Republicans defend Inflation Reduction Act as budget talks begin

Several Republicans are concerned about the future of the Inflation Reduction Act (IRA) as Congress begins ironing out the federal budget plan. 

Why it matters: The IRA earmarked billions of dollars for providing consumers who make qualified HVAC upgrades with point-of-sale rebates and tax credits. 

• In 2023, U.S. households claimed over $600 million of tax credits for installing qualifying air conditioners and heat pumps, according to the IRS. 
• Meanwhile, 18 of the top 20 districts attracting the most clean energy investments from the IRA are represented by Republicans, according to Atlas Public Policy. 

What’s happening: The House and Senate recently passed their versions of the budget plan and will now negotiate a unified bill as part of President Trump’s goal to deliver one “big, beautiful bill.”

• Four Republican Senators last week wrote to the administration, following a similar letter from 21 House Republicans in March, encouraging a “thoughtful” approach to any changes to the IRA.

What they’re saying: “You can go in with a scalpel, but you’re not gonna get [all] Republican vote[s] if you’re gonna pull the whole thing,” said Don Bacon, a Nebraska Republican, who’s advocating to preserve several IRA incentives.

• “You’ll notice in the letter, there are no demands — there’s no mandates,” added John Curtis, a Utah Republican. “What we’re saying is, ‘Don’t just put a partisan hat on’… Let’s put a ‘what-is-best-for-the-country’ hat on.”

Yes, but: The White House last week issued a statement reaffirming — to those still in favor of broader IRA cuts — its commitment to “historic spending reductions,” including by “targeting the Green New Scam IRA tax credits.”

Zoom out: President Trump, who’s spoken out against the IRA, on January 20 signed an executive order requiring all federal agencies to stop disbursing funds under the law for 90 days.

• In response, nearly two-dozen states have filed a lawsuit against the administration, and five states have either paused or delayed their HVAC rebate programs. 

Of note: While 25 Republicans collectively signed both letters, several more support protecting the IRA but are staying quiet for now, according to E&E News.  

• Additionally, certain parts of the Act, such as electric vehicle credits, are likely to see the chopping block before HVAC-related incentives, a former Trump official noted last year.  

What’s next: The budget reconciliation process will determine which IRA incentives stay and which go, with Congress aiming to deliver a final bill to Trump’s desk by the end of May.