Military officials weigh in on tax incentives for crucial mineral resources in the United States
In an unconventional tug-of-war, a gaggle of ex-top brass US military bigwigs are trying to put a stop to the Republican crusade to scrap billions in tax perks for essential minerals, warning it could leave America at China's mercy.
A pack of 23 ex-four-star generals and admirals have penned a missive to Jason Smith, the Chief of the House Ways and Means Committee, urging him to safeguard five tax exemptions covering cutting-edge manufacturing, eco-friendly transportation, and power generation. The committee is set to vote on the fate of these savings next week.
These military veterans are part of a group named SAFE, which focuses on vital mineral resources and energy independence, with support coming from charitable foundations, industry, and the U.S. government. The list includes Admiral Dennis Blair, a former spy boss, and General Joseph Dunford, the 19th commander-in-chief of the joint forces.
The intense clash highlights the bizarre political partnerships revolving around the Inflation Reduction Act of the Biden era, offering juicy incentives for green energy and vital mineral projects. The law finds favor from businesses and even Republicans representing districts profiting from the resulting projects. Meanwhile, environmental groups have demonstrated against mineral extraction, citing animal kingdom, H2O, and natural environment concerns.
Businesses have unleashed a multimillion-dollar lobbying blitz to save the IRA since Donald Trump won the 2020 presidential race. He has branded the legislation a "green new swindle" and vowed to scrap it with help from congressional Republicans. The prez plans to use the saved dollars to fund tax cuts for his administration.
Scrapping the IRA tax breaks might impact some of the 20 critical minerals projects recently expedited by the Trump government. These include lithium projects supported by Standard Lithium and Equinor in Arkansas and Albemarle in Nevada. Critical minerals like cobalt, nickel, and lithium are indispensable in digital gear such as wind turbines, electric vehicle engines, rechargeable batteries, and military hardware.
Some Republican congressional representatives have urged colleagues to "completely repeal" the act, claiming it could cost taxpayers $1tn over a decade and provide prop for renewable energy sources while muscling out fossil fuels.
The lobbying follows worries expressed by the Department of Defense this year over China's attempts to disrupt vital US supply chains by limiting exports of rare earths and the equipment used to process them.
In their letter to Smith and congressional leaders, the generals warned that curtailing the credits would jeopardize $125bn in investments in vital mineral projects crucial to the defense sector. This would endanger 100,000 direct jobs in 15 states and clear the way for Chinese Communist Party-linked companies to enhance their global market share in key industries, they insisted.
"Terminating or diluting these provisions would not only stall the growth of critical industries – it would leave the United States defenseless against supply chain manipulation by hostile regimes and further delay efforts to rebuild the nation's defense industrial base," the letter stated. Trump had already targeted spending under the law by ordering federal agencies to "instantly put the brakes on the disbursement of funds under the IRA." However, the fate of the IRA depends on a vote in Congress, which cleared the legislation in 2022 under a budget resolution. This means only a simple majority vote in the House and Senate is required to repeal it, with no opportunities for a filibuster.
Republicans hold majorities in both houses of Congress, but IRA supporters hope that some party members will oppose the repeal of the tax breaks, which support jobs in their constituencies. Even a dozen Republican legislators wrote a letter to Smith last Thursday, arguing that IRA tax credits were vital for Republican states with significant clean electricity projects, nuclear power, and battery storage. However, they said it was "not unreasonable" to incorporate a phaseout of the credits. "The IRA will almost certainly survive, but not in its present form," said Frank Maisano, a partner in the policy and resolution group of Bracewell, a legal and lobbying firm. "There are likely to be some items, like sunset provisions added to end certain tax credits sooner than originally expected, among other changes."
- The ex-four-star generals and admirals are advocating for the conservation of five tax exemptions, covering advanced manufacturing, renewable energy, and eco-friendly transportation.
- These tax exemptions are under consideration by the House Ways and Means Committee, with a vote scheduled next week.
- The military veterans are part of SAFE, an organization focused on vital mineral resources and energy independence, receiving support from charitable foundations, industry, and the U.S. government.
- Admiral Dennis Blair and General Joseph Dunford are included in this list, with the latter being the 19th commander-in-chief of the joint forces.
- The Inflation Reduction Act, favored by businesses and certain Republicans, offers rewards for green energy and mineral projects.
- Environmental groups have protested against mineral extraction due to concerns about animal habitats, water sources, and the natural environment.
- Businesses have spent millions on lobbying to preserve the Inflation Reduction Act since Donald Trump's 2020 election.
- Trump has called the legislation a "green new swindle" and aims to scrap it with the help of congressional Republicans.
- Some of the 20 critical minerals projects recently expedited by the Trump administration, including lithium projects supported by Standard Lithium and Equinor, could be impacted by scrapping the tax breaks.
- Critical minerals like cobalt, nickel, and lithium are crucial for digital devices such as wind turbines, electric vehicle engines, rechargeable batteries, and military hardware.
- Some Republican congressional representatives have advocated for the complete repeal of the act, citing potential costs of $1tn over a decade and support for renewable energy at the expense of fossil fuels.
- The Department of Defense has expressed concerns this year over China's efforts to disrupt vital US supply chains by limiting exports of rare earths and processing equipment.
- In their letter to Congress, the generals warned that abolishing the credits would jeopardize $125bn in investments in vital mineral projects essential to the defense sector.
- This could result in the loss of 100,000 direct jobs in 15 states, clarifying the path for Chinese Communist Party-linked companies to expand their global market share in key industries.
- The generals argue that eliminating or weakening these provisions would slow the growth of critical industries and leave the US vulnerable to supply chain manipulation by hostile regimes.
- Trump had attempted to halt spending under the law by ordering federal agencies to hold back funds allocated under the IRA.
- However, the fate of the IRA depends on a vote in Congress, which passed the legislation in 2022 under a budget resolution, requiring only a simple majority vote in the House and Senate to repeal it.
- Republicans hold majorities in both houses of Congress, but IRA supporters hope that some party members will oppose the repeal of the tax breaks, supporting jobs in their constituencies.
- Even a dozen Republican legislators wrote a letter to the committee, stating that IRA tax credits were vital for Republican states with significant clean electricity projects, nuclear power, and battery storage, but suggesting a phaseout of the credits might be reasonable.