As the congressional "supercommittee" readies its much-anticipated debt-cutting plan, a quartet of strange-bedfellow groups -- two green and two fiscally conservative -- today joined forces to pitch $380 billion in cuts to what they billed as environmentally harmful federal subsidies.
The four nonprofits -- Taxpayers for Common Sense, Friends of the Earth, Public Citizen and the Heartland Institute -- took broad aim at high political priorities of Republicans and Democrats alike in their budget-slashing Green Scissors report. Among the spending items they eyed for phaseout are several of the oil and gas tax breaks unsuccessfully targeted by the White House this year, nuclear power loan guarantees, and a Department of Energy high-tech research program prized by the Obama administration.
Even while offering their slate of energy-money slices to the supercommittee, which must propose more than $1 trillion of cuts to fellow lawmakers by Thanksgiving as part of this month's sweeping debt limit deal, the advocacy groups acknowledged that many programs they oppose maintain powerful constituencies on Capitol Hill.
"While these cuts are low-hanging fruit" for the four groups, Heartland Vice President Eli Lehrer told reporters today, "we're not maintaining that they're going to be easy cuts to make."
Some of the cuts likely would face weaker resistance than others, such as a proposed repeal of farm supports that were on the chopping block during early spending talks led by Vice President Joe Biden. But others that appear to have momentum face a murky future -- for instance, while the ethanol blenders' tax credit was overwhelmingly rejected by the Senate this year, an alliance of biofuel reformers failed to attach its repeal to the debt-limit deal (E&ENews PM, July 26).
As it stands, the ethanol credit is scheduled to expire at year's end, allowing Congress to forgo future spending as well as more proactive savings by not acting to renew it.
Ethanol is hardly the only alternative fuel that would see its government support cut by the four groups. The Green Scissors blueprint offers cuts to "clean coal" and carbon capture and sequestration programs as well as DOE's Advanced Research Projects Agency-Energy (ARPA-E), created by the 2009 economic stimulus bill to promote "transformational energy research" in areas ranging from fuels to clean electricity.
The Green Scissors sponsors did not include ARPA-E in their overall total, adding a footnote explaining that "not all of this spending funds environmentally harmful projects." Yet their argument that the nascent agency offers "taxpayer subsidies to develop things that the private sector was already using on a large scale" drew early criticism from its supporters.
"Eliminating funding for ARPA-e would be particularly short-sighted ... because of the need for breakthroughs in development of clean, low cost energy sources," Bipartisan Policy Center senior adviser Paul Bledsoe said via email. "Eating your seed corn is not a national strategy for long-term energy competitiveness."
Bledsoe's group also helps to steer the American Energy Innovation Council, a coalition of seven top-tier business chiefs including Microsoft Corp.'s Bill Gates and General Electric Co.'s Jeffrey Immelt, which is calling for a $16 billion annual public-sector investment in clean energy development.
What's in a subsidy?
Washington's inability to end two major ethanol subsidies as part of the debt limit deal took root this spring as conservatives battled internally over whether the rollback of tax benefits could be construed as a tax increase -- a clash that famously pitted Sen. Tom Coburn (R-Okla.) against anti-tax activist Grover Norquist (E&E Daily, June 14).
Former Rep. Bob Inglis (R-S.C.), toppled by a tea party challenger in his re-election race last year and now leading a coalition of conservatives seeking to address climate change, said today that he believed Coburn was the victor in that fight. As a result, Inglis added, GOP members of the newly convened "supercommittee" could consider chopping energy tax expenditures.
"By eliminating subsidies, not only do we get an immediate fiscal benefit in deficit reduction, but we also get the opportunity for growth and revenue flowing to the federal government because of the innovation that could occur as a result," Inglis said. He was joined by Rep. Earl Blumenauer (D-Ore.) in helping the four advocacy groups unveil their Green Scissors recommendations.
Perhaps the biggest unanswered question facing the 12 members of the debt-cutting panel, including House Energy and Commerce Chairman Fred Upton (R-Mich.), is whether they can take a significant stab at overhauling the tax code given their imminent deadline. Such a tax reform effort likely would be the only viable vehicle for both parties' leaders to accept politically risky cuts such as a repeal of oil and gas industry benefits.
Inglis said that he hopes the Green Scissors outline could come into play even beyond the "supercommittee" time horizon. But Bledsoe, of the Bipartisan Policy Center, cautioned that "much larger policy issues can best be addressed through a broader deal on tax and budget reform that is desperately needed.
"Reductions in energy subsidies like those for ethanol can play a valuable role in debt reduction, but a systemic approach is needed that considers all national priorities including economic growth, energy security, and environmental impact," he said.
Click here to read the Green Scissors report.