Posted by on May 18, 2015
Wall Street Journal Editorial Board
Republican leaders sound increasingly optimistic that they have the votes to pass trade-promotion authority this week, but the fight isn’t over. Apart from the Iran nuclear deal, this is probably the most important vote that Members will take in the 114th Congress. It’s therefore crucial to understand the stakes of the trade vote—economic, political and strategic.
Start with the economics, which comes down to whether the U.S. is still going to lead the world or shrink from global competition. The U.S. needs “fast-track” trade approval in particular to conclude the pending pact with 11 Pacific nations, which would be the most important trade deal since the early 1990s. These deals invariably benefit the U.S., which tends to have lower tariffs and fewer trade barriers. Trade deals are crucial to opening these foreign markets to U.S. goods and services, as the economic facts show.
The U.S. has trade pacts with 20 markets around the world, and those markets account for 47% of U.S. goods exports, according to the U.S. International Trade Administration. U.S. goods exports to trade-pact countries rose 64% from 2009 to 2014, far more rapidly than the 45% growth with the rest of the world.
Exports have increased by 415% with Chile (trade pact in 2004); 378% with Mexico (1994); 111% with Canada (1994); 90% with Australia (2005); 84% with Singapore (2004); 74% with Central America (2006); 61% with Peru (2009); 42% with Colombia (2012) and 26% with Panama (2012) since the respective trade deals took effect.
Opponents cite the slow 2.3% annual export growth rate to South Korea since the 2011 trade pact. But that’s the result in part of slower growth in Korea, and it ignores the 25% growth in U.S. services trade with South Korea between 2011 and 2013. Seoul has opened up legal services to U.S. firms, and American investors can now own telecom operations in the country.
Protectionists focus on the U.S. trade deficit, but American manufacturers and consumers benefit from cheaper foreign imports. In any event, the U.S. last year ran trade surpluses with trade-agreement partners of $36.4 billion in machinery, $17.7 billion in plastics and $14.3 billion in aircraft.
According to the U.S. Trade Representative, exports have spurred one million new U.S. jobs since 2009. The highest export job growth has occurred in Texas (251,000), Washington (107,000), California (81,000), Louisiana (68,000) and Michigan (62,000). Exports have also fueled substantial job creation in Georgia (56,000), Illinois (56,000) and South Carolina (42,000).
Farm states in particular would benefit from agreements with the 11 Pacific Rim countries and the European Union, which like Japan imposes prohibitive regulatory and tariff barriers on U.S. agricultural exports. Both regions are also fertile markets for U.S. intellectual property and biotechnology. Politicians who vote against trade agreements are opposing these typically high-paying jobs.
The political stakes are also high—for the Republicans who now run Congress and the U.S. political system. Republicans complain with cause that they can’t accomplish much with President Obama in the White House, but he’s on their side on trade. It’s true he’s delivering precious few Democratic votes, but with GOP control comes responsibility. The GOP image as a pro-growth party would suffer a damaging blow if the trade vote fails.
So would the reputation of the U.S. around the world. Republicans have been telling foreign officials and American business leaders that the U.S. retreat from world leadership has been Mr. Obama’s choice. If a GOP Congress fails on trade, the message will be that both major parties have lost the will to lead. The unavoidable conclusion will be that America is choosing decline.
The big strategic winners in that event would be America’s adversaries, especially China, which is busy building economic alliances as a tool of its soft power. Chinese leaders are aiming to replace the U.S. as the dominant regional power in the Western Pacific, and a U.S. trade failure would speed that along.
Posted by on May 12, 2015
NOTE: U.S. Congressman Kenny Marchant (TX-24) is among the 113 Republican lawmakers who signed the amicus brief supporting Texas and 25 other states in their legal challenge to President Obama’s executive amnesty. The complete brief and full list of lawmakers can be viewed here.
By Mike Lillis
Top Republicans in Congress on Monday entered the court battle over President Obama's latest moves to ease deportations for immigrants living in the country illegally.
Texas and 25 other states have challenged the legality of the unilateral actions, arguing that the president overstepped his executive power with programs halting deportations and granting work permits to certain groups of illegal immigrants.
The Republicans, including Senate Majority Leader Mitch McConnell (Ky.) and House Judiciary Committee Chairman Bob Goodlatte (Va.), are siding squarely with the states, arguing Obama's executive action "changes the law and sets a new policy, exceeding the executive’s constitutional authority and disrupting the delicate balance of powers."
"Congress has created a comprehensive immigration scheme — which expresses its desired policy as to classes of immigrants — but the class identified by the [Homeland Security Department] directive for categorical relief is unsupported by this scheme," the lawmakers wrote in an amicus brief filed with the 5th Circuit Court of Appeals in New Orleans.
"Instead of setting enforcement priorities," they added, "it created a class-based program that establishes eligibility requirements that, if met, grant unlawful immigrants a renewable lawful presence in the United States and substantive benefits."
The brief was endorsed by 113 Republicans, including Sens. John Cornyn (Texas), the majority whip, and Ted Cruz (Texas), a 2016 presidential hopeful. In the House, the supporters include Reps. Trey Gowdy (S.C.); Tom Price (Ga.); Michael McCaul (Texas), head of the Homeland Security Committee; and Lamar Smith (R-Texas), the former head of the Judiciary panel.
"[T]he President has unlawfully granted amnesty to millions who came here illegally," Cruz said Monday in a statement.
The White House was quick to fire back, noting that hundreds of voices — ranging from states to Democratic lawmakers to businesses groups — have filed their own legal briefs supporting the executive actions.
The court fight centers on a pair of executive actions taken by Obama shortly after November's midterm elections.
One, known as the Deferred Action for Parental Accountability (DAPA) program, would halt deportations and offer work permits to the parents of U.S. citizens and permanent legal residents. The other would expand Obama's 2012 program, the Deferred Action for Childhood Arrivals (DACA) initiative, to a greater number of immigrants brought to the country illegally as kids.
All told, the programs could defer deportation for more than 4 million illegal immigrants.
The states sued the administration over the programs, arguing they mark a case of executive overreach that would saddle them with exorbitant new costs.
In February, U.S. District Judge Andrew S. Hanen, of Brownsville, Texas, found that the states had a legitimate basis to bring their case. He also blocked the programs temporarily for what he deemed a violation of the federal law allowing public comment when new rules are established.
Hanen has yet to weigh the merits of the challenge, but his initial decision prevents the administration from moving forward with the programs, including the processing of applications.
Obama and Capitol Hill Democrats have hammered that decision, saying the executive actions are well within the president's powers and will eventually be authorized by the courts.
The administration has appealed Hanen's temporary injunction, arguing the case before the 5th Circuit last month. The court has yet to rule on the challenge.
The Republicans' amicus brief argues that the injunction should remain in place while the courts weigh the underlying case.
"President Obama’s decision to ignore the limits placed on his power and act unilaterally to rewrite our nation’s immigration laws are an affront to the Constitution," Goodlatte said Monday in a statement.
"Such lawlessness must be stopped so that we preserve the separation of powers in the Constitution and protect individual liberty."
Posted by on May 04, 2015
NOTE: “Aside from the tax credit revenue side of the PTC, there is a darker side that is often ignored. The PTC has become a corporate tax shield to corporations like Berkshire Hathaway and Google.”
By Christopher Versace, Forbes Contributor
For the two decades, investors in wind energy have been buoyed by nearly $9 billion in federal and state subsides and giveaways. The federal “production tax credit” gives corporations in the industry a 2.3-cent tax credit for every kilowatt-hour of electricity produced. Some states have padded the subsidies with their own generous financial support. Whenever we look at company or industry, however, it’s critical to realize that we are not looking at a photograph, a snapshot in time, but rather more like a movie an evolving story that can sometimes take an unforeseen twist. In the case of the wind industry, it’s looking like just such a twist is coming as the days of government support for the industry appear to coming to an end.
For this development we turn to first to Texas where the State Senate by a two-to-one margin effectively eliminated all support for wind power. Oklahoma’s state House voted by a 78-3 margin to eliminate property tax exemptions for the wind power sector. In February, the West Virginia legislature repealed a requirement that state entities generate a quarter of their power from alternative sources.
Now the federal government appears ready to sever to wind energy subsidy, a move that will test whether the upstart industry is prepared to stand on its own two feet without the crutch of government support. Wind energy companies have heavily relied upon a government construct known as the “Production Tax Credit” (PTC ) to support their bottom lines. The PTC is a federal program that provides billions of dollars annually to subsidize renewable energy facilities such as wind farms. Generally speaking a clean technology facility receives a tax credit for 10 years after the date the facility is placed in service with the tax credit amount ranging from $0.23 per kilowatt-hour (kWh) for wind to $0.011 per kWh for qualified hydroelectric. Looking at the International Journal of Sustainable Manufacturing, researchers concluded that “in terms of cumulative energy payback, or the time to produce the amount of energy required of production and installation, a wind turbine with a working life of 20 years will offer a net benefit within five to eight months of being brought online.”
Rep. Kenny Marchant (R-Tex) has just introduced legislation known as The PTC Elimination Act striking the statutory language for the primary federal handout for the wind industry from the U.S. tax code and provides that the PTC should expire as of December 31, 2014 and not be extended in the future or retroactively.
This legislation includes a number of additional measures that reduce the subsidy for current beneficiaries, including tightening eligibility definitions and repealing the inflation adjustment for current PTC recipients. These changes will reduce the amount that American taxpayers are forced to subsidize wind companies by approximately 35 percent.
“If we want to build a healthier American economy, Congress must get rid of the deadweight in the tax code that is limiting our nation’s potential,” Marchant said. “That’s why I have introduced legislation to eliminate the production tax credit.” Marchant noted, “Since its creation in 1992, the PTC has ballooned from a temporary boost for energy innovation into a massive special interest handout for the now multibillion-dollar wind industry. Today the wind industry regularly produces more energy than the market demands while hardworking taxpayers shell out billions of dollars each year in PTC support. In fact, because the credit pays claimants for 10 years of energy produced, Americans are currently on the hook for a minimum of $6.4 billion over the next decade.”
This has benefitted companies like NextEra Energy, which has received over $400 million in under the PTC. While that is one of the larger amounts, there is no shortage of other companies that have also benefitted. Duke Energy, received nearly $100 million in subsidies, while Sempra Energy, received an estimated $65 million and Xcel (XEL) received over $30 million. As noted in Sempra Energy’s 2014 annual report, “For each of the years ended December 31, 2014, 2013 and 2012, PTCs represented a large portion of our wind farm earnings, often exceeding earnings from operations.” Passage of the Marchant sponsored legislation would force Wall Street to cut earnings expectations for the above companies as well as those that serve the wind power industry, such as Siemens, Atlantic Power, Emerson Electric, and ABB .
Aside from the tax credit revenue side of the PTC, there is a darker side that is often ignored. The PTC has become a corporate tax shield to corporations like Berkshire Hathaway and Google. At one of his famous investor’s summits, Warren Buffet once bragged that he would “do anything that is basically covered by the law to reduce Berkshire’s tax rate. For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.” Addressing this aspect of the PTC as well would help close tax loopholes that would enable companies to minimize taxable income.
Marchant, Pompeo Joint Op-Ed in Daily Signal: Time to End the Production Tax Credit Once and For AllPosted by on April 30, 2015
By Representatives Kenny Marchant (TX-24) and Mike Pompeo (KS-04)
If we want to build a healthier American economy, Congress must stop supporting special interests at the expense of our nation’s economic potential. The Production Tax Credit is a prime example of just how much this self-destructive pattern hurts competition, enables waste and works against the middle class.
Created in 1992 as a temporary provision to encourage investment in nascent forms of energy, the PTC has ballooned from a short term boost to aid innovation into a massive handout for the now multibillion-dollar wind industry. Since the PTC’s inception, wind energy production has surged from 2.8 million to 167.6 million megawatt-hours. That’s an increase of nearly 6,000 percent. Meanwhile, according to the Department of Energy, the cost of a wind turbine has come down by as much as 40 percent since 2008. The wind industry is also producing on a regular basis more energy than the market demands.
Common sense says that a mature and self-sufficient wind industry should no longer be paid for by the American taxpayer. But, common sense is a rare commodity in Washington and it becomes even scarcer when the special interest spigot has been opened.
The wind industry is now larger than ever and so is its influence on Capitol Hill. And with the growth in the wind industry’s lobbying have come perpetual increases in the PTC’s price tag. Last year, the PTC cost taxpayers $1.5 billion. This year it’s projected to cost $2.8 billion. Next year – $3.5 billion.
The PTC also fosters vast market distortion and even puts the environment at risk. The credit pays out per kilowatt-hour (kWh) of energy produced. That means the more energy you generate, the more money you make – regardless of actual demand. Wind power generators looking to milk the credit for all it’s worth are going to generate as much wind energy as possible. They then sell at artificially low prices and sometimes even engage in negative pricing, where they pay grid operators to take the load off their hands.
All of this puts immense pressure on non-PTC eligible clean energy producers, such as natural gas and nuclear, that are forced to compete on the skewed playing field of price-warping subsidies. In fact, all things considered, wind power in 2010 received 18-times the subsidies of nuclear power and 88-times those of natural gas per kWh. Ironically, because of this dynamic, the PTC can foster greater dependence on baseload energy resources that are worse for the environment.
Over its long life, the PTC has expired and been renewed nine times. In theory, the PTC is expired right now. In reality, the PTC is more like a walking-dead credit because it pays eligible claimants for ten years of energy produced. Facilities that met vague “beginning of construction” standards just before the PTC “expired” on Dec. 31, 2014 will receive credits until 2025 or beyond. That assumes special interests do not succeed in getting PTC extended yet again. Just a one-year extension comes with an estimated 10-year cost of $6.4 billion. If made permanent, as President Obama requested in his 2016 budget, taxpayers would be hit with a $35 billion bill to pay.
The wind industry has greatly matured since PTC’s inception, and it should not be spoon-fed by taxpayers any longer. Even the American Wind Energy Association recognized this back in 2012 when it publically supported a future phase-out of the PTC.
By beginning to take on such wasteful, counter-productive subsidies, Congress can show how serious we are in tackling true tax reform. This is why we introduced the PTC Elimination Act. Our legislation significantly scales back PTC handouts to those who remain eligible and completely dismantles the credit’s statutory framework. Similar proposals have been estimated to save taxpayers $9.6 billion.
But the PTC Elimination Act doesn’t stop there. It uses the savings to lower the U.S. corporate tax rate, which, being the highest in the world, is a major handicap for American businesses. Even President Obama agrees that the corporate rate has to come down if we want to keep U.S. businesses competitive.
Let’s put the American people first, bring new life to the U.S. economy, and eliminate the PTC once and for all.
Mr. Marchant, a Republican, represents Texas’ 24th Congressional District in the U.S. House of Representatives and is a member of the House Ways and Means Committee. Mr. Pompeo, a Republican, represents Kansas’ 4th Congressional District in the U.S. House of Representatives and is a member of the House Energy and Commerce Committee.
To view this article on the Daily Signal website, please click here.
Posted by on April 29, 2015
By Neil McCabe
“If we want to build a healthier American economy, Congress must get rid of the dead weight in the tax code that is limiting our nation’s potential. That’s why I have introduced legislation to eliminate the production tax credit,” Marchant said in his April 22 statement.
“Since its creation in 1992, the PTC has ballooned from a temporary boost for energy innovation into a massive special interest handout for the now multibillion-dollar wind industry,” he said. “In fact, because the credit pays claimants for 10 years of energy produced, Americans are currently on the hook for a minimum of $6.4 billion over the next decade.”
The Texas congressman is taking a reasoned approach, trying to wean the wind power off over time.
“The fully mature wind industry should not be spoon-fed by taxpayers any longer. Even the industry’s top lobbying organization admits wind is a mainstream part of the market and has publicly supported a future phase-out of the PTC,” he said.
Others in the wind power trade want their government dole made permanent, like a feudal right. Supporters of wind power feudalism have a friend in President Barack Obama and the Republican leadership, which makes it significant that conservatives are stepping up at all.
The last session of Congress was not a good one for House conservatives. By the time, former majority leader Eric Cantor lost his June primary to a libertarian college professor, the House GOP leadership was already forming a parliamentary coalition with House Democrats to pass the president's agenda.
When time came to pass the Dec. 11 Cromnibus funding bill, rather than deal with conservatives, or wait for the Republicans to take over the Senate in three weeks, Speaker John A. Boehner (R.-Ohio) partnered with House Minority Leader Nancy Pelosi (D.-Calif.) to get the job done.
As 67 Republicans voted against the Cromnibus bill, Pelosi lent Boehner 57 Democrats to pass the bill 219 to 206. Among the goodies the Republican leadership tucked in the Dec. 11 Cromnibus federal funding bill was the extension of the wind production tax credit through the end of calendar year 2014. The credits had expired at the end of 2013.
If the Republicans had not passed the Wind PTC for 2014, the wind power companies would have been exposed to the realities of the free market—a place wind power can never survive.
Posted by on April 23, 2015
Thursday April 23, 2015
Reps. Kenny Marchant (R-TX) and Mike Pompeo (R-KS) introduced a bill H.R. 1901 to phase out a renewable energy tax credit. Any effort to rid the tax code of cronyism and special interest tax provisions should be applauded.
Cronyism is one of the most disturbing aspects of Washington, DC. We see allegations of Hillary Clinton using her former position as Secretary of State to funnel foreign money into her family foundation.
The Bush Administration bailed out Wall Street when they pushed and passed the Troubled Asset Relief Program (TARP) for friends on Wall Street.
The Obama Administration rewarded donors with billions in energy contracts with the failed solar panel company Solyndra being a classic example of political favors for Obama’s pals.
Repeal of the Renewable Energy Production Tax Credit (PTC) will go a long way to removing one special interest provision in law that is in place to reward green energy proponents.
This bill will forward the ball on tax reform. Rep. Marchant argued “if we want to build a healthier American economy, Congress must get rid of the deadweight in the tax code that is limiting our nation’s potential.” This is a small but important step in ridding the tax code of every single corporate special interest tax provision.
The purpose of taxes should not be to incentivize certain activities or to punish other activities. For example, tax provisions that promote home ownership, like the mortgage interest tax credit, and sin taxes like high cigarette taxes are attempts to engage in social engineering using the tax code. That is wrong.
Dallas Morning News: Marchant bill banning use of personal email for IRS business passes Ways and MeansPosted by on March 26, 2015
By Aubree Abril
WASHINGTON – The House Committee on Ways and Means advanced Rep. Kenny Marchant’s bill to prohibit IRS employees from using personal email accounts for official business.
“The IRS Email Transparency Act shines a light on irresponsible IRS behavior and takes important steps to safeguard confidential taxpayer information,” Marchant, R-Coppell, said in a statement Wednesday.
When he introduced the bill last month, Marchant said it was in direct response to the results of a committee investigation into the IRS political targeting scandal. That investigation, he said “revealed that, among other abuses, one of the agency’s top officials used her personal email address for official business.”
He said that practice put confidential taxpayer information at risk.
“The use of personal email for official IRS business jeopardizes the security of confidential taxpayer information. This is wrong and it should be against the law,” Marchant said.
The IRS has existing administrative rules banning the use of personal email accounts for official business, said Tom Barthold, chief of staff to the Joint Committee on Taxation. Marchant’s bill would legally prohibit employees from using their personal accounts for any official business.
Posted by on March 23, 2015
A letter to President Obama signed by 367 members of Congress warns that lawmakers must be satisfied that any Iranian nuclear agreement must "foreclose any pathway to a bomb" before they lift sanctions against Tehran.
The letter, which was drafted in early March but released on Monday, warns Obama that "permanent sanctions relief from congressionally-mandated sanctions would require new legislation" from Congress.
"Congress must be convinced that its terms foreclose any pathway to a bomb, and only then will Congress be able to consider permanent sanctions relief," reads the letter, led by Foreign Affairs Committee Chairman Ed Royce (R-Calif.) and ranking member Eliot Engel (D-N.Y.).
U.S. and international negotiators are up against a March 31 deadline for a framework agreement with Iran to roll back its nuclear program.
Sen. Tom Cotton (R-Ark.) and 46 other senators sent a letter to Iran on March 9 warning it that Congress needed to have a role in approving any deal. White House officials blasted that letter, and have threatened to veto any legislation that comes before the talks are set to conclude on June 30.
Senators, however, appear poised to pounce on legislation after they return from recess, which runs between March 30 and April 10.
Senate Foreign Relations Committee Chairman Bob Corker (R-Tenn.) announced on Friday he would schedule a committee vote April 14 on a bill that would allow Congress 60 days to review any deal before its implementation.
Although the House letter does not mention specific legislation, it said, "we are prepared to evaluate any agreement to determine its long-term impact on the United States and our allies."
"We remain hopeful that a diplomatic solution preventing Iran from obtaining a nuclear weapon may yet be reached, and we want to work with you to assure such a result," it said.
House Majority Leader Kevin McCarthy (R-Calif.) indicated Sunday on CBS's "Face the Nation" that the House would also pursue similar legislation as the Senate.
"As the House, you have some responsibility," he said.
U.S. Congressman Kenny Marchant (TX-24) was an original cosigner of the letter. To view this article on The Hill’s website, please click here.
Posted by on March 13, 2015
BY MARIA RECIO AND ANNA M. TINSLEY – STAR-TELEGRAM STAFF WRITERSU.S. Rep. Kenny Marchant, R-Coppell, must be clairvoyant.
He had just introduced legislation in late February that would prohibit IRS officers and employees from using personal email accounts to conduct official business when suddenly it became one of the hottest issues on Capitol Hill.
Not because of the IRS but because a New York Times story revealed that as secretary of state Hillary Clinton had used only private email accounts far from the prying eyes of archivists.
Marchant, a member of the House Ways and Means Committee, was motivated by reports that former IRS official Lois Lerner had targeted conservative fund-raising groups over their tax-exempt status.
“The Ways and Means Committee investigation into IRS political targeting revealed that, among other abuses, one of the agency’s top officials used her personal email address for official business,” Marchant said. “She put confidential taxpayer information at direct risk of falling into the wrong hands. This is a breach of IRS protocol and betrays the trust of the American people. It should be against the law.”
This story originally appeared in the Star-Telegram’s PoliTex blog on March 13, 2015. To view the blog post in its entirety, please click here.
Posted by on March 11, 2015
BY MARIA RECIO – STAR-TELEGRAM WASHINGTON BUREAU
WASHINGTON – Johnny Wayne Martin, 91, of Fort Worth finally got the medals and recognition he earned for his service in World War II in a ceremony Tuesday at Rep. Kenny Marchant’s office in Irving.
Maria Recio is the Star-Telegram’s Washington bureau chief.Twitter: @maria_e_recio