Politics, Not Money, Will Decide the IRA’s Fate

When Democrats in Congress passed the Inflation Reduction Act in 2022, the legislation promised to unleash a wave of funding for electric vehicles, zero-carbon electricity, clean manufacturing, and more across the United States. It signaled the return of industrial policy and the most concerted Democratic attempt in years to revive the moribund manufacturing sector.

More pertinently, the law rested on two hypotheses about how American politics work, and how voters might reward Democrats for passing it.

The first hypothesis was that voters would reward Democrats for investing in their districts — for making promises to renew manufacturing and revive heavy industry, and then for actually delivering on them. They would signal their approval of these policies, above all, by voting for Democrats in the next election. And they would vote for Democrats in greater numbers in exactly the places — the Great Lakes, Appalachia, and the Sunbelt — where the law had done the most to stoke investment.

The second hypothesis was somewhat of a rejoinder to the first. Well, that might not happen, it implicitly replied — investments take a long time to materialize, and people rarely vote to say thank you. Adults in Michigan, Wisconsin, Georgia, and the emerging southeastern “Battery Belt,” it conceded, might not turn out to support Democrats in the next election any more than they would have without the laws. But earning more votes wasn’t the point.

The second hypothesis said that Americans might not realize the Inflation Reduction Act’s importance to their lives in time for the 2024 election, just like they failed to grasp the Affordable Care Act’s importance in 2016. But come the next Republican trifecta, voters, business leaders, and lawmakers would realize how central the IRA’s tax credits and subsidies had become to their communities. Tens of thousands of jobs, billions of dollars of investment, and years of state and local tax revenue would depend on the continued presence of factories and other clean energy facilities in their region. Then, it said, Americans would rally to defend the law.

Since the IRA passed, more than $491 billion has been invested in manufacturing and deploying clean energy, electric vehicles, building electrification, and carbon management, according to the Clean Energy Monitor, a joint project of MIT and the energy research firm the Rhodium Group. Public and private investment in new factory construction is at a 50-year high.

Yet I think it’s fair to say that the first hypothesis failed. A new analysis from Sarah Eckhardt, Connor O'Brien, and Ben Glasner at the Economic Innovation Group has found essentially no correlation between funding from the three big Bidenomics laws and a change in Democratic vote share from 2020 to 2024. In other words, the amount of money that a county got from the Bipartisan Infrastructure Law, the CHIPS Act, and the Inflation Reduction Act had no impact on how its citizens voted — some counties shifted to Harris, some to Trump, and some didn’t change much, but you can’t see a clear “Bidenomics signal” in the data.

Now, perhaps we will find a signal in the coming weeks and months. Counties are big places, and as time passes, maybe we’ll discover that when you look at more fine-grained, precinct-level voting data, a clearer Bidenomics effect emerges. Maybe only some kinds of investments pay off with the electorate, or maybe voters living closer (or farther) from certain projects changed how they voted.

But I wouldn’t bet on ever finding anything. One of the IRA’s biggest policy strengths is also its political weakness: It primarily funded privately owned projects via tax credits. This allowed Democrats in Congress to pass it through the budget reconciliation process, meaning it needed only a bare majority in the Senate; and it protected the law from interference from the Supreme Court, which has generally given Congress a wide berth on new spending policies.

Yet that also meant many voters may have seen a new EV or battery plant sprout in their district and not realized Biden’s IRA had anything to do with it. The IRA was easiest to recognize in its effect on hundreds of companies’ balance sheets, for investors and experts to discern in Excel, than for ordinary people to see in their backyards. (I should add that not all IRA programs are so discreet — the direct pay subsidies and the new nonprofit green banks, may be more visible to the public. But they only began to roll out in the past year.)

So much for the first hypothesis, then. Now we come to the second hypothesis: that voters will understand the IRA’s importance to their communities and rally to save it. There are more encouraging signs for climate advocates on this front. We learned this week that the country’s automakers are reportedly trying to save the $7,500 tax credit for buying a new electric vehicle — with the sole exception of Tesla, which has tacitly signaled that it would permit the measure’s repeal. And as has been widely reported, congressional districts represented by Republicans are receiving three times as much money from the law than those represented by Democrats. That’s perhaps why earlier this year, 18 House Republicans begged Speaker of the House Mike Johnson not to repeal the IRA — and as my colleague Jillian Goodman reported last week, the number of House Republicans who signed that letter and are still in Congress exceeds the GOP’s margin in the chamber.

This has all led to a fair amount of optimism over the IRA. I’ve even seen progressives frame it as a kind of transaction — or assert, blithely, that the new Republican majority would never vote so grandly against its constituents’ own economic interests.

But that is wrong. Everyone is capable of voting against their economic interests. It even feels good to do it — like you’re courageously taking one for the team. Next year’s fight to save the IRA is not going to be a transaction or a contract negotiation. It is going to be a political battle — one that will emerge from a political process and be overseen by fundamentally political actors. That means it is going to be ideological. The IRA is much likelier to survive if it can find the right set of messengers — people who can credibly talk about economic growth, liberty, national competition, and more generally speak Republican — who can argue the IRA’s case to congressional Republicans in terms that will resonate with them. Hectoring lawmakers with Excel spreadsheets about spending is going to be less effective, for better or worse, than pointing out that repealing the EV tax credit would essentially grant the global EV industry to China.

Which isn’t to say that the spending on clean energy in districts doesn’t matter. It does, and will be nice to have and not essential to the coming melee. The question of whether the IRA and its innovation-encouraging policies survive will be perhaps the most important climate question of the Trump era. Saving it will require recourse to ideology, to values, to politics — and citing federal spending numbers alone will not allow decarbonization advocates to skip that crucial step.