POLITICS:

Ryan, the Republicans' budget hawk, opposes tax breaks for clean energy and oil

JANESVILLE, Wis. -- Paul Ryan's rangy arm is cocked over a high school sign, his thumb turned down. The playful insult, captured in a black-and-white picture 23 years ago, was aimed at the rival school here in his hometown of 62,000 people. The gesture also harmonizes with his message today on the direction of federal energy spending: down, down, down.

Within Ryan's fiscal 2012 budget resolution is a 70 percent cut to clean energy programs, compared to the president's plan, and deep reductions to U.S. EPA funding. By way of comparison, Ryan's goal is to spend about $1 billion a year on "basic science" research for energy, compared to more than $7 billion annually planned by President Obama.

He also supports eliminating renewable energy tax credits. Together, those reductions threaten the expansion of wind, solar and other renewable energy sources, according to businesses and advocates in the state, where manufacturing jobs in car plants, paper mills and machine shops continue to disappear. The plan also reduces research on alternative transportation fuels as Wisconsin is seeing gasoline prices steadily rise.

It is an ambitious -- and risky -- economic path laid out by Ryan, who is gambling that his emphasis on the national economy will be accepted even as his plan carries cuts that would fall on many local residents and businesses.

Convergence Energy is one of them. The small company installs solar panels on large dairy farms, at municipal utilities and on homes in Ryan's 1st District, a flat terrain of farm fields, crossroads towns and small industrial cities in the southeast corner of Wisconsin.

Covering a barn roof with solar panels can cost $100,000 or more, a price that makes it tough to compete with electricity from the grid without government incentives, says Thomas Martin, CEO of Convergence Equity, a venture capital firm affiliated with the energy company.

Those prices will come down, supporters say, with continued research and development and as more manufacturers, distributors and installers begin competing for customers. But for now, the foothold is tenuous, Martin says. Without federal government grants from the Section 1603 program, which pays for 30 percent of a project and expires in December, his business will likely shrink.

"Don't do it," Martin says about canceling the incentives. "It's as simple as that. What else can I say? I don't like firing people."

A polite renunciation of welfare

Other federal subsidies, like the production tax credit, which provides renewable energy developers with 2.1 cents for each kilowatt-hour produced for a decade, can also help Wisconsin businesses, supporters say. Snap-on Inc., located in the manufacturing town of Kenosha, Wis., where Ryan faced a freewheeling crowd last month that both booed and cheered his budget plan, makes tools for turbine technicians, says Michael Vickerman, executive director of RENEW Wisconsin, a nonprofit group that advocates for clean energy.

"More turbines, more maintenance, more service" are the economic benefits of those tax credits, he said.

But Ryan subscribes to a different philosophy. At age 41, the new House Budget Committee chairman has spoken for years about a reduced role for government. His message is: Less spending means less taxes, and that means more economic growth. In a recent swing through his district, Ryan embraced another theme historically held by conservatives, ending the "cradle-to-grave welfare state."

"We're becoming a government of more takers than makers," he told a crowd of about 70 people in the worn-down village hall in Twin Lakes, where a brindled mutt lashed to a long green rope relaxed on the fading roof of pickup truck.

That philosophy extends to clean energy, which Ryan has at times politicized as a Democratic priority. In his budget blueprint, Ryan refers to the "politically favored renewable energy interests" that the Obama administration and Congress funded through the economic stimulus spending package.

Many of Ryan's supporters like his adherence to the issues. And that means the economy. He talks through the filter of budget metrics, a neutral language of numbers, outlays and authorities. Ryan, meanwhile, infrequently makes pronouncements through the searing lens of social puzzles like abortion, or even controversial scientific issues, like climate change.

Departing a budget speech last week in Washington, Ryan declined to answer questions about his views on the human contribution to global warming. Later, his office sent a quote attributed to Ryan that focused on cap and trade. It's the type of economic framework through which Ryan generally talks about issues. But it didn't reveal whether he believes emissions from cars, buildings and industry are having an effect on global temperatures.

His spokesman, Kevin Seifert, clarified that Ryan "believes our environmental policies should be based on sound science and that humans and their activity have an impact and role regarding climate change."

It's unusual, too, for Ryan to launch political rockets at opponents. But when he does, he's nice about it.

"He's a polite guy, I think everyone will say that about him," said John Heckenlively, an out-of-work teacher who challenged Ryan as a Democrat last fall. Of course Ryan had little compulsion to use negative attacks: He easily rode to victory with 68 percent of the vote, shortly after beating Heckenlively in a goat milking contest at a county fair.

Ryan's first experience with campaigning involved less ambitious aspirations. But his focus was just as sharp, says Heather Gwaltney, a high school friend who ran as secretary on Ryan's ticket for junior class president.

They won, and fulfilled their promise to throw a dazzling prom. The president is automatically named prom king, and Ryan invited Gwaltney to be queen, because "I was safe," she said. Everyone knew him as P.D., not Paul, back then.

"For the average high schooler, they're having fun, they don't know where they're going -- I was more that type," Gwaltney said. "Paul ... he wasn't one to waste time."

No reprieve for local business

Although Ryan expresses his priorities through arcane budget-speak, that tendency can belie strong political statements in his assignment of federal money.

Leaving a spillover public event in Lake Geneva recently, Ryan explained that the elimination of renewable energy incentives is part of a broader effort to reduce spending in the tax code. In the process, clean energy companies, including local ones that might lose jobs, would see their tax breaks disappear along with those of other corporate payers.

"So you can find specific people who utilize certain earmarks in the tax code that benefit from it, but that comes at the expense necessarily of better tax policy and better economic growth," Ryan said.

Those cuts are needed to make up the revenue that's lost by Ryan's other proposal: reducing the top tax rate for individuals and businesses from 35 percent to 25 percent. Some constituents have criticized Ryan for that policy, saying he's appealing to wealthier taxpayers.

The Tax Policy Center found that Ryan's tax cuts would cost about $300 billion a year, meaning that one-third of the nation's tax breaks, which amount to roughly $1.1 trillion annually, would have to be eliminated to make up for the lost revenue. Ryan's budget doesn't go into detail on which programs would be ended, but he has made it clear that renewable energy tax credits are a target.

Fossil fuel incentives will also be considered, he said in a Wisconsin parking lot.

"Yes, we're talking about cleaning up the whole entire tax code," Ryan said. "We go after fossil fuel subsidies, we go after renewable subsidies. We propose to go after all that stuff."

Ryan: 'Get off fossil fuels'

Ryan also wants to provide funding for "basic research" in energy, paid for with royalties and lease payments obtained by allowing oil and gas companies to expand domestic drilling. Basic science research generally refers to chemistry, geosciences and some biosciences. It doesn't include aspects of deploying technologies, or commercializing them.

"We think nuclear and all these other ideas is worth pursuing through basic research, not applied research, which I would argue is more of a corporate welfare -- more picking winners and losers," Ryan said. "So let's drill for oil, drill for gas, bring down prices, increase supply, create jobs here and use the money to invest in basic scientific research, so we can get off of fossil fuels at the end of the day."

His plan provides the budget authority to spend $7 billion on energy next year, $4 billion in 2013 and $1 billion each year through 2021.

Obama's plan for 2012 reaches Ryan's highest mark with two programs: $5 billion to extend the production tax credit and 1603 grant program, and $2 billion in loan guarantees for renewable and energy efficiency projects. Altogether, the president proposes spending $29.5 billion on the Department of Energy next year.

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