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Send this tax credit over the cliff

With the nation accelerating toward the “fiscal cliff,” Americans are left wondering how a last-ditch year-end deal might affect them. But one group seems quietly confident about how it will fare. As Washington re-examines its taxing and spending priorities, the nation’s wind power producers are sure they will be counted among the winners.

Since 1992, wind power has benefited from a production tax credit, or PTC, passed by Congress to boost the fledgling industry. Intended as a temporary leg up, the PTC is meant to help wind power compete with more affordable and reliable sources of energy. Two decades later, the industry still remains a ward of the state. Like many beneficiaries of federal subsidies, the wind industry is artificially propped up by taxpayer dollars yet still remains uncompetitive.

This is just one unfortunate example of what happens when the federal government, rather than consumers, picks winners and losers in the marketplace. That’s why I am an advocate of eliminating all subsidies – for Big Wind, Big Oil and any other industry that receives a handout on the backs of taxpayers.

Wind producers have received approximately $20 billion in federal subsidies over 20 years. Meanwhile, the nation’s small businesses receive no such favored status, and in fact, they may even be asked to pay a higher share of taxes in coming years. Lobbyists often say that the PTC is necessary to preserve continued U.S. leadership in the energy sector. But many Americans, including myself, will see it for what it is – corporate cronyism in the nation’s capital.

In this time of sluggish economic growth and continued belt-tightening, the PTC is a form of corporate welfare that we can no longer afford. The nonpartisan congressional Joint Committee on Taxation estimates that extending the PTC would cost us $50 billion more over the next six years. This for an industry that produces 3 percent of the nation’s electricity, and that saw a 12 percent drop in employment over the last several years.

Wind power doesn’t just cost taxpayer dollars. It hikes everyone’s utility bills, too. Wind farms receive a tax credit for every kilowatt hour they generate, whether utilities have a demand for their energy or not. Simply put, this is an industry that doesn’t need to worry unduly about prices or consumers or markets – just about politics in Washington and in state capitals. When an industry becomes dependent on subsidies, it no longer has to focus on long-term sustainability and competitiveness. It can rely on taxpayers to bear all of the risks while it, as a favored industry, reaps all of the rewards.

That is why lobbyists from the wind industry are seeking another extension of the PTC. And that’s why my fellow lawmakers should allow the credit to expire on Dec. 31. The lobbyists warn that ending the production tax credit will spell doom for an industry that won’t be able to match the prices offered by more cost-effective energy sources. And they’re right. If an industry can admit it needs preferential government treatment just to survive, we’d be foolish to pour any more money into it.

Given our debt problem, the nation must make tough fiscal decisions right now. This is an easy one. Rather than prop up an industry that still can’t stand on its own feet, it’s time to pull the plug on the PTC.

What should we do with the money we save by ending the Big Wind subsidy? That’s another easy one. We could give it back to the taxpayers who earned it in the first place. We could cut the corporate tax rate of the small businesses that will be the real power source for a rebounding American economy. We could use it to pay down the federal debt.

At the same time, the U.S. government must stop picking winners and losers in the energy market – and all markets. Letting the PTC expire will be an important first step. Otherwise, in Washington, we’re all just tilting at windmills.

Dr. Paul Broun is a Republican representing Georgia’s 10th Congressional District.