After billions in stimulus funding failed to transform impotent green energy sources into profitable endeavors, even Obama has taken a break from promoting Wind and Solar. He is even talking more about oil and gas exploration, although his sincerity is in serious doubt. Unfortunately, some Republicans have not relinquished their affinity for using public funds to prop up their local wind industry.
Yesterday, Iowa Gov. Terry Branstad and Kansas Gov. Sam Brownback sent a letter to the 20 members of the payroll tax cut conference committee imploring them to extend the Production Tax Cut (PTC) for Big Wind, set to expire at the end of the year. They warned that “wind development will grind to [a] halt due to the uncertainty of a PTC extension.”
The PTC is among 51 ‘tax extenders’ that have either expired last December or are slated to expire this December. It grants a 2.2 cent/per kilowatt-hour refundable credit for wind, solar, or geothermal. Believe it or not, that is a large sum of money. According to the Heritage Foundation, if the oil industry received a commensurate subsidy, they would get a $30 check for every barrel produced. The PTC is tantamount to an Earned Income Tax Credit for corporations.
As such, the governors are probably correct to assume that Big Wind will grind to a halt without the credit. And that’s how it should be in our free-market economy. Why is this any different than Obama’s attempt to pick winners and losers? Actually, in this instance, we would be picking losers as winners. While ending the tax credit will probably bring down Big Wind, it’s not like the subsidy actually helped Wind become prosperous. In 2010, wind accounted for 0.9% of our energy supply, geothermal 0.2%, and solar 0.1%. Many states offered their own tax credits to the wind industry, and lost money. In Texas, the property tax break alone cost the state $1.6 million per job created.
What we really need to do is to let all targeted tax breaks expire, especially to those industries that have no tax liability to begin with. Last year, Congressman Mike Pompeo (R-KS) introduced legislation (HR 3308) to sunset all non-universal energy tax credits and grants, including those for fossil fuels and nuclear power. The bill would use the savings from the repeal of these credits (roughly $90 billion over ten years) to lower the corporate tax rate on everyone, including green energy companies (to the extent that they pay taxes at all). HR 3308 has 18 co-sponsors, including Paul Ryan. It should garner the support of the entire caucus.
Yesterday, Senators DeMint and Lee introduced the bill in the Senate. We should urge everyone to cosponsor the bill.
When we’re trying to draw bold contrasts to Obama on the issue of venture socialism, the last thing we need is members from our party muddling the distinction by offering their constituents an echo, instead of a choice.
Cross-posted From The Madison Project