Party Over Prosperity: What Tax Extenders Say About the 113th US Congress

What does every congressman want, besides being re-elected? They want to be seen as job creators. We know economic growth creates jobs (and helps reduce our national debt), so to that end, both parties have traditionally supported pro-growth tax incentives for a wide variety of businesses and industries. And while congress has become more polarized and ideological in recent years, last week’s passage of the tax extenders bill represents a real departure from its traditional bipartisan and pragmatic approach to job creation. How else would you explain a measly two-week extension of the Production Tax Credit (PTC) for wind?

Renewables Create Jobs

The renewable energy industry has seen a job creation renaissance over the last few years; ironically due in part to the same federal tax credits Congress just refused to extend past 2014. The PTC is critical in helping the wind industry secure financing and lock in sales contracts.  It has been a tremendous tool in expanding the market for wind power, and has helped create thousands of jobs. 

In fact, the Energy Information Administration (EIA) just released a report that looked at employment trends in the electricity sector between 2011 and 2013.  Over that time, jobs in the wind industry grew 16 percent, and that’s just operation and maintenance.  The EIA excluded manufacturing and construction, which constitutes the bulk of those jobs, so that number is actually much higher.  Moreover, the renewable electricity sector as a whole saw a whopping 246% in job growth verses declining employment in every other power sector over that same time period.  Just the kind of economic prosperity we want to see more of, right?  Clearly those tax incentives are working, so why take our foot off the pedal and slow the growth of an industry that is showing real potential?    

Tax Code Inequality 

You often hear it said that “Congress shouldn’t be in the business of picking winners or losers.” But when Congress refuses to extend tax credits for renewable energy, while keeping permanent tax credits for the mature fossil fuels industry intact, how is that not showing a preference for the latter? 

Tax incentives for fossil fuels made up the bulk of federal energy tax incentives through 2007, and it has only been recently that renewables have achieved some parity in federal financial support.  However, even with increased federal support, investments in renewables and energy efficiency have not come close to leveling the subsidy playing field given that the oil and gas industry has enjoyed an average of $4.86 billion in annual tax breaks since 1918.  So why is Congress pulling the plug on support for wind — a relatively new commercial industry starting to show real job growth — while continuing to reward mature fossil fuels with billions in permanent subsidies?  And why do fossil fuels enjoy the certainty of permanent tax incentives while renewables only qualify for temporary tax credits subject to annual tax code uncertainty?

Last Time This Happened

The last time congress punted on extending the PTC, U.S. wind installations dropped by more than 90 percent, investment in state and local economies fell by $24 billion, and wind manufacturers cut thousands of good, high-paying jobs.  Both parties agree that regardless of the market environment, a lack of certainty paralyzes business and economic growth.  Whether you believe in a role for government as a catalyst for business, or that our economy performs best when the government gets out of the way, businesses still require certainty.  Business owners have to be able to count on some consistency in federal policy in order to structure their investments accordingly, create jobs, and grow.  Last week’s tax extenders bill effectively denied wind owners and prospective job creators that certainty. 

Congressional Inaction Undermines Jobs and Economic Growth

Members of Congress talk about the need to legislate pro-growth policies, ensure market certainty, and create jobs. In the past, they have worked across the aisle to make that happen. So what’s changed?  Is it the unlimited money in our electoral process, or perhaps it’s the product of too much gerrymandering; or maybe the rise of the tea party?  It’s hard to say it’s any one thing, but despite the fact that extending the PTC over the longer term creates jobs and grows our economy, and despite the fact that there are many wind manufacturers and businesses in republican districts, when Congress had an opportunity to put prosperity over party, they caved to the ideological extremists.

Failing to extend the PTC is the very definition of being penny-wise, but pound foolish. The story of the wind industry should have everyone excited, regardless of party.  We should nurture that growth, not stunt it.  It appears we have reached a point where job creation and economic growth no longer trump political ideology.  We now know that this is the least productive congresses in history, but the notion of “do no harm” simply doesn’t apply here.  When Congress fails to govern pragmatically, and moreover, when Congress fails to act, our economy suffers. 

I don’t understand why wind made the naughty list this year, but Santa’s been good to me before; perhaps he will grant my Christmas wish.  Here’s to hoping that the 114th Congress actually goes about the tough business of governing, and places prosperity over partisan politics.   

Lead image: Mdgn via Shutterstock

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Rob creates and implements legislative campaigns to support UCS efforts on clean energy, global warming, and nuclear safety issues. His work played an important role in the passage by the House of Representatives of the first-ever legislation to reduce greenhouse gases and increase deployment of clean energy. Rob is also a valued resource for Congress on nuclear power safety policy and oversight. Prior to joining UCS, Rob worked for the National Environmental Trust (now Pew Environment Group) for seven years doing media, outreach, and legislative work on climate and energy issues as well as marine conservation and fisheries issues. He holds a Masters in International Relations from the Fletcher School, Tufts University.

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