To Cut Wasteful Spending, Start With Energy Subsidies
For decades, the federal government has propped up energy sources and technologies through subsidies and tax credits. From 2010 to 2023, the cumulative cost of these policies was $76 billion and $65 billion for solar and wind power, respectively, and $33 billion for oil and gas. Nuclear energy, meanwhile, received about $26 billion.Â
Not only have these subsidies been costly for taxpayers, but they have also proven ineffective in changing the energy landscape. Despite receiving more than twice the amount of money as fossil fuels and nuclear power since 2010, wind and solar only generated 10.2 percent and 3.9 percent of the country’s electricity in 2023, respectively.Â
The Inflation Reduction Act (IRA) supercharged subsidies for wind and solar energy while introducing new technology-specific tax credits for green hydrogen, nuclear power, sustainable aviation fuel, and more. Additionally, it established a $7,500 tax credit for electric vehicles (E.V.s) assembled in North America. Households earning less than $300,000 and individuals earning less than $150,000 are also eligible for the one-time clean vehicle credit.Â
With Elon Musk and Vivek Ramaswamy at the helm of the newly-minted Department of Government Efficiency (DOGE), the department should work with Congress to repeal energy subsidies and tax credits that distort markets and reward politically favored companies at the expense of taxpayers.Â
While the government’s practice of picking winners and losers always comes with a steep price tag, the cost of increased energy subsidies from the IRA is exorbitant. Initially projected at $369 billion over the next 10 years, these subsidies are now expected to add over $1 trillion to the federal deficit through 2032. And, with some provisions lacking an expiration date, this figure could feasibly reach $3 trillion.Â
Since its enact
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