With Congress in recess for the Presidents’ Day holiday, the Administration made energy issues one of its top priorities last week, reiterating the president’s call for an all of the above strategy to energy policy.
Speaking to college students in Miami February 23, President Obama criticized the pro-drilling approach of Republicans and the reluctance of the oil and gas industry to give up $4 billion a year in tax breaks, which the president has called for zeroing out in his fiscal year 2013 budget request. With the election year heating up, and the administration facing the blame for high gas prices, President Obama last week acknowledged that prices are rising faster and earlier this year than ever before, and that the sticker shock people feel at the pump is another reminder of why developing clean, alternative energy sources is critical.
Taking the opportunity to tour the University of Miami’s Industrial Assessment Center, where students are trained as industrial energy efficiency experts to help manufacturers reduce energy costs and which receives funding from the Department of Energy, the president downplayed the possibility of any quick fix, but called again on Congress to pass clean energy tax credits.
As a part of the trip, administration officials announced three new clean energy initiatives involving natural gas, biofuels, and energy efficiency, all of which are detailed below. In the weekly Republican radio address on Saturday, Sen. Kay Bailey Hutchison used the speech as an opportunity to reiterate an emerging Republican narrative linking Obama’s energy agenda and high gasoline prices.
In other news, after working on it for two years, Treasury Secretary Timothy Geithner unveiled the administration’s proposal for tax reform February 22. Noting that a reworking of the country’s tax system will take time, require bipartisanship, and benefit form stakeholder feedback, the proposal calls for the elimination of numerous tax loopholes and subsidies and a reduction of the corporate tax rate to 28 percent; a refocusing of the manufacturing deduction to reduce the effective tax rate on manufacturing to 25 percent while encouraging increased clean energy research and development; the introduction of a new minimum tax for foreign earnings, the simplification of tax filing for small businesses; and ensuring that current tax provisions are fully paid for.
The framework would make permanent the tax credit for the production of renewable electricity in order to provide a strong, consistent incentive to encourage investments in renewable energy technologies like wind and solar. To date, the United States has provided only a temporary production tax credit for renewable electricity generation, creating an uncertain investment climate, undermining the effectiveness of tax expenditures, and hindering the development of a clean energy sector in the United States, while requiring many firms to invest in inefficient tax planning through tax equity structures so that they can benefit even when they do not have tax liability. The framework would address these issues by making the permanent production tax credit refundable.
Members of Congress will return on Monday after the President’s Day recess to take up several key pieces of legislation and hold various energy and budget hearings. The House is backing off its large highway reauthorization bill, while the Senate will resume consideration of a two-year, $109 billion version of the bill (S. 1813).