Romney’s Opposition To Wind Tax Credit May Become A Political Liability In Iowa: ‘This Is A Very Big Deal For Us’
"Romney’s Opposition To Wind Tax Credit May Become A Political Liability In Iowa: ‘This Is A Very Big Deal For Us’"
Chaz Allen is the exact type of voter that Mitt Romney and Barack Obama would love to win over in the fall.
A registered Independent, Allen’s political views range across the political spectrum. As a moderate fiscal conservative, he’s concerned about some of the spending measures proposed by Democrats. As a moderate on social issues, he believes that Republicans have become too polarizing on gay marriage and abortion.
But for Allen, there’s one really big issue that could influence his vote for president: Wind.
Allen is mayor of Newton, a town in central Iowa that represents one of the most visible and uplifting stories on the economic impact of domestic wind manufacturing. And as someone who’s seen the enormous jobs benefits from the wind industry, he’s increasingly worried about a key federal tax credit for the industry set to expire at the end of this year.
Romney says he wants to immediately end the tax credit; Obama has been pushing Congress to renew it.
“This is a very big deal for us,” says Allen, leaning back behind his desk at his office in City Hall. “There are a lot of issues that people will be voting on. But for us here in Newton — and a lot of other communities around Iowa — this one really sticks.”
Newton has received a lot of attention in recent years because of its dramatic economic turnaround helped by the wind industry. Obama even campaigned here in May. For 115 years, the town was home to the headquarters of appliance manufacturer Maytag Corporation, which at one point employed 4,000 workers in a town of 15,000. But over the years, as the company declined in health, local jobs were shed. By 2006, the company was sold to rival company Whirlpool, operations were consolidated, and the Maytag facility was closed. Nearly 1,800 jobs were lost.
In 2007, after Allen came into office, the town embarked on a “team effort” with the state and federal government to attract businesses in the rapidly growing wind industry. It worked. Soon after, the turbine blade manufacturer TPI composites and the wind tower producer Trinity Structural Towers moved to Newton, helping create more than 950 manufacturing jobs. Trinity even opened up its operations in the old Maytag plant.
“Bringing in these companies, it was like hitting the lottery,” says Allen, smiling. “Wind is about jobs for us.”
Driven by improving economics, strong state targets, and a federal production tax credit that provides wind farm owners with 2.2 cents per kilowatt-hour of electricity, the Midwestern market exploded in the mid-2000’s. Today, Iowa gets 20 percent of its electricity from wind, has up to 7,000 jobs in the industry, and has brought in $5 billion in private investment over the last three decades.
But now, communities and companies in wind states across the country are concerned about the expiration of the federal production tax credit at the end of the year.
Since this federal tax incentive was put in place for the the technology in the 90’s, the wind industry has been able to drop installation costs by 90 percent, according to the American Wind Energy Association. However, with natural gas prices at historic lows due to a glut of supply and many states reaching the upper limits of their renewable energy targets, the wind industry says that another extension of the tax credit is needed to continue momentum.
Unlike permanent tax credits for oil and gas producers, the production tax credit is only extended on a short-term basis, making long-term investment decisions difficult. As a result, wind installations are expected to crash in 2013.
Trying to break through Congressional gridlock as the election season unfolds, the wind industry has been pushing Congress for a one-year extension. Some wind proponents have also suggested a three- to five-year extension, with a phase-out schedule that would give investors and manufacturers more clarity, rather than just a sudden elimination.
Killing the tax credit could force the layoff of up to 37,000 workers in the wind industry, according to an analysis from the consulting firm Navigant Consulting. Already, manufacturers and developers in Arkansas, Colorado, Ohio, and Pennsylvania have cancelled projects, laid off workers, or announced plans to lay off workers. And just this week, the turbine manufacturer Clipper Windpower said it will lay off 174 employees, including an unspecified number of workers at its facility in Cedar Rapids, Iowa.
Even with job creation such a big national priority, Congress hasn’t budged.
However, this is not just a Congressional issue anymore. With Romney’s campaign now saying that the candidate supports immediately ending the credit, the debate over federal tax incentives for wind has been thrust into the national presidential campaign.
But for a large number of voters in the Midwest who see how important wind is for their local economies, it’s not a debate at all.
“When Romney comes out and says that he wants to end this incentive for this industry, I think for a lot of voters in Iowa, that’s a huge turnoff. For some, it’s a killer,” says Rob Hogg, a Democratic state senator from Iowa’s 19th District. “We may lose hundreds and potentially thousands of jobs in this state because of this. So yes, for a lot of communities that are invested in this, it’s an issue.”
In July, a poll from Public Opinion Strategies showed that 57 percent of Iowans would be less likely to vote for a candidate who opposed an increase in wind development. Furthermore, the poll showed that 59 percent of Independents felt strongly enough about wind to influence their vote.
And it’s not just Democrats and Independents concerned. Romney has broken with nearly every Republican ally in Iowa on the issue as well. Prominent GOP policymakers like Governor Terry Branstad, Representative Steve King, and Senator Charles Grassley have all urged Romney to reconsider. He has not. Senator Grassley, the so-called “father” of the production tax credit, said earlier this month that Romney’s position was “like a knife in my back.”
Iowa is a hotly contested swing state this election cycle. Obama won Iowa in 2008, but Romney is campaigning hard there, hoping to take the state back. He’s already been to Iowa five times since emerging as the presumed GOP presidential nominee. With Democrats, Independents, and Republicans in the state all raising public concerns about Romney’s stance on wind, the issue could be turning into a political liability for him.
Down the road from Newton City Hall, a large transfer truck carrying a wind turbine blade pulls out of the parking lot of TPI composites, making its way to one of the many wind farms under construction throughout the region.
Sitting in his office, Mark Parriot, the general manager of TPI’s Newton facility, explains why these blades allowed him to keep his job — and his family — in Newton.
As former general manager of the Maytag plant, Parriot lost his job when the plant closed in 2006. After living in Newton for 25 years, he was afraid that he would be forced to relocate. But when TPI decided to open a facility in the town, he got his job back.
“That was an emotionally and economically difficult time for the town and for me. But here I sit, five years later in Newton as a direct result of the wind industry. I could introduce you to hundreds of people here who would tell you a story similar to mine,” he says.
When Parriot found his way into the wind industry in 2007, he came in at an historic time for the industry. In 2006, with a limited domestic supply chain, wind turbine manufacturers were only able to source about 35 percent of components from American companies. Today, with 500 manufacturing facilities now in operation around the country, manufacturers are sourcing 67 percent of components from American companies — a doubling of domestic content in the last five years.
“I think that’s a huge American success story,” says Parriot. “I’d hate to see politics make that come undone.”
With 75,000 wind jobs encompassing every single state in the country, these stories aren’t limited to one area. In fact, wind is more heavily concentrated in conservative areas of the country. According to the American Wind Energy Associations, 81 percent of all wind capacity has been installed in Republican congressional districts, and only 16 percent is in Democratic districts.
“We’ve demonstrated in Iowa that it’s not divisive because we view wind as a jobs issue and we’ve seen great returns,” says Parriot. “And this industry has phenomenal diversity across the country — I’m genuinely excited about it. I find it frustrating that this has become a politically divisive issue.”
It remains to be seen how much that frustration will influence wind-supportive voters in the voting booth.