Last month’s announcement from Siemens Corp. that it was laying off workers at its wind turbine nacelle manufacturing plant in Hutchinson painfully reminded us of the economic challenges Kansans face – slow economic growth, sluggish hiring and firms unwilling to invest – in the current economic climate. Now, nearly 150 families that came to rely on Siemens for their income and support are without either, and my heartfelt condolences go out to them.
In response to my statement that industry-specific tax handouts are job killers, this paper’s editors asked: “[W]ith more than 600 jobs that were created by Siemens alone in the U.S. because of this [wind production] tax credit (PTC) that now are being lost, just how do you get that?”
The answer: “You get that” because the central premise of this question is false and represents precisely the faulty economic logic that gave us Solyndra, an $800 billion failed stimulus, and dozens of energy tax credits doing nothing to reduce the nation’s massive unemployment and underemployment that now stands at over 23 million Americans. Let me explain.
Politicians love ribbon cuttings because they can tour a new plant, have their pictures taken and claim credit for the “new jobs.” The PTC is a perfect example of such photo-op politics. The politicians never mention all the jobs lost when the federal government takes money away from more productive uses. While elected officials blew through the new Siemens plant to celebrate these temporary, government-dependent jobs, real-economy job losses mounted all across the country under a combination of tax burden, regulatory burden and deficit spending that is unequalled in the nation’s history.
This newspaper has argued that the PTC created jobs. That is wrong. It displaced jobs elsewhere, and it is a net destroyer of American jobs because it raised the price of energy for manufacturers. All the companies that must then pay higher electric bills have less money left over to hire employees and grow their enterprises, and consumers have less money to spend as they see fit.
It costs far more to generate electricity from wind than from abundant and cheap coal, natural gas and existing nuclear power. The wind industry admits as much, saying that it cannot compete without government intervention. In addition to the PTC, Kansas requires utilities to purchase wind energy regardless of the cost to ratepayers – not unlike the Obamacare mandate to purchase health insurance. Thus, government policy artificially boosts both supply (via federal tax credits) and demand (via state mandates) for wind energy.
American manufacturers do not need federal handouts like the PTC, but rather low manufacturing costs – especially low energy costs. To paraphrase James Carville, when it comes to manufacturing jobs, “It’s the affordable energy, stupid.” Manufacturers will return to America in droves because of inexpensive natural gas, which is a feedstock for many manufacturing processes, in addition to being a fuel source. Hundreds of thousands of good-paying jobs will come with this manufacturing renaissance.
Indeed, here in south central Kansas, there are already hundreds of job openings today generated by the new oil and gas finds right in our own backyard. If we want manufacturing jobs to come to Kansas, too, then we need to make sure we aren’t making energy prices artificially high here.
Massive wind companies and many local leaders have said the PTC’s expiration creates “uncertainty,” and thus job losses. But the precise date and time of the PTC’s expiration – midnight on Dec. 31, 2012 – were always known. Why would someone build a business – and hire workers who would have to be fired later – on the assumption that temporary federal handouts would be continued? Whatever the reason, “uncertainty” is not the problem.
Contrary to some reports, I do not favor oil and natural gas tax credits while opposing those for wind. I have introduced legislation, the Energy Freedom and Economic Prosperity Act, which eliminates all energy-specific tax credits in the Internal Revenue Code. If passed, tax credits for oil and gas – gone. Tax credits for renewables like wind – gone. Tax credits for hydropower – gone.
The federal government cannot create energy with tax credits. It only distorts energy markets, and it will almost always get it wrong when it tries to pick amongst energy sources with your money. Think Synfuels Corporation. Think Solyndra. Think Chevy Volt.
I want to eliminate every energy subsidy and scale back government intrusion in all sectors of our economy. I am confident that Siemens’ engineers can find ways to compete without government handouts. I stand ready to remove any regulatory barriers that stand in the way of job creation at Siemens, in the wind industry and for all energy sources. Meanwhile, I will not waver in my support for policies that will ultimately create the economic conditions needed to create permanent jobs in Kansas and across the nation.
Mike Pompeo is a U.S. Congressman representing the 4th District in Kansas.
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