ENERGY TAX CREDITS – RIDERS ON THE STORM
For months, NewEnergyNews and New Energy industry spokespeople have been aggressively making a case about the urgency of the New Energy tax credits and the importance of New Energy to the U.S. economy.
Now, suddenly, the fate of the world’s economy is hanging in the balance and the New Energy tax credit extensions, so vital to the industry, have become mere riders on the storm of great economic matters.
The Senate on Wednesday handed off H.R. 1424, The Emergency Economic Stabilization Act of 2008 (EESA)to the House of Representatives and, along with it, an almost unbearable responsibility the House must today confront.
The ghost of President Herbert Hoover, a good man and a great public servant who failed to take action from 1929 to 1931 as he stubbornly watched the nation slip into dire straits, will be looking down and smiling enigmatically.
Barney Frank (D-Mass), Chairman, House Financial Services Committee: "The reality has hit some members…The main change is reality. It's not possible now to scoff at the predictions of doom if we don't do anything."
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Yet there is unanimous disagreement about EESA, its $700 billion bailout and its $112 billion tax package among the members of the country’s most rambunctious legislative body.
What to watch for: If the measure comes to the floor, it will have the 218 votes it needs to pass. Speaker Pelosi and her staff will not tolerate a repeat of Monday’s embarrassment, when they brought an earlier rescue plan into the House thinking they had the votes to pass it, only to be spurned by Blue Dogs and other fiscal conservatives.
Nancy Pelosi (D-Calif), Speaker of the House: We're not going to take a bill to the floor that doesn't have the votes…I'm optimistic that we will take a bill to the floor.”
Some members are equally confident of passage.
Representative Charles Rangel (D-NY), Chairman, House Ways and Means Committee: "The extenders and energy package, and the mental health and the AMT (alternative minimum tax) kind of guarantees it's going to go through…"
Others are utterly dubious.
Representative Lloyd Doggett ( D-Tex): "When markets are poisoned, you demand the best antidote, not yield to President Bush's take-it-or-leave-it demand…"
Adding to the ambiguity of the situation, the Dow Jones Industrial Average’s 3% drop Thursday was a clear statement of low expectations yet nothing like Monday’s record-breaking losses that proclaimed the need for action.
Representative Steven LaTourette (R-Ohio) and Representative Spencer Bachus (R-Ala), Ranking Member on the House Financial Services Committee led a daylong cry for changes and cuts in the EESA package.
LaTourette (R-Ohio): "One thing we didn't appreciate in the Senate's action was that they decided that this bill should become Christmas in October…Votes should not be purchased with pork…"
But their protests rang hollow. Like those who sat respectfully, listened attentively and replied reasonably, the protestors knew only too well that changes would wreck havoc with the legislative process.
It is time to choose to act or refuse to act.
Which is the preferable course?
Both presidential candidates, Warren Buffett, George Soros, Alan Greenspan, David Brooks and Tom Friedman are for action.
Here is how, in 1956, historian Arthur Schlesinger, Jr., described President Herbert Hoover’s response in the first months of the Great Depression: “The crucial period when a small amount of spending might have checked the cumulative forces of breakdown had already slipped by. But Hoover found in pledges an acceptable substitute for actions; assurances given took the place of dollars spent.”
Action and dollars. That’s what did not come in the early days of the Great Depression and what the White House is urgently seeking now.
President Bush spent time working the phones Thursday, won the cooperation of some Republican members and was reportedly “optimistic.”
The House Rules Committee finalized its preparatory work and announced the rescue plan was ready to come to the House floor Friday morning in the exact form in which the Senate passed it off. Jared Allen of The Hill told C-SPAN the final vote, if there is one, could come as early as 10AM. Congressmen from both sides of the aisle seemed to see the handwriting on the wall and began announcing support for the bill.
Representative Zach Wump (R-Tenn), a “no” vote on Monday: “This is the toughest vote, on some fronts, that I've ever made, because there's no good choice, there's no good alternative…I was home all week and talked to hundreds and hundreds and hundreds of people from every vantage point, and the anxiety levels are really, really high about what happens if we don't take action…”
Representative Emanuel Cleaver (D-Mo): “I’m in favor of it because I have additional information that will allow me to make a different decision…I think we needed the additional time of being able to go home, to sit down and talk with bankers, to talk with community leaders, to talk with people in educational institutions. And I think that's what happened.”
Their votes will be heralded as profiles in courage if the measure averts economic disaster and as career-ending mistakes if the economy does not respond.
Insiders expect the bill to pass. But they expected it to pass on Monday. The grumblings and rumblings won’t go away.
There are members who resent the way the Senate came down on the House like a guy with a deal they didn’t dare refuse. Others insist it is wrong to approve a package of tax benefits and reductions for which budget revenues are not allocated. And there are those who do not like the bill’s inclusion of tax credits and subsidies to dirty energies like coal-to-liquids, tar sands and oil shale.
In the eye of the storm: 49 Blue Dog Dems are fighting party leaders. 10 liberal environmentalists sent a letter threatening to withdraw. Republican mavericks continue to protest earmarks and clamor for postponing action until after the election.
When the storm is over: Passage of the rescue package means extension of the New Energy tax credits. With those incentives in place, the nation’s most dynamic industries and innovators will take action with a force rarely seen in American history. The light of the sun and the power of the wind could well be the entire economy’s best hope.
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TELL THE HOUSE TO VOTE FOR THE RESCUE PACKAGE (H.R. 1424 at the American Wind Energy Association’s POWER OF WIND or the Solar Energy Industries Association’s TAKE ACTION. SEND EMAILS NOW.
Senate bailout vote puts pressure on House Republicans, aides say
October 2, 2008 (CNN)
Lawmakers Switching Sides to Support Financial-Rescue Package
Ryan Donmoyer and Lorraine Woellert, October 2, 2008 (Bloomberg news)
Vote-switchers emerge in the House
Klaus Marre, October 2, 2008 (The Hill)
House bailout larded with – yup, you guessed it – earmarks
Zachary Coile, October 2, 2008 (SF Chronicle)
The U.S. House of Representatives
The House must decide on H.R. 1424, Emergency Economic Stabilization Act of 2008 (EESA).
This GE study proved the wind tax credits, like other New Energy incentives, create revenues in the long run. (click to enlarge)
- The Senate passed EESA October 1.
- The House vote is expected October 3.
- Congress is likely to adjourn for the election season as soon as this matter is settled.
- The tax credits expire December 31.
The action is all in the House.
- H.R. 1424, Emergency Economic Stabilization Act of 2008 (EESA). 451 pages. Covers 5 major areas:
I. Stabilizing the Economy – EESA provides up to $700 billion to the
Secretary of the Treasury to buy mortgages and other assets, relieve financial institutions and make it possible for citizens and businesses to get credit. It also allows companies to insure assets.
II. Homeownership Preservation – EESA requires modification of bad loans (many due to predatory lending) to help owners keep their homes and improves the HOPE for
III. Taxpayer Protection – EESA sets up requirements that assure taxpayers they will benefit from any growth companies get from the act and requires the President to submit legislation to cover taxpayer losses from the program.
IV. No Windfalls for Executives – EESA prevents executives who made bad decisions from dumping bad assets and walking away with millions in bonuses. To gain EESA advantages, companies lose certain tax benefits and must limit executive pay and golden parachutes.
V. Strong Oversight – EESA allocates $250 billion immediately, then requires Presidential certification before the next $100 billion and the last $350 billion are allocated. It also requires ongoing reports from the Treasury Department and creates an Oversight Board and special inspector general to protect against waste, fraud and abuse.
This Navigant study shows the solar tax credit extension will pay off in huge revenues. (click to enlarge)
- The provisions regarding New Energy tax credits are based on those in H.R. 6049, which 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) tax credits for pilot “clean” coal (carbon capture and sequestration, CCS) projects, coal-to-liquids projects, battery manufacturing, high-speed rail construction and green building,
(5) authorization for the National Academy of Sciences to assess IRS incentives’ impacts on greenhouse gas (GhG) emission abatement,
(6) tax credits for cellulosic ethanol and biodiesel production and a tax credit for the purchase of a plug-in hybrid electric vehicle,
(7) approves $3 billion in bonds and tax credits for efficiency and GhG abatement projects and construction,
(8) includes a package of extensions on tax breaks for teachers, hurricane victims and others.
- The bill also contains a compromise provision for the controversial Alternative Minimun Tax (AMT).
- The legislation is reported to save taxpayers $60 billion.
Money invested in New Energy pays itself back in jobs and revenues. (click to enlarge)
- Unnamed Republican leadership aide: " We believe the House has a better chance to pass this bill than the one it considered on Monday…Having said that, we're going to need more Democrat and Republican votes to pass this bill in the House."
- Steny Hoyer (D-Md), House Majority Leader: "There's no doubt the tax package is very controversial. The Senate, in my opinion, is adding that on because they think that's the only way they can get it passed…"
- Steve Ellis, vice president, Taxpayers for Common Sense, on the 2 reasons the Senate put the tax credits in the rescue plan: "One is they're hoping this will turn a few votes, that people who support some of these provisions will forget about the $700 billion and concerns they may have on that, and if you give me a few million in tax breaks for their constituents, I'll go along…The second reason is that this is your standard, run-of-the-mill end of year politics. You take a piece of must-pass legislation, you cram whatever you want in there and you dare the House to oppose it. It's really a pretty cynical maneuver."
- James Clyburn (D-SC), House Majority Whip: “I feel very comfortable about where we stand…Of course, I felt very comfortable on Monday.”