economics are over and the wealthy and the biggest corporations no longer get the — all the tax breaks.” Earlier that day the White House published a fact sheet claiming that Biden would “invest in America by making big corporations and the wealthy pay their fair share.”
And yet, the Cato Institute concluded this week that Biden has actually boosted corporate tax expenditures by 92 percent since Trump left office. Tax expenditures include anything from exclusions, deductions, deferrals, credits, and special tax rates for specific groups.
But these breaks aren’t across-the-board tax cuts. As Cato points out, the three major bills Biden signed into law contain “a mess of complex loopholes with special rules for favored industries.” Who are the favored industries? It’s no secret that Biden is antagonistic toward the fossil fuel industry; his top priorities center on pushing a green agenda.
The Infrastructure Investment and Jobs Act of 2021 increased federal subsidies by $548 billion. This bill included major tax credits for electric utilities and the electric vehicle industry.
The CHIPs and Science Act gave $39 billion of its $54 billion in subsidies to semiconductor companies.
And the biggest gift to corporate welfare was the very controversial and deeply partisan Inflation Reduction Act (IRA). It is handing out roughly $800 billion in green energy subsidies, most of which is going to big corporations that include automakers, utilities, manufacturers, and hydrogen producers.
The original IRA figure started out at just under $400 billion; but the Congressional Budget Office recently recalculated the new figure. Goldman Sachs and Penn Wharton actually estimate the amount to clear the trillion-dollar mark.
Apparently, subsidies for green energy are being claimed at a much higher rate than previously anticipated.
Jason Smith (MO-08), Chairman of the House Ways and Means Committee, states that the administration “is sacrificing America’s economic and national security for the sake of writing as many green corporate welfare checks as quickly as possible.” Foreign entities are cashing in, as are wealthy Americans. Countries like China have a monopoly on critical minerals. And the average electric vehicle owner is a rich white male. Both are being subsidized at the taxpayer’s expense.
The Energy Information Administration (EIA) confirms that in FY 2022, 67 percent of energy-related tax expenditures were for renewable fuels, nearly triple what they were in 2016. Wind- and solar-powered renewable electricity accounted for the majority of these tax credits, while petroleum and natural gas only garnered a fraction. EIA also notes that fossil fuels contribute roughly 80 percent of U.S. energy production, while wind and solar combined only supply 5.5 percent.
And since EIA’s estimates were published before the IRA had gone into effect, expect the disparity between fossil fuels and renewables to be even more pronounced in the coming years. Especially after the tailpipe emissions rule was just finalized and the proposed power plant rule will be eventually. Both regulatory measures force increased adoption of green technologies.
Special treatment and tax preferences will only distort the economy. Federal money creates subsidy-dependent industries that are more responsive to public funds than actual consumer demand.
It is clear the president is picking winners and losers in corporate America, playing favorites within the energy industry to enact a political agenda. And the taxpayer is footing the bill. This is a very expensive maneuver in attempts to manipulate atmospheric temperatures, methods which have never been proven to adequately decrease warming. Studies have shown that even if all fossil fuels were banned, the results would be extremely miniscule and would not stop climate change.
The mixed messages we are getting from this administration are not only deceitful but very costly. Despite his constant complaints about tax breaks for big corporations, Biden has massively increased corporate tax loopholes for the select industries aligned with his agenda.
Unfortunately, this is all on the backs of the American consumer, who is already stretched thin with record-high inflation and the soaring cost of living.
Quit playing politics with our tax dollars.
Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on Twitter @ConsumerPal.