Fox News – Rep. Marchant: A plan for a more transparent, accountable, and timely debt limit frameworkPosted by on October 29, 2015
By Rep. Kenny Marchant
As Congress raises the debt limit this week – this time until March 2017 – wider attention should be focused on replacing the current debt limit system that is prone to excess and crises.
There is good reason to worry about the national debt. U.S. debt stands in excess of $18 trillion. Federal debt held by the public is about 74 percent of the economy’s annual output.
That’s a higher percentage than at any point in American history since just after World War II. If current law remains unchanged, in 25 years the federal debt will exceed 100 percent of GDP, according to the non-partisan Congressional Budget Office.
This cannot be sustained.
The struggle to rein in the debt is fought partly around the debt limit. Conflicts over the debt limit routinely lead to destabilizing uncertainty, lower growth, and increasingly high and unresolved debt levels. Washington’s chronic crisis management with the debt limit is not just a poor advertisement for America’s full faith and credit; it also hurts our nation’s leadership abroad.
So what should be done with the debt limit?
Some in both parties prefer all-or-nothing. Democrats recently accused Republicans of playing a cynical game with huge economic stakes while, ironically, President Obama refused to even discuss the debt limit unless it was an unconditional debt hike. As a result, no debt limit reforms were agreed upon and our nation’s debt trap has become even more difficult to surmount.
In light of this, I introduced the Debt Management and Fiscal Responsibility Act, which would establish a more transparent, accountable, and timely debt limit framework. Here’s how:
Transparent. Prior to reaching the statutory debt limit, the administration would submit to Congress comprehensive reports on the state of the national debt, composition of the debt, and future debt projections. The administration would also submit proposals to reduce the debt in the short-, medium-, and long-term. This would expand the focus from mere debt limit increase requests to analyzing the comprehensive nature of the debt and finding debt reduction solutions. These reports would be made readily available to the public.
Accountable. As part of requesting a debt limit increase, the Treasury Secretary would be required to testify before Congress about the national debt and the administration’s debt reduction proposals. The Secretary’s testimony and reports on the national debt would instill rigor into the debt limit process and facilitate straightforward discussions about debt management that are tough but fair.
Currently, the Treasury Secretary simply sends a letter to Congress requesting a clean debt limit hike. Unsustainable debt, however, poses too great a challenge to continue on autopilot. The proposed framework would require serious and regular examination of U.S. debt and debt reduction.
Timely. Recent debt limit crises have rattled financial markets and diminished America’s economic standing in the world. Early and strategic assessments of the debt – well before the statutory debt limit – would reduce disruptive uncertainty and allow constructive debate to get a better hold on the debt. Moreover, the framework would require regular progress updates from the administration on debt reduction.
The advantages of this system are self-reinforcing. A transparent, accountable, and timely framework would instill discipline in the debt limit process and give traction to sound economic policies.
Let’s be clear: No American wants to default on the debt. But the desire to avoid default shouldn’t lull anyone into a false sense of security. Nor should it justify kicking the fiscal can further down the road.
We should use all the tools at our disposal to manage the debt responsibly and promote economic stability. The national debt is a shared responsibility, and it will take a shared executive-legislative approach to get it under control.
Passing the Debt Management and Fiscal Responsibility Act would be a good start.
Republican Kenny Marchant represents Texas’ 24th District in the U.S. House of
Posted by on September 30, 2015
By Bernie Becker
A House Republican has introduced legislation to combat what he called the marriage penalty for married couples with student loan debt.
Rep. Kenny Marchant's bill would double the amount of student loan debt interest that married couples filing jointly can deduct from their taxes, from $2,500 to $5,000.
Currently, married couples have to choose the "married filing separately" status to both get the $2,500 deduction.
"Raising the cap to $5,000 for married couples with student loan debt makes equitable sense and it provides stronger incentives toward higher education, marriage, and financial independence," Marchant said.
"With student loan debt putting increasing pressure on our economy, let's stop penalizing married households and start helping young American families build a stronger future."
Posted by on July 13, 2015
By Michelle Pitcher
Great news for everyone out there trying to make a living — which is, you know, everyone. Texas is the best place in the country to do just that.
Forbes reported the “The 10 Best and Worst Places to Make a Living in 2015” and Texas topped the list (on the good side). Last year, Texas ranked second, behind Washington.
Taking into account average wages, taxes, cost of living, unemployment, and workplace safety, MoneyRates.com ranked the 50 states by livability. For Texas, the very low cost of living amplified the effects of slightly higher wages, and the fact that we have no income tax didn’t hurt.
Workers in Texas can also take heart in knowing that — except for the occasional stubbed toe — they’re pretty unlikely to get injured on the job. Only Louisiana had fewer instances of workplace injury.
Washington took the No. 2 spot this year, followed by Wyoming, Virginia, Illinois, Michigan, Colorado, Delaware, Ohio, and Utah.
Posted by on June 17, 2015
NOTE: Included in the legislation is a measure similar to one by U.S. Congressman Kenny Marchant (TX-24) that would ban IRS employees from using personal email accounts for official business. Marchant’s bill, the IRS Email Transparency Act, passed the House unanimously on April 15, 2015.
By Bernie Becker
Two senior Senate Republicans introduced legislation Tuesday that would give taxpayers a slew of new protections, and codify some already in place.
Sens. Chuck Grassley (Iowa) and John Thune (S.D.) said their more robust taxpayer bill of rights was especially necessary given all the controversy that has swirled around the IRS in recent years.
"Unfortunately, the IRS here of late has forgotten that the 'S' in IRS stands for service," Thune said at a news conference announcing the bill.
Both Grassley and Thune are members of the Senate Finance Committee, which oversees the IRS. Grassley is a former chairman of the committee.
The IRS rolled out a taxpayer bill of rights on its own a year ago, which included the right to only pay what you owe and to better challenge an agency decision.
But both Thune and Grassley said that Congress needed to put those protections – and even more – into law and not rely solely on executive action. Lawmakers last approved a taxpayer bill of rights more than 15 years ago.
"Administrations come, administrations go," Thune said.
The measure from Thune and Grassley bars IRS officials from using personal email to conduct agency business, increases the penalties for the unauthorized disclosure of taxpayer information and requires better records collection from the agency.
The two senators said they hoped the measure would get bipartisan support, but acknowledged the two parties remain divided over the IRS. House Republicans recently proposed slashing another $838 million from the agency's budget, which IRS officials already say is woefully inadequate.
Still, Grassley said Tuesday that he hoped his legislation would start a conversation on the need for broader reforms at the IRS.
The agency has been under fire for more than two years, ever since former official Lois Lerner acknowledged the IRS improperly scrutinized Tea Party groups.
The IRS's watchdog is expected to give the Finance Committee a report on a string of missing Lerner emails by the end of the month, and committee leaders hope to release a report on the Tea Party controversy.
Both parties, Grassley said, should be interested to talk about expanding taxpayer rights when discussing that report.
"That culture must change," Grassley said.
Posted by on June 10, 2015
By Rep. Kenny Marchant
Having led the world in free and open markets for generations, America now faces a choice as simple as it is consequential: lead on trade, or get left behind.
The decision should be clear.
Congress is considering whether to renew Trade Promotion Authority (TPA). TPA is a process between Congress and the administration for negotiating trade deals that has existed in some form for over 80 years. With TPA, Congress has greater influence over trade agreements, and U.S. negotiators hold a stronger position to secure a good deal for American producers, consumers and workers.
Absent TPA, the President has the constitutional power to negotiate trade agreements without Congressional input, transparency requirements or a mechanism to make agreements available for public review. But other countries will not engage in serious negotiations – or offer real concessions – until they know the U.S. is negotiating in good faith.
That is why TPA is essential. It puts Congress – not the administration – in charge of trade negotiation objectives. It sets clear transparency requirements and makes agreements available for public review. And it shows our trading partners that America can be trusted.
If the administration meets the TPA requirements, Congress gets the final say on any trade agreement through a yea-or-nay vote. If the administration fails, Congress has the power to cancel the vote and halt the agreement altogether. TPA ensures transparency and accountability.
But most Democrats are lined-up to oppose TPA and kill America’s golden opportunity to expand free market policies to Asian countries under the growing influence of China. Liberals want to saddle Americans with higher taxes and more trade regulations. It’s no surprise the anti-trade movement is led by organized labor and Massachusetts Senator Elizabeth Warren.
Even a few Republicans are considering joining the left-wing crusade against TPA and free trade. My message to them is simple: don’t take the bait. Every objection is based on misinformation or economic fallacy.
Concerned about secrecy? TPA requires any agreement to be made public at least 60 days before a vote. Concerned about transparency? TPA allows every Members of Congress to read negotiating text and receive briefings at any time. Concerned about Congress ceding authority? “TPA grants no new authority to the President,” confirms the nonpartisan Congressional Research Service.
Apart from these reasons, it’s important to recognize the profound economic and strategic consequences at stake. Trade already is happening. The question is whether Congress will embrace measures to give the U.S. a competitive edge in the world, or allow our country to backslide into disastrous protectionist policies of bygone eras.
Since World War II, no nation has actively promoted an open and stable system for global commerce more than America. Free trade lies at the heart of our country’s post-1945 economic prosperity and global influence.
But nothing was pre-programmed. Time and again, America chose to boldly step up and advance free markets.
Ronald Reagan understood this. He tapped into the “can-do” spirit of America, and called on trade negotiating authority to pursue free trade. “Our commitment to free trade is undiminished,” Reagan said. “We will vigorously pursue our policy of promoting free and open markets in this country and around the world.”
That same challenge exists today – and so should our commitment. If America fails to seize this opportunity, other nations will step in to claim the mantle of economic leadership. Or as Ted Cruz and Paul Ryan, both TPA supporters, put it: Who do you want to write the rules for the global economy in the 21st century – America or China?
It must be America. That’s why Congress should renew TPA and strengthen our nation’s hand in sealing two major trade agreements under discussion. One is a deal with eleven Pacific economies, including allies such as Japan, Australia and Singapore, and the other is with the European Union. Together, these deals would account for 65 percent of global economic output.
The potential gains are immense. Estimates have the deals boosting America’s economy by at least $200 billion. The agreements would cut taxes on trade, dismantle unfair trade practices, and protect intellectual property rights for American workers and firms. Consumers would benefit from greater product choice and lower prices. Leading on trade also pressures other nations to establish their rules toward U.S. standards – not the other way around.
Striking more open markets would be a massive win for our state and local economies. My home state, Texas, has led the country in international trade for 13 years. More than 60 percent of Texas’ exports go to U.S. free trade partners. Exports would only increase with better access to Asian and European markets. That would be a boon for Texan exporters, 93 percent of which are small- and medium-sized businesses.
In Dallas-Fort Worth, the area I represent in Congress, global trade reached a record $72 billion in 2013. That same year DFW’s trade growth was the second-fastest in the nation. And make no mistake: trade brings innovation, growth and well-paying jobs for all of America. One in five American jobs are supported by international trade, jobs that earn on average 13 to 18 percent more than non-trade jobs.
For our nation to grow in the future as it has in the past, America must lead on trade. Plain and simple, TPA is a proven and effective process to advance U.S. national interests. The U.S. has led the free and open international economic system for 70 years. There is no reason to surrender that lead now.Republican Kenny Marchant represents Texas’ 24th District in the U.S. House of Representatives.
Posted by on June 02, 2015
By Sean Lester
It seems like a daily occurrence that the Dallas-area adds a new company moving its headquarters to North Texas. Toyota, State Farm and Liberty Mutual are just a few of the big names that will join the D-FW scene in the coming years.
Though the timetable isn’t exactly that quick, the growth in business relocating to D-FW has been noted. According to MarketWatch, Dallas is the most “business-friendly city” in the country.
Dallas landed ahead of San Francisco, Seattle, Des Moines and Raleigh which rounded out the top 5.
MarketWatch ranked the cities on a combination score that factors in business climate, company performance and economic outcome. To read the complete analysis on how MarketWatch got the results, click here.
As Russ Britt of MarketWatch writes, Dallas has the geographical location that companies seek.
“Some companies seek a geographic advantage by locating facilities in the middle of the country, whether a distribution hub or an entire headquarters,” Britt said. “It may be that executives are hankering to save money on taxes or real estate or other business costs. Or perhaps they’re just weary of regulatory trappings elsewhere and long for a meaningful relationship with a business-friendly local government.”
One thing Britt mentions that many Dallas-area folks will disagree on is his take on the local highways and a lack of traffic, which he says shows room for growth.
“Drive the region’s elaborate web of new and relatively uncrowded highways — seemingly ready to accommodate an onslaught of humanity — and you’ll see the occasional 10- or 20-story office building or hotel dotting the landscape, quickly followed by acres and acres of vacant land. Locals are upbeat when they say the area’s 6.8 million residents could double over the next 20 years.”
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.