President-elect Donald Trump intends to establish an Efficiency Commission, a body dedicated to identifying and eliminating inefficiencies within the federal government and reducing its size. Elon Musk appears eager to accept the challenge. While similar commissions have produced mixed results, Musk has one advantage over prior commissions: the amount of currently available information on federal inefficiencies is massive. Moreover, Trump has already identified target number 1, the subsidies given out by policies forming the Green New Deal, or as Trump calls it, “the Green New Scam.”
The Biden administration’s climate policy is a brilliant strategy. It uses tax subsidies instead of substantive law and the regulatory process, making it very difficult for opponents to challenge the subsidies since Congress has almost unlimited discretion over taxing and spending. Fortunately for taxpayers, the Biden administration’s arrogant force-feeding of Americans with costly electric vehicles, windmills, solar panels, high energy bills, and expensive consumer products contributed to the defeat of Kamala Harris, a strong proponent of the scam.
The federal trough is filled with tax expenditures—tax credits, subsidies, grants, and deductions. While Musk can recommend draining the trough, real reform will require Congress to repeal Biden’s Infrastructure Investment and Jobs Act (“IIJA”) and the Inflation Reduction Act (“IRA”), which are the legislative money laundering vehicles. The likely roadblock to success will be a Democrat-led Senate filibuster.
The subsidies are massive. Biden’s IIJA contains 452 specific funding sources and gives away $850 billion in construction grants for transportation, energy, water, broadband, and environmental programs.
Biden’s IRA gives away hundreds of billions and perhaps trillions in tax credits, loans, and loan guarantees to corporations undertaking the government’s obsession with climate protection activities. The scale of these subsidies, estimated at $1.2 trillion by Goldman Sachs, is staggering. A few of the beneficiaries include electric vehicles ($379 billion), energy manufacturing ($156 billion), renewable electricity production ($82 billion), energy efficiency ($42 billion), hydrogen production ($36 billion), biofuels ($34 billion), and carbon capture and storage ($31 billion). The Energy Department is authorized to lend up to $400 billion to advance climate projects.
Two “poor” corporations received subsidies: Exxon, valued at $461 billion, received $7 billion for hydrogen and carbon capture, and Ford Motors received a $9.2 billion loan for two battery companies.
Perhaps the multi-trillion-dollar oil and gas industry is the most stunning illustration of corporate greed. It lobbied President-elect Trump to maintain the subsidy parts of the $1.6 trillion climate, energy, and infrastructure agenda that provides $369 billion in subsidies and tax credits for their “clean energy” projects. The oil and gas industries do not support tax credits for electric vehicles since they do not use gasoline. From the Bush administration, until Biden’s subsidies became available, the oil and gas industry opposed most climate change laws, regulations, Executive Orders, and proposals. Suddenly, subsidies make their principles turn around.
Recently, Constellation Energy announced that it will reopen the infamous Three-Mile Island nuclear plant, known for its 1979 meltdown., The facility will sell its energy to Microsoft’s massive AI data hog facilities. Of course, it will all happen using the corporate IRA tax subsidies. Microsoft has a market cap of $3.1 trillion, and Constellation is valued at $80 billion. The U.S. government is penniless and is $35 trillion in debt, yet it subsidizes wealthy corporations.
If repealing these climate tax expenditures fails, Congress should make all tax expenditures subject to the appropriations process so they are part of the budget process. Currently, Federal IRA tax expenditures are not subject to the appropriations process. There is an unlimited charge on the federal treasury since anyone who conforms to the government’s desires gets credits that reduce their income tax. For example, taxpayers purchasing electric vehicles receive up to $7,500 in credits to reduce their federal income taxes. Other activities include battery storage, energy efficiency, residential green energy, hydrogen, carbon capture, solar and wind generation, and electric vehicles.
These federal tax credits create few jobs. “Total [cost for each green job created] range from $2 to $7 million per job.” The jobs created, however, will only have an average annual wage of $45,000. Where have all the billions gone? Into corporate pockets everywhere!
The Center on Budget and Policy Priorities estimates that in 2019, IRS tax expenditures carried a value of $1.3 trillion for the recipients. Additionally, the IRA tax credit adds another $1.2 trillion. None of these $2.5 trillion in tax credits is part of the appropriations process. No wonder Congress cannot control spending.
If both legislative efforts fail, there are options. Congress should request the General Accounting Office (“GAO”) to audit the agencies that gave away hundreds of billions in less than two years. Trump should order the appropriate Inspector Generals to conduct audits and investigations. All financial irregularities should be prosecuted. Agencies like the Environmental Protection Agency (“EPA”) do not have the experience or safeguards to distribute billions quickly.
Even with the subsidies, the subsidized projects are going bankrupt. Many wind and solar projects need help connecting to local power grids, which often require larger power lines and new transformers. The high cost of these upgrades results in canceled projects.
Other projects are abandoned due to a lack of corporate credit. While the government provides subsidies to green industries, many banks won’t extend the additional credit needed to complete construction because of a facility’s poor balance sheet. A cancellation of wind farms in New Jersey is a recent example. Orsted, a sizeable Danish wind farm developer, dropped two mega-projects offshore due to $4 billion in cost overruns.
The Wall Street Journal noted offshore wind power is “bleeding cash.” Today, offshore wind project costs are 49% more than in 2019. About 60% of all offshore wind projects awarded have been canceled or are at risk of cancellation.
The green industry is not a good investment. Over time, many of these government monuments to green technology will be abandoned across the national landscape, creating more of a drain on the treasury and local communities as they litter the nation with the hazardous waste contained in the metals in the equipment.
The IRA even monetizes tax credits for environmental groups. To increase the gift of taxpayer money, Congress authorized the IRA to monetize the subsidies by allowing the granting agency, usually the EPA, to directly pay cash equal to the value of the credit to the non-profit organization. The receiving organization monetizes the tax credit by treating it as a refundable credit on any tax liability. The IRA also allows non-profits without tax liability to transfer all or a portion of the tax credits to an unrelated party for cash.
Newly created non-profits received billions in subsidies. In April 2024, the EPA announced billions in grant awards to non-profits under its recently established $14 billion National Clean Investment Fund and $6 billion Clean Communities Investment Accelerator. One non-profit with a prior year’s check balance of One Hundred Dollars received a $940 million award. Another non-profit received $2 billion one month after receiving non-profit status.
Eliminating this multi-trillion-dollar New Green Scam is an easy trillion-plus in savings.
William L. Kovacs, author of Devolution of Power: Rolling Back the Federal State to Preserve the Republic. It received 5 stars from Readers’ Favorite. His previous book, Reform the Kakistocracy, received the 2021 Independent Press Award for Political/Social Change. He served as senior vice president for the U.S. Chamber of Commerce and chief counsel to a congressional committee. He can be contacted at wlk@ReformTheKakistocracy.com
