President Joe Biden’s massive climate agenda is contributing to the ballooning federal deficit, according to the Congressional Budget Office (CBO).
The administration’s green spending, which Vice President Kamala Harris recently estimated to cost $1 trillion, is playing a role in the growing federal deficit, according to a new CBO report that assesses the outlook for the budget and the general economic situation in the country for the next ten years. The CBO says that energy-related tax credits are actually more costly than initially understood, and that other climate regulations and actions are also contributing to the costs as well.
“Two key factors partially offset that deficit reduction relative to last year’s projections,” CBO Director Phillip Swagel said of his office’s report. “First, net interest costs rise as a result of higher interest rates. Second, the costs of energy-related tax provisions are much higher than the staff of the Joint Committee on Taxation originally projected. Those costs reflect new emissions standards, market developments, and actions taken by the Administration to implement the tax provisions.”
The CBO now expects to see a “substantially higher” amount of money claimed in the form of green tax credits, which in turn alter budget projections because of changes in expected tax revenues and increased outlays related to the credits, per its report.
“Together, those technical revisions increased CBO’s estimate of the budget deficit in 2024 by $25 billion and its projections of the cumulative deficit from 2024 to 2033 by $428 billion. More than half of the increase in the 10-year deficit—$224 billion—is from revised projections of amounts claimed for clean vehicle tax credits and of revenues from excise taxes on gasoline,” the CBO report states. “Of that increase, $151 billion is attributable to reductions in projected revenues, and $73 billion to increases in projected outlays.”
The White House has previously claimed that the Inflation Reduction Act (IRA), Biden’s signature climate bill that established several green energy tax credit programs, would reduce the federal deficit. However, Kent Smetters, the faculty director of the Penn Wharton Budget Model, said in June 2023 that the bill will add about $750 billion to the national deficit over the next decade, joining Goldman Sachs analysts who posit that the federal government significantly underestimated the costs of IRA tax credit programs.
The federal government has run deficits in excess of $1 trillion each year since fiscal year 2020, and budgets greater than $6 trillion have also marked every fiscal year included in that period of time.
“Today’s report provides further evidence of economic strength and deficit reduction under President Biden,” a White House spokesperson told the Daily Caller News Foundation. “The economy continues to grow faster than forecast as inflation continues to fall, while the deficit is projected to be lower over the next decade than CBO last projected.”
Nick Pope on February 7, 2024
