Inappropriated: what's happening with the IRA?
The hypernormalization of neofascism continues apace as the first month of the second Trump administration comes to a close.
There’s a lot of fear and confusion, and any moment of feeling sanguine about the incoherence or imcompetence behind the Trump spectacle has been tarnished with a sense of dread for our comrades across the diverse working class. Solidarity. It’s important to stay focused, stay involved, keep organizing along the vectors you know.
I’m keeping my nose to grindstone on school finance. We can win this thing, though it may be rough going.
For instance, I’ve been wondering whether and how the administration will dismantle the Inflation Reduction Act programs that form a policy basis for organizing in school finance. Did any of executive orders in that slurry of bad policy aim at the IRA?
I hadn’t seen much, so I asked on Bluesky (which is getting a bit better as a platform). Thanks to Mark Lieberman’s response. The answer is yes, but.
There’s a memorandum to the heads of offices and agencies from the Office of Management and Budget we should look at.
Before we get to the text, Lambert Strether (who’s retiring from Naked Capitalism, much to my chagrin though it’s much deserved) reminds us that there’s a big difference between executive orders, proclamations, announcements, and memoranda. Strether lists all of these out helpfully towards the top of the page.
While these are all presidential actions, they have different statuses as discourse. The memorandum about the Inflation Reduction, which is just that—a memo—says the following:
MEMORANDUM TO THE HEADS OF DEPARTMENTS AND AGENCIES
FROM: Matthew J. Vaeth, Acting Director, Office of Management and Budget
Kevin Hassett, Assistant to the President for Economic Policy and Director of the National Economic Council
SUBJECT: Guidance Regarding Section 7 of the Executive Order Unleashing American Energy
The directive in section 7 of the Executive Order entitled Unleashing American Energy requires agencies to immediately pause disbursement of funds appropriated under the Inflation Reduction Act of 2022 (Public Law 117-169) or the Infrastructure Investment and Jobs Act (Public Law 117-58). This pause only applies to funds supporting programs, projects, or activities that may be implicated by the policy established in Section 2 of the order. This interpretation is consistent with section 7’s heading (“Terminating the Green New Deal”) and its reference to the “law and the policy outlined in section 2 of th[e] order.”
For the purposes of implementing section 7 of the Order, funds supporting the “Green New Deal” refer to any appropriations for objectives that contravene the policies established in section 2. Agency heads may disburse funds as they deem necessary after consulting with the Office of Management and Budget.
Okay, so there’s a lot to parse here. At first, I was pissed off: don’t terminate the Green New Deal please! And yet here we are.
I was reminded of a haunting conversation I had with a school district official who told me that it’d be great to have more public financing for public schools from the federal government, but you just can’t trust that programs started in one administration will survive the next—that’s what happened to Build America Bonds and school districts who wanted to take advantage of it got burned in 2010 when the Tea Party sequestered monies meant to reimburse them for interest payments on bonds.
That’s what’s happening here—sort of.
When we look at the language, some questions about the strength and severity of this memorandum emerge.
The first and biggest one to me is about the word “appropriated.” The memo says there has to be a pause in the disbursement of any funds appropriated for these laws. But I happen to know that the most exciting parts of the IRA have a tax credit structure, it’s called the elective pay tax credit, and that money doesn’t have to be appropriated for school districts to get their reimbursements from the Internal Revenue Service.
So can the programs still function if there’s no money that’s technically appropriated for them? A tax expenditure isn’t the same thing as a regular expenditure. You don’t have to appropriate money for it, the “spending” happens when the IRS gives the reimbursed entity a kind of rebate through the tax structure.
Brookings Institution has a helpful explainer for this, and the answer is that they might be able to weaken this program, but it’s not for sure. Here’s what they say:
The IRA relies on regulations for implementation. As of November 29, 2024, the Internal Revenue Service (IRS) currently lists 20 Notices of Proposed Rules and as of December 6, 2024, 11 final regulations that relate to the implementation of the IRA, and other agencies have published at least four final rules, one interim rule, and one proposed rule on the Federal Register.5 The final regulations are on clean vehicle credits, transfer of certain credits, advanced manufacturing investment credit, and elective payment of applicable credits.
If a rule has not been finalized, a President can prevent the rule from being issued by imposing moratoriums on regulations or withdrawing the rule. If a rule has been finalized, then a President must go through the rulemaking process set forth in the Administrative Procedures Act to repeal the finalized rule. This involves:
Agencies publishing a notice of proposed rulemaking, allowing for public comment, and publishing a final rule; or
Congressional action under the Congressional Review Act.
Former President Trump’s previous administration was successful at preventing proposed rules from being finalized and overturning finalized rules through both the rulemaking process and the Congressional Review Act.
From what I can tell, the IRS rules around elective pay have been finalized (if I’m wrong please let me know). That means Trump will have to go through the CRS path above to get at them, meaning the memo, for now, doesn’t have teeth.
And, we know that Biden tried to protect 84% of IRA grants by making sure they were obligated before he left office—the contracts are already signed. It was reported a few days ago that that number went up to 93%. According to the GGRF’s website, that same obligation strategy was used for capitalizing state green banks. The money’s obligated!
So, at this moment, I’m feeling cautiously optimistic about the policy basis for school finance organizing. I don’t see any reason why districts shouldn’t try to use these programs.
Of course, the threat of being burned looms large, and it’ll inevitably have a chilling effect on organizing district finance offices.
Organizers will have to reassure squeamish district budget officials that, yes, they’ll get the reimbursements. Frankly, the squeamishness will be well-founded: Trump doesn’t like to follow rules, norms, etc., or at least he likes to make a show of that. And it makes districts vulnerable to being on the hook for millions of dollars if the IRS doesn’t hold up its end of the bargain. So they might just say “pass, took risky.”
My position on this is: move forward, push, and don’t comply in advance. If we have to do some complex organizing to target the IRS and force the Trump administration to do these reimbursements, then so be it. It could even be a powerful campaign that digs into the heart of how the reimbursements work, testing the strength of the administration’s reach into the civil service. Maybe there are comrades in the ranks of the IRS and Dept of Energy who’ll respond to our pleas and work with us.
Have heart!