The Inflation Reduction Act kickstarted an American manufacturing renaissance, attracting more than $500 billion in new private investment between August 2022 and August 2024 – more than half of total nationwide private investment growth over that time – and creating more than 334,000 jobs across our country.
Those benefits are building unexpected political constituencies: Congressional districts represented by Republicans have secured 80% of total IRA investments – nearly $200 billion – and 18 House Republicans urged their leadership to preserve the IRA in August 2024.
That economic growth is now threatened by the incoming presidential administration and some members of the 119th United States Congress who have called for repealing the IRA, in part to pay for extended tax cuts.
Repealing the IRA would significantly harm our economy – new analysis reveals it would cause deep economic damage across America, and cede tens of billions in investment opportunities to major economic competitors like China, Korea, and Mexico.
Inflation Reduction Act Repeal Would Cost Billions In Lost Investment, Exports
Johns Hopkins University’s Net-Zero Industrial Policy Lab reports IRA repeal would hand $66 billion in new investment opportunities to other countries that directly compete economically with the U.S. while costing America up to $50 billion in lost exports.
And that total is a conservative estimate of economic damage, since it assumes only a 10-20% reduction in demand for clean energy technologies, while Energy Innovation modeling shows higher losses.
“This would severely damage U.S. ability to develop and scale next generation technologies, effectively stymying the best hope for the U.S. to gain a competitive footing with China,” write the report’s authors. “Without these investments and tax credits, U.S. industry will be hobbled just as it is getting going, ceding the ground to others.”
JHU’s analysis finds the total U.S. market for electric vehicles, batteries, solar, and wind is worth $263 billion by 2035 but IRA repeal would “likely hit the U.S. clean energy industry on both the demand and supply side.”
Without American manufacturing meeting that domestic demand, other countries will fill the gap, including economic competitors who are investing in clean energy manufacturing like China, the European Union, Japan, Mexico, and South Korea.
Our export economy and trade balance would also suffer under IRA repeal as domestic production of clean energy technologies would not increase alongside surging domestic and foreign demand – reducing annual export revenue by $52 billion.
Companies Say Inflation Reduction Act Repeal Would Cost Business, Force Layoffs
JHU’s analysis is underlined by separate analysis from BW Research, which estimates IRA investments to date would create 621,000 new jobs and nearly $170 billion in new worker wages, along with $237.5 billion in new U.S. GDP and nearly $50 billion in new tax revenue over the next five years.
BW Research also surveyed nearly 930 business stakeholders across America, finding 53% of firms said they would lose business or revenue and 21% said they would be forced to lay off workers as a direct result of IRA repeal, with rural areas and small communities bearing the brunt of negative economic effects.
Economic harm in these areas directly mirrors where IRA manufacturing investments and jobs have been announced. States like Georgia, North Carolina, South Carolina, Michigan, and Indiana have by far received the most IRA investment dollars, and they also have massive economic growth at stake: Maintaining the IRA in just those five states alone is worth $29 billion in GDP and 144,000 jobs by 2030.
Republicans, American Businesses Oppose Inflation Reduction Act Repeal
These local economic benefits are driving Republican support for the bill’s incentives – in addition to the 18 U.S. Representatives who urged support for IRA tax credits in August 2024, governors in states like Georgia and South Carolina have become vocal advocates for clean energy technology manufacturing as they’ve watched new factories break ground, seen constituents get hired at good-paying jobs, and begun counting upon future tax revenue.
“You are seeing heavy investment in Republican states that Trump just won,” Rep. Andrew Garbarino, one of the 18 signatories on that pro-IRA letter, told Politico. “A lot is thrown out there in campaign rhetoric, but when push comes to shove and you’ve got to look at where you are seeing investment, we’ve got to get it right.”
America’s energy industry – including leading fossil fuel producers – have also defended IRA tax incentives. The U.S. Chamber of Commerce and American Petroleum Institute, entities certainly not associated with environmentalists, both said they would defend the IRA against repeal due to the bill’s support for advanced manufacturing of clean energy technologies. “We think the IRA makes sense,” Darren Woods, CEO of Exxon Mobil, told Bloomberg after the presidential election.
JHU’s analysis also notes the Edison Electric Institute, which represents America’s electric utilities, lobbied heavily against proposed amendments to repeal IRA provisions in March 2024, and that trade associations like the National Association of Manufacturers and National Mining Association are expected to defend the bill.
The Alliance for Automotive Innovation, which represents major automakers including Ford and GM, urged Republican policymakers to preserve the IRA’s electric vehicle tax credits in October, saying they maintain a “globally competitive American auto industry” that helps American automakers compete with China.
“Business is going to defend the Inflation Reduction Act,” Christopher Guith, senior vice president of the U.S. Chamber of Commerce’s Global Energy Institute told Politico in May, saying it was instrumental for “energy security, competitiveness, and the business case for the energy transition.”
Clean Energy Boosts National Security, Strengthens Our Economy, Cleans Our Air
Federal investments in clean energy manufacturing are increasing America’s national security by cutting dependence on foreign countries, strengthening our economy by onshoring factories and manufacturing jobs, and cleaning our air by expanding clean energy options.
These have always been fundamentally bipartisan goals. “Republicans have always pushed for tax incentives to incentivize business growth, domestic manufacturing and job creation — and the data shows these IRA tax incentives are working,” wrote former Republican Federal Energy Regulatory Commission Chairman Neil Chatterjee.
Energy Innovation’s modeling forecasts maintaining the IRA could be worth up to 1.3 million jobs and nearly 1% higher GDP by 2030 – a net profit for America’s economy.
And clean energy manufacturing is critical to global economic competitiveness. Clean energy accounted for 10% of global GDP growth in 2023, and global clean energy investment hit $1.8 trillion last year – if we don’t maintain our pace, other countries will capture that investment and economic growth.
Add it all up, and IRA repeal would kneecap America’s burgeoning clean energy industry just as it’s surging ahead in the race with our economic competitors – and the U.S. business community agrees.
Members of Congress should consider the economic benefits flowing into every corner of America – and especially in their districts – when considering IRA repeal.