Last year, Congress decided to allow four expensive tax provisions — which would cost more than one billion dollars — to go the way of the dodo. Special tax exemptions for green energy companies were allowed to die, but now the House of Representatives wants to bring them back to life.
“Today, we are in between the season premiere of The Walking Dead and Halloween, so we turn to the issue of zombies,” declared Thomas Schatz, president of Citizens Against Government Waste (CAGW), in a conference call on the issue Wednesday. Continuing the zombie metaphor, Schatz added, “These four provisions were killed by Congress. They should remain in the grave, but — like many things in Washington — you have to put a stake through them” to make sure they stay dead.
The metaphor is indeed apt. CAGW partnered with Americans for Prosperity (AFP), and with 44 other coalition members (groups such as the Heritage Action, Concerned Veterans for America, Freedom Partners, and the Competitive Enterprise Institute) to release a letter Wednesday calling on Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan to oppose reviving these dead measures.
Last December, Congress passed an $680 billion package to make some tax extenders permanent, but it also allowed “more than two dozen others to expire at the end of this past year, laying the groundwork for comprehensive tax reform.” The coalition praised Congress for doing so.
“The $1.4 billion in expiring tax provisions currently under consideration—pertaining to wind power, geothermal heat pumps, fuel cell facilities, and combined heat and power (CHP) properties—are a distortion of the tax laws for special interests in the renewable energy industry and were wisely left out of this package,” the letter declared.
Nevertheless, Congress did extend favorable tax treatment to renewable energy companies — “5-year extensions of the main federal provisions for renewables, the wind production tax credit (PTC) and the solar investment tax credit (ITC), at the cost of $23.8 billion over the next decade.”
The letter called on Congress to oppose “green pork,” special tax and economic treatment for renewable energy, in general.
Government subsidies, loans, mandates, and tax policies regarding renewables have consistently failed to deliver on their promises of long-term job creation and economic viability. Americans deserve access to energy solutions that are affordable and reliable—ones that should be able to stand on their own in the marketplace.
This echoes the conservative (and liberal) opposition to cronyism or corporate welfare — special treatment from the government to specific companies. On the call, AFP President Tim Phillips explained that “Republicans are often very good when it comes to reforming and cutting back wasteful social programs [welfare], but when it comes to handouts for corporate groups, a lot of times Republicans will join Democrats in spending taxpayer dollars to support and favor businesses.”
Next Page: Why this issue fires up grassroots activists, and how reform is possible even if Hillary Clinton wins.
While grassroots activists and ordinary citizens were largely unfamiliar with this corporate welfare in the early 2000s, Phillips said that AFP activists “get it” today. “It’s what they see as totally wrong with Washington and both parties — this is an issue that our activists now understand and they’re frustrated about it.” Indeed, cronyism strongly motivates grassroots activists — “We get one of our highest response rates in reaching out to legislators on this issue.”
On the specific issue of green energy cronyism or “green pork” (best known in the case of Solyndra), AFP’s Director of Federal Affairs and Strategic Initiatives Christine Harbin said “taxpayers have seen woefully little return on their investment for energy, especially wind and solar.” She criticized the federal PTC in particular, arguing that while it has been around for 20 years, it has failed to fulfill its promises on long-term job creation and more access to energy.
Rather than extending tax preferences on a yearly basis, Harbin called upon Congress to present “a comprehensive approach for actually improving energy policy.” She opposed tax benefits not only for renewable energy but for all forms of energy.
“Our position is that energy solutions should be able to compete on the open marketplace for consumers’ dollars,” Harbin said. She also warned against the Obama administration’s regulations on energy. “We’ve been very concerned about new rules and regulations like the Clean Power Plan and rules on methane — these are going to be a longstanding restriction on Americans’ access to energy.”
Urging Congress to act on such matters proves difficult, but Harbin and Phillips saw hope in the growing number of organizations and members of Congress raising these issues. They mentioned a previous coalition letter they released in April, opposing the addition of these very tax extenders to a bill reauthorizing the Federal Aviation Administration (FAA). 34 coalition members joined them AFP in that letter, and 31 Representatives and 4 Senators opposed the extenders. This month, the coalition has grown to 46 members. Even so, reform is tough.
“Congress faces little incentive to act unless something is expiring — that’s one upside of the short-term extensions of these tax provisions is that it forces Congress to act on the issue,” Harbin noted.
Schatz, the CAGW president, argued that no matter who wins the presidential election on November 8, Congress should act on these issues. “It doesn’t matter who’s in the White House, the first step needs to be taken and that’s for legislation to get through the House,” Schatz said. “That’s what the Ways & Means Committee needs to do — set something in writing to send it to the Senate and force the White House to address it.”
While Hillary Clinton leads in the presidential polls, and FiveThirtyEight gives the Democrats a high chance of taking the U.S. Senate, most expect the Republicans will hold on to their majority in the House of Representatives. These Congressional Republicans must take the lead against crony capitalism and green pork in 2017, no matter what happens to the White House and the Senate.
Reform will still be possible, and Paul Ryan should lead his party in pounding the stake deep into the heart of these zombie tax provisions.