WASHINGTON — Extending a federal wind energy tax credit that has helped create 75,000 U.S. jobs since 2007 and several thousand in Iowa may seem a safe bet in Congress, even with a $5 billion price tag that is modest by Washington standards.
But the issue, which brought Iowa Republicans Gov. Terry Branstad and Sen. Chuck Grassley to a Senate hearing room Nov. 13, may instead be sailing into a congressional headwind.
Branstad, chairman of a bipartisan group of roughly two dozen governors called the Governors’ Wind Energy Coalition, was in Washington to lobby congressional leaders into a multi-year extension of the renewable energy production tax credit. The 1992 law that created the credit was written by Grassley and has been praised for spurring private investment into the wind industry, but its expiration could cost nearly 40,000 industry jobs and the chance to attract $10 billion in private investments, proponents say.
“Significant private sector in energy has occurred because of the support of federal and state policies. Our state has been a beneficiary of that as have many others,” Branstad said. “But due to the uncertainty over the credit not having already been extended, we are now seeing negative financial impact and a loss of jobs.”
The tax credit expires Dec. 31, so Branstad and Grassley say the issue needs a vote before Congress adjourns for Christmas. Grassley called for at least a one-year extension and noted that the issue is bipartisan, given past committee votes.
“The uncertainty about the future of this tax incentive and others hurts the economic good that these policies do,” Grassley said.
Branstad and Grassley noted a number of wind industry layoffs they said were at least partly caused by such uncertainty. Those include Clipper Wind Power, which laid off about 100 employees in Cedar Rapids, and Siemens, which laid off 400 workers in Fort Madison.
Like the federal farm bill, the energy tax credit has expired before due to congressional action. This time, however, it is entangled in the larger “fiscal cliff” discussion dominating post-election Washington. Before addressing issues such as the credit extension, leaders from both parties say they need to settle larger, thornier questions of whether to allow spending cuts scheduled to automatically happen on Jan. 1, as well as the future of middle- and upper-class tax cuts that are expiring at the same time.
With only a few weeks of congressional activity remaining before Christmas, President Barack Obama and congressional Republican have already begun a war of words over the “fiscal cliff” issues, although they are meeting at the White House this week to start talks. The state of the negotiations is so precarious that Grassley, asked by a reporter Tuesday if he would support higher taxes on wealthy Americans, wouldn’t answer.
“I don’t want to influence the debate. I’m more interested in the process going forward, and I don’t want to impede that process,” he said. “If the process doesn’t go forward, we’ll have a stalemate.”
Grassley later said specifically that the process of bringing up the credit extension for a vote was “on hold” pending the outcome of talks between Obama and GOP House Speaker John Boehner of Ohio.
An aide to Senate Majority Leader Harry Reid, D-Nev., agreed that specific congressional action depends on Obama and Boehner. But he also said the credit extension is a “top priority” of Democratic Senate leaders. The aide noted that the extension was already included in a package of tax reforms passed by the Senate Finance Committee on a bipartisan vote in early August.
Branstad said he recognized the difficulty of threading the issue into the congressional agenda.
“We know there are a lot of tough issues that have to be resolved here with the fiscal cliff and budget deficit issues, but we think this is one issue that actually helps grow the economy, creates new jobs and reduces our pollution problems,” he said. “The price tag for all of this is relatively small.”
State Sen. Rob Hogg, D-Cedar Rapids, seconded that.
“The production tax credit creates jobs and reduces carbon pollution,” he said in a statement Tuesday. “It works by giving a 10-year incentive for clean, home-grown renewable energy that doesn’t pollute, can’t be outsourced, and will never be depleted. Extending the production tax credit is the easiest thing that can be done right now to create jobs in wind manufacturing and installation.”
Branstad and Grassley were joined at Tuesday’s press conference, via conference call, by Republican Kansas Gov. Sam Brownback, Democratic Oregon Gov. John Kitzhaber and Democratic Colorado Gov. John Hickenlooper.