A letter was released recently on behalf of 21 House Republicans in support of preserving the suite of energy and manufacturing tax credits that some in their party have floated as a sacrificial lamb in coming budget negotiations. This letter, sent to Ways and Means Chairman Jason Smith, shows an even stronger — and growing — bench of Republicans going to bat for these tax credits when compared to the 18-member letter sent to House Speaker Mike Johnson last summer.
It has become clear that cutting or modifying these credits will be met by opposition from some elected officials and industry players, likely due to the economic boom in red districts and the nearly $2 trillion added to national gross domestic product. There are significant financial and energy security risks posed by placing these on the chopping block that have pushed many Republicans to realize that tax credits may be the thing to help fulfill their energy dominance agenda.
In the last two years, $289 billion has been invested in American manufacturing and clean electricity, with more than 2,000 facilities opening nationwide. An additional $524 billion of investment remains to be spent on the construction and installation of 2,189 facilities. Red states have a lot more to lose than blue states in this fight, with more than three-quarters of announced and outstanding investments in Republican districts.
It’s apparent that these credits have harnessed broad support among Republicans, what’s more interesting is that many of the members whose districts are benefitting the greatest are not the ones publicly speaking out to defend them.
For example, while no Texas Republicans signed onto the letter, the state is benefitting from the credits above all others as it is home to the greatest level of investment and the highest levels of unspent, or “at risk,” funds. More than $54 billion in investments have been spurred by these credits with an additional $130 billion announced and yet to break ground and/or reach operation. These investments are spread across Texas but are particularly large in some negotiator’s districts.
Take Jodey Arrington, for example. He is the chairman of the House Budget Committee, and his district ranks in the top 10 for dollars spent to date and for at-risk funds. The district has $5.6 billion in investments to date, with an additional $11.6 billion announced and unspent — meaning the majority of the more than $17 billion announced in the district is vulnerable to cuts or changes to tax credits.
Notably, most of these projects are solar, storage and wind — technologies that benefit from the more targeted tech-neutral tax credits.
Congress has been flooded with advocates armed with data and anecdotes in support of tax credit preservation. They are often met with arguments that sacrifices to pay for other tax demands will be necessary. However, it’s critical to understand the economic hurt that would be brought upon many in red and rural America should this happen.
If the technology-neutral credits alone were cut, we could see domestic investment fall by $336 billion and up to 3.8 million jobs-years lost through 2035. Not to mention the implications for the power generation already online and what’s needed to meet unprecedented load growth — cuts would lead to 237 gigawatts less clean generation and power bills increasing by $142 annually for customers by 2040. Rate spikes would be even more pronounced in specific regions; Texans, for example, could see a $348 annual cost increase.
Based on the most recent letter, vulnerable Republicans may be making the calculation that their constituents would like them to prioritize delivering for the district above their loyalty to House leadership. Preserving these tax credits could give them a boost in 2026, and cuts that threaten local investments pose economic and electoral issues for them. The rest of the conference must recognize the risks associated with sweeping the rug out from companies, consumers and Americans.
Republicans can and should champion energy and manufacturing tax credits in support of onshoring critical industries, lowering energy prices, ensuring grid reliability, and bolstering national security for their constituents.
