ENERGY TAX CREDITS (BUT NOT KITCHEN SINK) IN SENATE RESCUE BILL

This is NOT a Wall Street “bailout” plan, it is a bank “rescue” plan. Actually, it’s a rescue of the world economy, but nobody should get bogged down in details right now.

The Senate produced new rescue legislation September 30, turning the rejected 150-page House proposal into a reported 450 pages of goodies. Among the goodies is some version of the New Energy tax credit extensions, most likely a version similar to H.R. 6049, passed by the Senate 93-2 on September 23.

H.R. 6049 included: An 8-year extension of the solar energy industry’s investment tax credit (ITC), a 1-year extension of the wind energy industry’s production tax credit (PTC), a 2-year extension for other forms of New Energy power generation and tax credits for energy efficiency measures and for plug-in hybrid electric vehicles.

There is little doubt this package will pass in the Senate, where the vast majority of Senators regard the need for a rescue with ponderous gravity. Their idea is to create an offer the House can’t refuse. Given the deep dark complexities of politics in the House of Representatives, that would be difficult on even the sunniest of days, which this is not.

The biggest obstacle is the House’s “pay-as-you-go” rule, which many fiscal conservatives take extremely seriously. The new Senate rescue measure lacks pay-fors. It is the flaw that stymied the New Energy tax credits last week. But the House might just overlook a lack of $18 billion in New Energy pay-fors if it decides to spend $1 TRILLION.

Will it decide that? One thing might help. It took a principled stand on the rescue plan last week and cost constituents a collective trillion dollars in market valuation.

Congressman Steven C. LaTourette (R- Ohio), a “no” voter on the 1st House plan: “I started hearing from a lot of people who lost money on their investments thanks to the big drop on Wall Street yesterday…”

The problem: Is a rescue really necessary? The Bush administration started the hue and cry, but the Bush administration is widely regarded very like the boy who cried wolf.

Experts from both sides of the aisle have largely affirmed the validity of the seriousness of the situation, as put forward by Secretary of the Treasury Henry Paulson and Federal Reserve Bank Chairman Ben Bernanke.

In the face of a matter of this scale and complexity, the inclination is to be dubious. Especially after 8 years of this bunch. The easiest joke of all is how these raging free-marketeers have suddenly become socialists.

About that: The reason President Herbert Hoover did not act to interrupt the worsening of the Great Depression was a morbid fear of creeping socialism, an economic-political system that barely a decade before had violently overthrown the Russian Czar and was on the rise in Europe. Irrational fear of socialism is what created Adolph Hitler.

The point: A little regulation and a push of capital from the visible hand might be just the helping hand the invisible hand of the marketplace needs.

Harry Reid (D-Nev), Majority Leader, Senate: “It has been determined, in our judgment, this is the best thing to move forward…”

Listen carefully to the economists who argue the rescue is not needed. Note 2 points. (1) The arguments are usually founded on the assumption no rescue is needed YET because there is at present no recession. President Hoover argued for YEARS that things weren’t YET bad enough to intercede. The result: The first hundred days of the Roosevelt administration, the most interceding the U.S. has ever seen. (2) Most arguments against the rescue acknowledge SOME action is nevertheless necessary.

The truth: Decisive action is necessary.

As long as the action includes the New Energy tax credits, the New Energy industries will be sustained and can be counted on as a driver in whatever economy comes after.

Chinese Premier Wen Jiabao, in a recent interview with Fareed Zakaria, noted that Adam Smith, the founding father of capitalism, wrote 2 very important books. One, The Wealth of Nations, extolled the wisdom of the free market. The other, The Theory of Moral Sentiments, stressed the importance of making moral judgments.

By including the New Energy tax credits (and a host of other good ideas) in its bill, the Senate has put something from both economic testaments into the rescue plan. It is time for House members to see the light of the sun and feel the power of the wind and get on with tomorrow.

Jean-Claude Juncker, Chairman, Euro Zone Finance Ministers, on the rescue: "It is the responsibility of the United States to other countries…"

Tell the House to follow the Senate’s lead at: the American Wind Energy Association’s POWER OF WIND or the Solar Energy Industries Association’s TAKE ACTION.

No way around it. That's why they call it a democracy.

Senate to Vote Today on Bailout Plan
Carl Hulse and Robert Pear, September 30, 2008 (NY Times)
and
Senate urged to back revised bank rescue
Donna Smith and Huw Jones, October 1, 2008 (Reuters)

WHO
U.S. Senate and U.S. House of Representatives

WHAT
The Senate has added a variety of items into its new economic resuce package, including something very like the Renewable Energy and Job Creation Act of 2008 (H.R. 6049), extending and funding the vital New Energy tax credits. The measure will come before the Senate and then go on to the House.

click to enlarge

WHEN
- The vote in the Senate is expected Wednesday, October 1, late in Washington’s afternoon or early in its evening.
- The House will take up the question Thursday, October 2.
- Congress hopes to adjourn for the election season as soon as possible.
- The New Energy Tax credits expire December 31, 2008.

WHERE
- The noise will be in the Senate but the fight will be in the House of Representatives.

WHY
- H.R. 6049 included:
(1) a 1-year extension of the wind energy industry’s production tax credit (PTC),
(2) a 2-year extension of a production tax credit for biomass, geothermal, hydrokinetic and some forms of solar,
(3) an 8-year extension of the solar energy investment tax credit (ITC),
(4) $2.5+ billion in tax credits for pilot carbon capture and sequestration (CCS) projects, (5) authorizes the National Academy of Science to assess IRS incentives’ impacts on greenhouse gas (GhG) emission abatement,
(6) allows tax credits for cellulosic ethanol and biodiesel production and a tax credit for the purchase of a plug-in hybrid electric vehicle,
(7) includes tax credits for the continuing redevelopment of the World Trade Center area, (8) approvesw $3 billion in bonds and tax credits for efficiency and GhG abatement projects and construction,
(9) includes a package of extensions on tax breaks for teachers, veterans, hurricane victims and IRS sting operations.
- H.R. 6049 was funded by shifting budget monies from 2 major sources, tax benefits previously allowed for the oil and gas industry and revenues from taxation of “offshore” bank accounts
-There are better sources than NewEnergyNews for details on the “bank resuce” legislation.

Money invested in New Energy pays itself back in jobs and revenues. (click to enlarge)

QUOTES
- Josef Ackermann, CEO, Deutsche Bank: "If the United States passes such a package, Europe should be prepared to find similar solutions…"
- Chris Dodd (D-Conn), Chairman, Senate Banking Committee: “I think [the House members’]will is coming back having heard from their constituents…”
- Senator Robert Bennett (R-Utah): “Some will feel very virtuous about having voted against Wall Street and then turn around and find their constituents, generally, paid a huge price for that vote…I have faith that the members of the House and the members of the Senate will ultimately recognize their responsibility and do the right thing.”
- Unnamed House staffer; “Everybody is on board…The question is, how many votes does it bring?”