Irresponsible Senate Finance Committee Action on Wind Energy Tax Break, by Glenn Schleede

Irresponsible Senate Finance Committee Action on Wind Energy Tax Break

April 11, 2013

Once again, the Senate Committee that manages to make life miserable for millions of tax-paying Americans with its manipulation of the US Tax Code, is acting to aid its friends, punish ordinary taxpayers, and load another $85 billion in debt on our children and grandchildren.

On April 3, 2014, by “voice” (no fingerprints) vote, the Senate Finance Committee reported out an $85 billion tax break ”extender” bill -- which the Committee calls the “EXPIRE Act.” [1] The bill includes billions in unwarranted tax breaks for special interests, including the wind industry.

As long as Congress fails to pass a balanced budget, every dollar provided to special interests in this $85 billion “Extender” bill is a direct addition to the national debt that will be dumped on our children and grandchildren. Further, each dollar that Congress adds to the national debt will be DOUBLED in about 15 years due to interest that will accrue on that debt.

An egregious example of an unwarranted special interest tax break in the Finance Committee’s bill is Senator Grassley’s wind and other renewable energy “Production Tax Credit” (PTC) and “Investment Tax Credit” (ITC). Grassley insisted on extending this 20-year old “temporary” tax break for another 2 years at a cost, according to the Joint Tax Committee, of more than $13 billion over the next 10 years (and more thereafter).

When Senator Toomey attempted to eliminate unwarranted energy tax breaks from the bill, Republican Senators Grassley, Cornyn, Thune, Crapo, & Portman[2] joined Finance Committee Democrats in voting to keep the massive energy tax breaks in the bill!

The votes for Grassley’s $13+ billion wind PTC and ITC extension to benefit “wind farm” owners would result in an equal addition to future generations’ debt burden! Under Grassley’s measure, owners of “wind farms” would be able to continue reducing their corporate income tax liability by $0.023 (adjusted upward for inflation) for each kilowatt-hour (kWh) of electricity produced by their wind turbines during the next 10 years.

The wind PTC was initially passed in 1992 as a temporary incentive to help a then fledgling industry – with the expectation that wind energy would be environmentally benign and would become commercially viable. However, after nearly 40 years of subsidies for wind energy R&D and 20 years of lucrative wind energy tax breaks -- together totaling over $100 billion:

• Electricity from wind remains high in true cost and low in real value[3] – with the wind industry providing no evidence that electricity from wind will ever become commercially viable (i.e., without large tax breaks and subsidies).
• Producing electricity from wind has proven to have numerous adverse environmental, economic, electric system reliability, scenic, and property value impacts not originally foreseen and still not admitted by wind industry advocates; and

Eight Republicans[4] (some claiming to be “conservatives”) and 110 Democrats in the US House of Representatives have signed a letter to House leaders urging extension of the wind PTC. The tax-writing House Ways & Means Committee hasn’t taken up the wind PTC, but one of the wind industry’s Washington lobbyists has bragged that the wind industry still has "very strong support from Democrats in the House and strong support from some, but not all, of the Republicans."[5]

Last December, Senator Grassley told constituents in Iowa that the costly wind Production Tax Credit (PTC) would be extended soon. “…Congress will come back after the New Year and approve four dozen or more tax credits.” “There are a lot of economic interests”…represented in the tax credits. Those interest groups collectively “put a lot of pressure on Congress to re-institute the credits’[6]

In addition to wind industry lobbyists, Grassley undoubtedly was referring to such Washington establishment organizations as the US Chamber of Commerce, National Association of Manufacturers, and Business Roundtable. Organizations such as these once championed private enterprise but now seem to be heavily influenced by member companies that:

• Have concluded that there is less risk and more profit in “mining” Washington for tax breaks and subsidies than in pursing truly innovative and productive activities in private, competitive markets.
• Have no problem in accepting special interest tax breaks that load debt on future generations.

The April 3rd action by the Senate Finance Committee certainly helps explain why a recent Gallup Survey shows that Congress currently has a 13% favorability rating. If the nation’s “Millennials” understand how the Congress is adding to the debt that they and their children will bear, they may assign an even lower rating!

Glenn R. Schleede
Virginia

[1] Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act.
[2] See “Results of [Senate Finance Committee] Executive Session.040314” download 4/9/14 from: http://www.finance.senate.gov/legislation/details/?id=67094f10-5056-a032-52ff-257830e0a938
[3] Electricity is produced by wind turbines only when wind speeds are in the right range (starting around 6 MPH, reaching rated capacity around 32 MPH, and cutting out around 55 MPH). Electricity from wind turbines is, therefore, low in value because it is intermittent, volatile, unreliable, and most likely to be produced at night in colder months, not on hot weekday afternoons when most needed. Reliable generating using conventional energy sources must always be available to maintain stable electric grids and a reliable electricity supply.
[4] King (IA), Lucas (OK), Runyan (NJ), Fitzpatrick (PA), Gibson (NY), Latham (IA), Noem (SD). Cole (OK).
[5] http://www.snl.com/Interactivex/article.aspx?CdId=A-27696241-11565 (downloaded April 11, 2014)
[6] The Gazette (Cedar Rapids, IA), December 11, 2013.