September 26 2012
Deflating the Economy with More Wind-Power Subsidies
Vicki E. Alger
Last week U.S. Sen. Lamar Alexander (R-TN) and U.S. Congressman Mike Pompeo (R-KS) penned a great editorial in the Wall Street Journal. Averting a debt meltdown by cutting non-priority spending should be keeping Congress busy enough. So why are lawmakers distracting themselves with a seventh extension of the wind-power subsidy—which is set to expire at year’s end? Alexander and Pompeo explain:
From 2009 to 2013, federal revenues lost to wind-power developers are estimated to be $14 billion—$6 billion from the production tax credit, plus $8 billion courtesy of an alternative-energy subsidy in the stimulus package—according to the Joint Committee on Taxation and the Treasury Department. If Congress were to extend the production tax credit, it would mean an additional $12 billion cost to taxpayers over the next 10 years….
The Obama administration and other advocates of wind power argue that the subsidy provided by the tax credit allows the wind industry to sustain American jobs. But they are jobs that exist only because of the subsidy. Keeping a weak technology alive that can't make it on its own won't create nearly as many jobs as the private sector could create if it had the kind of low-cost, reliable, clean electricity that wind power simply can't generate.
While the cost of renewable energy has declined over the years, it is still far more expensive than conventional sources. And even the administration's secretary of energy, Steven Chu, calls wind "a mature technology," which should mean it is sufficiently advanced to compete in a free market without government subsidies. If wind power cannot compete on its own after 20 years without costly special privileges, it never will.
Letting subsidies like these expire should be a no-brainer because the last thing our economy needs is another drag on it.