In Newton, Iowa Obama calls for extending wind energy tax breaks
NEWTON, Ia. — President Barack Obama, here to stump for an extension for wind energy tax breaks, hammered Thursday on congressional Republicans as stumbling blocks to economic progress.
“We’ve got too many of my dear Republican friends in Congress that have been standing in the way of steps that we can take that would make a difference at the moment,” Obama said to a crowd of about 500 people at TPI Composites, a maker of wind turbine blades that employs 700 people at its Newton plant.
In his 25-minute speech, the president advocated ending tax breaks to companies that he says have shipped jobs overseas. He also touted efforts to help families refinance their mortgages, a tax break for small business owners and creation of a Veterans Job Corps.
But his main point, as he stood in front of the hollow, circular ends of six massive wind turbine blades, was the need to extend wind energy tax breaks. He told the crowd that since he became president, the nation has nearly doubled the use of renewable energy, including solar and wind power.
“I’m here today because as much progress as we’ve made, that progress is in jeopardy,” Obama said.
Iowa offered Obama a double-dip setting to talk policy and politics. Iowa is a leading producer of renewable energy, especially wind, ethanol and biodiesel, so it’s a welcoming spot to call for tax credits for renewable energy. And it’s a swing state in presidential politics, considered winnable by either Obama or presumptive Republican nominee Mitt Romney. Later, Obama spoke at a campaign rally at the Iowa State Fairgrounds in Des Moines.
Critics: Tax credits distort free market
A 10-year extension of the production tax credit, the key tax break for wind manufacturers, would cost the U.S. Treasury an estimated $4.1 billion, according to the Congressional Research Service.
Critics like Nick Loris, an energy policy analyst for the Heritage Foundation, say the credits are unnecessary. His group, based in Washington, promotes conservative public policies. He cited a 2009 study in Spain that found every subsidized green-energy job eliminated two conventional jobs.
“That money doesn’t fall from the sky. It sucks money out of other sectors of the economy,” Loris said. “The money … has to be borrowed out of the economy or taxed at a later date.”
But Nathaniel Baer, energy program director of the Iowa Environmental Council, sees a need for the tax credits.
Failure to extend the wind credit would have devastating effects on the future growth of the economy and give other energies an unfair advantage, he said.
“There are a whole variety of tax incentives for a whole variety of types of energy,” Baer said. “Wind incentives are put there to create a level playing field for wind energy, not give it a special advantage.”
The wind tax issue is important to Iowa because the industry supports more than 3,000 manufacturing and operations jobs, according to the U.S. Energy Information Administration.
Iowa congressmen favor extension
All seven of Iowa’s congressmen favor extending the tax credit.
That’s a situation Loris calls “crony capitalism” — when business success depends on close relationships with the government.
Although Iowa congressmen agree with extending the credit, Republicans accuse the president of unnecessarily making the tax credit a campaign issue. Instead of talking up the issue in Iowa, he should be pushing the issue in Congress, they said.
“The stakes for the wind industry and the country in general will only get worse with delay. It’s time to act, not politic,” said U.S. Sen. Chuck Grassley, a Republican who authored and won enactment of the first wind energy production tax credit in 1992.
U.S. Rep. Steve King, another Iowa Republican, expressed a similar view.
“It is extremely disappointing President Obama has chosen to continue to politicize this issue instead of simply working with Congress on finding a solution for the future of this energy industry, and in turn, our country,” King said.
Steve Lockard, CEO of TPI, pointed out that the wind energy tax credit isn’t stimulus money or a grant.
It’s an offset to tax liability only when turbines are spinning and electricity is being generated, he said.
Lockard praised King for calling for an extension of the tax credit in tandem with requiring the wind industry to make a plan for it to be phased out.
“I think there will be a time when wind can operate without the tax credit, but we’re not quite there yet,” said Lockard, a Republican. “We urgently need this extension.”
Each party sees edge in wind debate
This was an official White House visit, but it bore many of the trappings of a campaign event. American and Iowa flags hung from the corrugated metal ceiling. A turbine blade formed a wall behind a row of bleachers. Above it was a presidential slogan: “An America built to last.
Democratic political operatives agree with Obama’s focus on this topic because they think it’s good policy and could hurt Romney by making him look anti-business.
Obama, and Iowa’s congressional delegation, understand that renewables like ethanol and wind need initial help from the government because they would have a hard time attracting private investments, said Democratic strategist Jeff Link.
“Romney’s approach will hurt him with Iowans because we have witnessed the success of wind energy in creating jobs and producing power,” Link said.
Romney has taken no formal position on the credits. He has generally said he doesn’t support subsidies.
Asked if Romney were president whether he would support extending the production tax credit or the advanced energy manufacturing tax credit, his campaign answered with a swat at Obama.
“President Obama hasn’t followed through on his promises to get the economy back on track or to support domestic energy production, so it’s baffling that he’s now trying to run on a new ‘to-do’ list,” said Sarah Pompei, a Romney campaign spokeswoman.
Republican operatives said there’s an argument for not relying on subsidies to prop up a market — and that this election likely isn’t going to hinge on wind energy.
“I don’t think taxpayer subsidies to alternative energy suppliers will impact the Iowa vote,” said Steve Grubbs, a Republican strategist from the Quad Cities.
“Romney’s position that we have to find ways to reduce federal spending will appeal to Iowans, since so many are concerned more about our national debt and looming inflation than alternative energy sources,” Grubbs said.
Wind Energy in Iowa
WHAT IT IS: Arizona-based TPI Composites is a global provider of structural composite products for wind energy, military and transportation markets.
NEWTON PLANT: About 700 employees make wind turbine blades. The plant opened in 2008 to great welcome following Newton’s loss of more than 1,800 jobs after Whirlpool acquired Maytag and closed its headquarters and factory. TPI accepted $2 million in state loans to develop the Newton plant.
OBAMA AND NEWTON: This is President Barack Obama’s second visit as president to Newton. He spoke in April 2009 at an Earth Day town hall meeting, which TPI’s CEO attended.
WHAT IT IS: It’s a tax break for companies that use wind, solar and geothermal sources as well as dedicated energy crops to generate power. It provides a break of 2.2 cents per megawatt hour for the first 10 years of a facility’s operation.
PRO: Advocates such as the Iowa Wind Energy Association say the credit has been a major driver of wind power development over the past decade. The tax credit expires for wind at the end of this year. Its demise would shrink wind power expansion and jeopardize thousands of Iowa jobs, supporters say.
CON: Critics such as the conservative-leaning Heritage Foundation say that the credit costs taxpayers millions of dollars per year and that the free market — not the government — should decide which energy sources succeed.
• Iowa ranks first in the nation in overall wind energy jobs, employing 6,000 to 7,000 workers, including more than 3,000 manufacturing and operations jobs.
• Iowa was second in the nation in wind-generation capacity in 2011, ranking behind Texas.
• There are more than 215 wind-related businesses operating in Iowa.
• The industry provides more than $12.7 million in annual land lease payments in Iowa.
• Last year, Iowa generated 20 percent of its total electricity from wind energy, avoiding emissions that come from other power sources.
SOURCES: Center for American Progress, TPI.com, Heritage Foundation, American Wind Energy Association and Iowa Wind Energy Association