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Former US military leaders have lobbyed Congress and warned that they would make the country vulnerable to China, rejecting Republicans’ push to abolish billion-dollar tax credits for key minerals.
A group of 23 retired four-star generals and admirals asked Jason Smith, chairman of the Houseways and Means Committee, to protect five tax credits covering advanced manufacturing, clean vehicles and electricity production. The committee is expected to vote for the fate of some of the credits next week.
The former military leader is a member of SAFE, a group focused on critical minerals and energy security funded through donors ranging from charitable foundations to industry and the US government. They include Admiral Dennis Blair, former Director of National Intelligence, and General Joseph Dunford, who is chairman of the Co-Chief of Staff.
The rally battle highlights an extraordinary political alliance on Biden-era inflation reduction laws that provide incentives in favor of green energy and important mineral projects.
The law brings back support from industries and some Republicans who benefit the district from the resulting projects. Meanwhile, environmental groups are protesting mineral extraction, citing wildlife, water and ecological concerns.
Since Donald Trump won the November presidential election, businesses have unleashed a multi-million-dollar lobbying campaign aimed at saving the IRA. He labelled the law as a “new green fraud,” and vowed to abolish it with the help of Republicans in Congress. The president wants to use the savings generated by scrapping legislation and funding the administration’s planned tax cuts.
Eliminating the IRA tax credit could affect some of the 20 key mineral projects that have been tracked quickly by the Trump administration recently. These include standard lithium and lithium projects in Arkansas and Equiner and Albemarle in Nevada. Important minerals such as cobalt, nickel and lithium are essential for electronic devices such as wind turbines, electric vehicle motors, rechargeable batteries, and military hardware.
Some Republican members of Congress have called on party colleagues to “repeal” the law, saying taxpayers could cost $10 for a decade and support renewable energy sources while replacing fossil fuels.
The lobbying follows concerns raised by the Department of Defense this year about China’s “disruption to critical US supply chains” by limiting rare earth exports and the equipment used to process them.
In a letter to Smith and his House and Senate leaders, the general said cutting credits would threaten $125 billion in investments in key mineral projects essential to the defense industry. This puts 100,000 direct jobs in 15 states at risk, creating opportunities for Chinese Communist Party-related companies to increase global market share for major industries.
“Repealing or weakening these provisions will not only hinder the growth of critical industries, but will also become vulnerable to supply chain manipulation by hostile regimes and further delay efforts to rebuild the country’s defense industrial bases,” the letter states.
Trump has already targeted legislative spending by ordering all federal agencies to “suspend payments under the IRA funds immediately.” However, the future of the IRA ultimately relies on voting in Congress, and Congress passed the law in 2022 under a budget resolution. This means that only a simple majority vote in the House must abolish it and there is no opportunity for a filibuster.
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Republicans have a majority in both chambers of Congress, but IRA supporters hope that some members of the party will oppose the abolition of tax credits that support their district work.
According to Reuters, Republican lawmakers wrote to Smith on Thursday, claiming that IRA tax credits are important to Republican states. However, lawmakers said it was “not unreasonable” to incorporate a gradual credit out.
“The IRA will almost certainly survive, but not in its current form,” said Frank Maisano, a partner in the Policy and Resolution Group at law and lobbying company Bracewell. “Among other changes there could be a few items, such as the Sunset provisions added to close certain tax credits earlier than originally anticipated.”
