Congress votes to send 2 million US jobs to China, increase deficit, energy costs

Congressional republicans have passed the republican tax bill that kills a slew of tax credits to help working families become more energy efficient, improve US air quality, and boost US manufacturing – instead channeling that money to wealthy elites, increasing the deficit by $3.3 trillion dollars along the way.

(Update, July 3 – this article has been updated to reflect the House passage of the reconciliation bill)

The bill as passed retains much of the draft language killing off energy efficiency credits and credits responsible for green manufacturing growth in the US.

The credits were largely established under President Biden as part of the Inflation Reduction Act, which raised hundreds of billions of dollars through tax enforcement on wealthy individuals and corporations and channeled that into energy efficiency credits for American families. It was also the most significant single climate action by any country in the history of the world, in terms of the amount of investment it put towards energy efficiency.

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We’ve covered how families could save thousands of dollars on upgrades to lower their energy costs through these credits.

But these credits aren’t just money-saving for Americans, they also work to boost American manufacturing, due to various provisions in the bill, particularly around the $7,500 EV tax credit which was limited to cars that undergo final assembly in North America.

While loopholes exist, nevertheless the IRA resulted in a massive expansion of American manufacturing, driving hundreds of billions of dollars of investment and creating hundreds of thousands of jobs.

So of course, republicans want to repeal this good thing. The republican tax plan that just passed Congress repeals most of the credits established in the IRA which were responsible for this boom in investment. It also attempts to make fuel economy standards unenforceable, which will further increase fuel costs for Americans (by at least $23 billion).

Republicans in the House narrowly passed their version of the bill in May, which then went to the Senate and was modified. The Senate mostly kept the job-killing language of the House bill, eliminating consumer and business tax credits that helped to spur investment in US manufacturing – specifically the 30D and 25E credits for new & used clean vehicles, the commercial clean vehicle credit, the EV charger credit, and funding to reduce pollution from heavy duty vehicles. Many of these credits have domestic sourcing provisions which encouraged companies to establish US manufacturing facilities.

It’s estimated that the elimination of these credits will kill 2 million jobs by nipping a nascent US EV manufacturing boom in the bud before it really gets started. Many of those jobs will be lost in states whose Senators voted for the bill, like Tennessee and South Carolina which will lose 140k and 135k jobs respectively. All four Senators from those states – Marsha Blackburn, Bill Hagerty, Lindsey Graham, and Tim Scott – voted to put their constituents out on the street.

All told, every Democrat in both houses voted against the job-killing, deficit-increasing measure – which is also estimated to increase the average home’s energy costs by $400 annually. Just the bill’s repeal of the home solar credit will account for $110 worth of increased electricity costs for all Americans, and it also threatens US AI/Energy dominance that republicans claim to care about but are actively working against.

Only three Senate republicans had the good sense to oppose the bill – or, perhaps more accurately, were allowed to vote against it in order to maintain the illusion of their independence from this anti-American party which they continue to consider themselves a member of. But it managed to pass with a 50-50 vote with tiebreaker from J.D. Vance, the runningmate of the convicted felon currently squatting in the White House.

In the House, the original version of the bill passed by the slimmest of margins, 215-214 (with one abstention… which meant it got exactly 50% of the cast votes), again with only a few republican dissenters. The reconciliation bill ended up passing with a vote of 218-214, with only 2 republican dissenters, Fitzpatrick (R-PA) and Massie (R-KY), gaining votes even though some republicans had claimed to regret voting for it (or didn’t read it) the first time it hit the House.

Originally, there were additional measures in the bill that seemed to have been included just out of spite. For example, republicans wanted to sell off USPS’ awesome new EVs for scrap, losing billions of dollars in the process and killing the American jobs building them. And republicans wanted to add a punitive tax on EVs while subsidizing gas vehicles even more, increasing the budget shortfall for highways.

Thankfully, neither the USPS or registration tax measures seem to have made it into the final reconciliation bill, but the main measures killing American jobs have remained.

But the reconciliation bill is, in some ways, worse than the original House bill. For example, it eliminates the consumer EV credit 3 months earlier, thus increasing inflation faster for one of the most costly items that a consumer owns – their car. And that won’t just affect EVs – by making EVs $7,500 more expensive, competing gas vehicles will feel less downward pressure on price from the competition of cleaner, cheaper-to-own EVs, and manufacturers could well increase prices.

All of this occurs in the context of a global automotive industry which is rapidly shifting to electrification, currently led by China. China is the number one EV making country in the world, and is rapidly transforming its manufacturing industry to meet the needs of the future.

Domestic EV sales in China have ballooned in recent years. China got a slower start than some countries, having low EV penetration until around 2020, but has gone exponential in recent years. In 2023, ICE car values began to plummet and these cars became unsellable in China, acting as a canary in the coal mine for what will happen to the global auto industry if other automaking countries don’t take EVs seriously.

It’s estimated that this year, China will sell more EVs than the US sells cars overall.

But China is not just the number one EV maker, it’s also the number one car maker. As of last year, China is the top auto exporter in the world, eclipsing Japan which had been the primary holder of that title for decades.

Japan came to international prominence in automotive manufacturing in the 1970s, led primarily by the adoption of technologies that better confronted the environmental challenges of the day, while Western automakers continued to try to sell unpopular, inefficient gas guzzlers. Western governments failed to recognize the threat of growing overseas competition, and responded fecklessly with tariffs that didn’t work. Sound familiar?

And so, this republican budget bill, which would strangle the attempt to catch US EV manufacturing up to China’s long-planned dominance of the field, will only serve to reduce potential international competition to the rise of China. China is taking EVs seriously, and the US could have, if it weren’t for the spiteful actions of the republicans.

They’re trying to kill off these manufacturing investments likely to snub one of President Biden’s biggest accomplishments, with the largest positive effect on America, and as a giveaway to the fossil fuel industry that bribes them disproportionately.

But all this will do is harm US manufacturing and make Americans sicker and poorer – and help the US’ geopolitical rivals step into the vacuum left by America’s abdication of the auto industry.

The bill now moves to the White House, where it will be placed on the desk of a convicted felon who is Constitutionally barred from holding office in the US. It will inevitably be signed, as the bill is bad for America, and the felon in question has repeatedly proven that he is an enemy of America. Thus killing millions of American jobs, which will inevitably be shifted to China, as that country does not have a similar political faction actively trying to kill its own global competitiveness.

So, enjoy your higher costs, America – on energy, vehicles, and healthcare due to increased pollution (and the healthcare cuts the bill also includes). You voted for inflation, and you’re getting inflation.

Republicans also killed a number of home energy efficiency credits today, including the rooftop solar credit. That means you could have only until the end of this year to upgrade your home before republicans raise the cost of doing so by an average of ~$10,000. So if you want to go solar, get started TODAY, because these things take time and the system needs to be active before you file for the credit.

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