All four Iowans in the U.S. House voted on April 26 for a plan to raise the debt ceiling by $1.5 trillion for the coming year, in exchange for “aggressive caps on federal spending” over the next decade.

The House approved the Limit, Save, Grow Act of 2023 by 217 votes to 215, meaning House Speaker Kevin McCarthy had no votes to spare.

The speaker secured passage of his bill by making concessions on biofuels subsidies on the eve of the vote. McCarthy had previously indicated he was not open to altering the bill, but a group of Republicans from the Midwest—including Iowa’s Representatives Mariannette Miller-Meeks (IA-01), Ashley Hinson (IA-02), Zach Nunn (IA-03), and Randy Feenstra (IA-04)—insisted on changes.

LAST-MINUTE CHANGE SAVES BIOFUELS TAX CREDITS

Chris Clayton reported last week for the DTN/Progressive Farmer website on how McCarthy’s plan could affect biofuels and renewable energy by repealing portions of the Inflation Reduction Act enacted last year.

Beyond going after the tax provisions for electric vehicles, the bill also repeals an extension of the $1-per-gallon Biodiesel Tax Credit and Renewable Diesel Tax Credit. The $1.01-a-gallon Second Generation Biofuel Producer Tax Credit would also be repealed.

Another tax credit meant to help spark biofuel development in aviation fuel, the $1.25-a-gallon Sustainable Aviation Fuels Tax Credit would also be repealed under the bill.

The bill also would dramatically restrict the Clean Fuels Production Credit, which is set to start in 2025. Under the bill, the tax credit would only be available for fuel production started before the end of 2024.

Hinson and Feenstra were among the House Republicans who met with McCarthy on April 25. They declined comment to reporters after that meeting.

The revised version of the bill, unveiled early on April 26, struck sections that would “modify the tax credit for carbon dioxide sequestration; change the effective dates for applying incentives for the use of biodiesel, renewable diesel, and alternative fuels; and change the effective date for applying incentives to use second-generation biofuels.”

Without tax credits for carbon dioxide sequestration, it would not be economical for companies to build CO2 pipelines that have been proposed in Iowa and other states. Biofuels industry representatives have argued those projects are essential to keep Iowa’s ethanol producers afloat.

Miller-Meeks, Hinson, Nunn, and Feenstra released a joint statement on April 26, saying they were “proud to deliver a major victory” for the biofuels industry and the entire state.

Since this proposal was unveiled, our delegation has stood united for Iowa’s farmers and producers fighting to amend the bill to protect biofuels tax credits. Having successfully amended the bill to protect funding for these tax credits, our delegation will vote for this legislation, which is a starting point to avoid a default and cut wasteful spending. As negotiations continue, we have made it crystal clear that we will not support any bill that eliminates any of these critical biofuels tax credits.

The use of passive voice (“proposal was unveiled”) glossed over the fact that Republican leaders wrote the plan threatening Iowa’s farmers and producers.

The Iowa delegation also failed to credit the previous Democratic Congress and President Joe Biden for preserving “these critical biofuels tax credits” in the Inflation Reduction Act, which all Congressional Republicans (including Hinson, Miller-Meeks, and Feenstra) opposed.

Governor Kim Reynolds took a similar tack in her own statement released on April 26, thanking Iowa’s House members for “their steadfast efforts to stand up for biofuels throughout the negotiations on the House debt limit package.”

OTHER PROVISIONS OF HOUSE DEBT CEILING BILL

The Congressional Budget Office has estimated that the Limit, Save, Grow Act of 2023 would reduce federal spending by approximately $4.8 trillion over the next decade through “about $4.2 trillion of policy savings and $543 billion of interest savings.” Most federal agency budgets would be reduced to the levels approved for fiscal year 2022. Each agency’s budget would be unable to grow by more than 1 percent a year for the next ten years.

Eric Katz reported for Government Executive, “Republicans have vowed to exempt spending at the departments of Defense and Veterans Affairs from the reductions, though Democrats have highlighted that the bill text itself does not provide such protections for VA.”

Other major provisions of the debt ceiling bill would rescind unspent funds allocated through COVID-19 relief bills, repeal $5 billion in Inflation Reduction Act funding to reduce greenhouse gas emissions, rescind an increase in funding for the Internal Revenue Service by $80 billion over the next decade, block Biden’s student debt cancellation and Income-Driven Repayment expansion, and prioritize fossil fuel production in energy, regulatory, and permitting policies.

The House bill also includes new work requirements for Medicaid recipients and those who receive federal food assistance. (The last-minute changes moved up the date of those mandates from 2025 to 2024.) According to a Congressional Budget Office analysis, those provisions “would lead to lower federal costs, an increase in the number of uninsured people, no change in employment or hours worked by Medicaid recipients, and a rise in state costs.” When Arkansas adopted work requirements for its Medicaid program, thousands of eligible people lost health coverage.

Proposed changes to the Temporary Assistance to Needy Families program could cut off benefits to more than half a million households nationwide.

The Democratic-controlled Senate will not take up the House debt ceiling plan, and Biden has vowed to veto the measure. But House leaders viewed passage as important to strengthen McCarthy’s negotiating position vis-a-vis the White House.

While Donald Trump was president, Congressional Republicans voted three times to raise the debt ceiling with no strings attached regarding future federal spending. Economists have warned that failing to raise the debt ceiling this year would send the U.S. into default, sparking huge job losses and market crashes.

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Appendix: Full text of joint statement released by Representatives Mariannette Miller-Meeks (IA-01), Ashley Hinson (IA-02), Zach Nunn (IA-03), and Randy Feenstra (IA-04) on April 26

The biofuels industry drives the Iowa economy and is vital to our nation’s energy security. We are proud to deliver a major victory for this industry and our whole state in these negotiations.

Since this proposal was unveiled, our delegation has stood united for Iowa’s farmers and producers fighting to amend the bill to protect biofuels tax credits. Having successfully amended the bill to protect funding for these tax credits, our delegation will vote for this legislation, which is a starting point to avoid a default and cut wasteful spending. As negotiations continue, we have made it crystal clear that we will not support any bill that eliminates any of these critical biofuels tax credits.

Iowa farmers and producers feed and fuel the world, and we will always have their backs. Now, it is past time for President Joe Biden to stop playing politics with our nation’s fiscal health, which means working with us to cut wasteful spending and prevent a catastrophic default.

Statement released by Governor Kim Reynolds on April 26:

I commend the members of Iowa’s Congressional Delegation for their steadfast efforts to stand up for biofuels throughout the negotiations on the House debt limit package. Their commitment helped protect an industry that contributes over $6 billion to Iowa’s economy and accounts for over 60% of Iowa’s corn. I want to thank Speaker McCarthy for working with the delegation to find a compromise that continues the conversation while recognizing the importance of biofuels to our country. 

Top image, from left: Official photos of U.S. Representatives Mariannette Miller-Meeks, Ashley Hinson, Zach Nunn, and Randy Feenstra.