This is the Cato Daily podcast for Tuesday, March 11, 2025. I'm Caleb Brown. Few people really believe that the Inflation Reduction Act was aimed at reducing inflation. Fewer still believe that it was much more than a massive bundle of subsidies aimed at preferred technologies.

A new Cato paper out today digs into just how costly those handouts could be.

Cato's Travis Fisher and Joshua Loutts comment.

Travis, I want to start with you.

Let's give everyone a nice little refresher in what the Inflation Reduction Act was passed in order to achieve.

First of all, terrible name. It doesn't reduce inflation. I don't think anybody ever really thought that it did. Even President Biden, towards the end of his term, said something like, we should have called it something else. I agree. The Inflation Reduction Act, from our point of view, we're talking about

the energy portion of it, because it did some other things with health care and other elements

that we're not going to touch on. On the energy side, it was a subsidy bill. It's just this

suite of massive subsidies through the tax code, so styled as tax credits.

But these are actually direct pay. So they're transfer payments. And what they do is just shovel

massive amounts of money towards preferred technologies. So a great example is you get something like

an investment tax credit of 30% on any investment

you make on everything from solar panels to a new nuclear plant, new wind turbines, batteries

even. So all of that stuff gets a massive federal subsidy now. That is how it was styled. And so that

was passed in August of 2022.

And so before we get to the budgetary impact, what does that do to energy markets?

So I think what it does is it takes entrepreneurs and we're really good in America at being

entrepreneurial. It takes that entrepreneurial spirit and creates subsidy seekers instead of

entrepreneurs trying to serve

consumer interest. So all the conversations now, especially lobbying and the capital, of course,

but all the conversations now are about how do you capture this, how do you maximize this tax

credit, how do you capture this new one, what kinds of investments do you need to make? And by the way,

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