Fact check: WSJ stumbles with PTC-bashing editorial
A recent anti-wind Wall Street Journal editorial (“Windy Republicans,” May 5) overlooked a number of facts about the federal wind energy Production Tax Credit (PTC) and the accomplishments of the U.S. wind industry. In response, we provide this point-by-point rebuttal.
WSJ: The GOP swept Congressional elections in 2010 promising to end President Obama's $800 billion stimulus and stop industry bailouts. Too bad nobody told that to Iowa Republican Steve King and his colleague Dave Reichert of Washington.
Response: The federal PTC is an effective tool to allow developers to raise private capital in the marketplace and bring renewable energy projects to completion.The PTC provides an income tax credit of 2.2 cents per kilowatt-hour for the first 10 years of electricity production from utility-scale turbines. It is set to expire on Dec. 31 unless Congress extends it first.
WSJ: The $1.2 billion a year PTC … exempts much of the industry from federal income tax. By contrast, the oil and gas companies… pay some $26 billion a year in federal and state corporate income taxes.
Response: The PTC applies only to actual electricity produced from utility-scale wind turbines. A wind project developer does not receive the credit until the wind turbine actually generates power. Because the PTC is a business tax credit, funding is based solely on project performance, not evaluation by government officials.
WSJ: Mr. Reichert is co-sponsoring legislation to extend the PTC because the subsidies “reduce electricity costs and create jobs.”
Response: With stable tax policy the wind industry can grow to nearly 100,000 American jobs in the next four years, including growing the wind manufacturing sector by one third to 46,000 American manufacturing jobs.
WSJ: Mr. King, who likes to advertise himself as a principled conservative, his line is that “Iowa is a wind energy success story” that only needs the federal government to “provide stable, low tax rates.”
Response: The PTC has been supported on a bipartisan basis in the past, and continues to receive support from members of both parties today.
WSJ: Where have we heard that one before?
Response: Legislation extending the PTC now has 97 co-sponsors, including 22 Republicans and four Republican members of the powerful House Ways and Means committee.
WSJ: Every industry says it wants low, stable tax rates.
Response: A recent report from the non-partisan Congressional Budget Office points out the fact that traditional energy sources enjoy an undeniable advantage with regard to subsidies. “Tax preferences for energy were first established in 1916, and until 2005 they were primarily intended to stimulate domestic production of oil and natural gas… [Today] Only four major energy tax preferences are permanent: three are for fossil fuels and one is for nuclear energy.” That’s an 89-year head start. The wind industry is simply interested in leveling the playing field.
WSJ: But one reason tax rates are high and the tax code is such a mess is because of special-interest carve-outs, which allow politically connected industries to avoid the taxes that others pay.
Response: The past four years of stable tax policy demonstrate the economic security and energy diversity benefits that the wind industry can continue to provide in a stable policy environment.
WSJ: The wind lobby is now predicting a catastrophic loss of jobs if the PTC expires, but that is because the tax subsidy has sustained the industry on a scale that wouldn't have been possible if it had to follow the same rules as everyone else.
Response: The fact remains that that Congressional inaction on the PTC will kill 37,000 American jobs, shutter plants and cancel billions of dollars in private investment. As families across our country struggle with unemployment, and as businesses are cutting back just to survive, it’s past time for Congress to focus its ideas and efforts on proposals that will create jobs and get our economy moving again. Extending this key tax incentive for wind and other forms of renewable energy generation is one of the best ways to spur economic development and create the good jobs we need.
WSJ: The lobby's spin is that wind power needs one last push to become economically sustainable. They've been saying that since the Bee Gees were cool and Jimmy Carter was President. But it isn't the 1970s any more, even if Messrs. Reichert and King want to stick the rest of us with a 1970s energy policy.
Response: The price of American wind power has dropped over 90% since 1980, benefiting utilities and consumers. More than $60 billion of investment has been made since 2005. And sixty percent of a wind turbine’s value is now produced here in America, compared to 25% prior to 2005. Over the last six years, U.S. domestic production of wind turbine components has grown 12-fold to more than 400 facilities in 43 states, shifting manufacturing jobs from overseas back to the U.S.
WSJ: If the party is serious about tax reform, deficit reduction and ending corporate welfare, then it will vote to take wind power off the taxpayer dole.
Response: In an era of economic hardship, the wind industry is adding jobs in rural America and revitalizing our homegrown manufacturing base. Wind power is helping communities across America create economic opportunity and jumpstarting one of our fastest growing manufacturing sectors. American wind jobs stand poised to grow more than five-fold to half a million in the next 20 years, but only if the Production Tax Credit is continued and we do not raise taxes on wind energy.
Jason Sorter and Kevin Haley prepared this article.