Clean-tech manufacturing needs 2 cents for every $ in tax cuts for rich
By CAPAF’s Daniel J. Weiss.
This afternoon the Senate overwhelmingly approved ending debate on the “Obama-McConnell” compromise tax package by a vote of 83-15. This limits debate to no more than thirty hours, and makes likely the final passage of the bill on Tuesday or Wednesday.
The tax bill, H.R. 4853, would extend tax cuts for both middle class and wealthy taxpayers, as well as extend unemployment insurance and cut social security payroll taxes. Its provisions would create over two million jobs. The bill extends a critical renewable electricity job creator, while ignoring a lapsed provision that would create clean tech manufacturing jobs despite strong public support for boosting manufacturing.
The original draft framework of the tax package would let expire the “Treasury Grant Program” established in the American Recovery and Reinvestment Act. This provision, commonly referred to as Section 1603, enables companies to receive cash grants in lieu of production or investment tax credits for renewable electricity projects if they lack the tax liability to use tax credits. The inability of renewable companies to use tax credits has been a big impediment to clean energy investments since the financial collapse in September 2008.
If Sec. 1603 expires at the end of 2010, the immediate layoff of at least 15,000 employees could occur. Additionally, without Sec. 1603, the U.S. Partnership for Renewable Energy Finance estimates that $24 billion worth of clean energy projects “will not proceed.” Additionally,
US PREF estimated around 104,000 jobs are forgone by not extending the 1603 cash grant through 2011 and on in to the future, where even more jobs would be created.
Senators Maria Cantwell (D-WA), Diane Feinstein (D-CA), and thirteen other senators urged Senate leaders to include an extension of Sec. 1603 in the tax bill. Senators Harry Reid (D-NV) and Max Baucus (D-MT) responded and made it happen.
Reps. Earl Blumenauer (D-OR), Mike Thompson (D-CA), Rush Holt (D-NJ) were among 81 representatives that sent a letter to House Democratic leaders to urge that they extend Sec. 1603 for two years to close the finance gap and help the U.S. clean tech sector remain competitive.
Due to economic conditions, a large gap persists between the total amount of financing renewable energy developers need and the money available in the market. The TGP [Sec. 1603] fills that gap. In addition, the U.S. renewable energy industry is under increasing competition from other countries.
This program has proven that it will increase jobs, increase the market share for U.S. renewable energy companies, and reduce our dependence on foreign sources of energy.
Unfortunately, the Senate bill would not provide additional resources for the Advanced Energy Manufacturing tax credit (48C) that compliments the Sec. 1603 program by providing assistance to small and medium clean tech manufacturing firms that produce renewable energy equipment. This provision helps these helps manufacturers build new factories or retrofit existing factories to build clean energy products, such as electric vehicle batteries, solar panels, or wind turbines. US PREF determined that
The 48C manufacturing tax credit is stimulating a US domestic supply response to meet this demand [from Sec. 1603]. Thus, by providing tax equity financing certainty, 1603 helps to ensure demand for the supply being created under the 48C program. We see the extensions of 1603 and 48C as a 1+1=3 proposition.
The extension of the 1603 cash grant would make more successful any extension of the 48C manufacturing tax credit in terms of job growth.
It quickly funded enough projects to reach its $2.3 billion spending limit, even though there were three times more applicants than grantees.
Providing $2.5 billion more for 48C would cost relatively little compared to the $858 billion tax package – it’s one-third of one percent of the total. And its only two percent of the bonus tax cuts to the wealthiest Americans.
There is strong public support for federal investments in manufacturing. The December Allstate-National Journal Heartland Monitor poll found great public concern about economic competition for our manufacturing sector.
Americans believe the United States now lags behind China as the strongest economy in the world and are deeply pessimistic about the current track of the country.
More than half of Americans (62%) agree that it’s important for the government to help advanced manufacturing industries with tax incentives and funding – even if it means more federal spending and more government involvement in the economy.
A poll for the Alliance for American Manufacturing by the Mellman Group found similar support for manufacturing, particularly among working class voters crucial for Democrats electoral success.
Loss Of Manufacturing Generate The Most Concern On Average.
We have lost too many manufacturing jobs in this country. [This is a] Top Concern Among: Independents, 50+ no college, Working Class.
The House of Representatives should complement the Sec. 1603 extension in the Senate tax bill by adding at least $2.5 billion for the Advanced Energy Manufacturing tax credit program. Together, these programs would create tens of thousands of new jobs, boost our domestic clean tech manufacturing industry, and protect public health by reducing pollution generated by coal fired power plants.
– Dan Weiss, Director of Climate Strategy at American Progress Action Fund