Republicans balk at ‘outlandish’ energy wish list

Source: By Geof Koss, E&E News reporter • Posted: Wednesday, November 6, 2019

Efforts to extend and revise an assortment of expired or soon-to-lapse energy tax breaks before the end of the year are struggling to find air in a crowded agenda. Policy and process disagreements are also getting in the way.

Lawmakers and interest groups for months have eyed the end of year to enact an extenders package to revive more than two dozen tax breaks — including key biofuel and efficiency incentives — that have expired or will lapse by Dec. 31.

But the lack of progress on appropriations and daily partisan rancor over the House’s impeachment inquiry may deprive congressional tax-writers of one crucial ingredient: a legislative vehicle.

Senate Finance Chairman Chuck Grassley (R-Iowa) has been looking to the Nov. 21 expiration of the current stopgap funding measure for moving extenders, but with the annual appropriations process already months behind schedule, there’s talk of simply punting spending decisions into February or March (E&E Daily, Oct. 28).

That would likely mean another “clean” continuing resolution to head off a government shutdown, making it harder to add an extenders package.

Sen. John Cornyn (R-Texas), a member of the Finance Committee, said that extenders may become “another casualty of all this impeachment mania.”

Grassley, however, signaled last week that he’s not giving up on including extenders in whatever spending bill materializes to head off a government shutdown later this month.

“I think we’ve got to reach an agreement by next week,” he told reporters when asked about extenders last week.

‘We’re not giving up’

Lawmakers in recent weeks have taken an increasingly pessimistic view of extenders, including Grassley, who was frank when asked by E&E News late last month if he was making any progress.

“I guess right now, I’d say no, but we’re not giving up,” Grassley said, pointing fingers squarely at Democrats.

“I would say that there is something odd about the Democrats not showing the same interest in the extenders that’s been the case for the last 20 years,” he said.

Sen. Ron Wyden (D-Ore.), the ranking member on Finance, declined to discuss ongoing negotiations but told E&E News that “Democrats are very interested in these issues.”

GOP tax writers said last week that Democrats are asking for too much to be included in an end-of-the-year tax bill.

“We had a briefing from Finance Committee staff the other day, and it sounds like our Democratic colleagues have some what I would call outlandish demands that kind of are non-starters,” Cornyn said. “It’s hard to have a conversation when they are making outrageous demands from the beginning.”

Cornyn said he could support a limited extenders bill but said lawmakers need to be judicious in deciding what needs to be extended.

“I’m willing to swallow some of it, but we ought to be able to show some judgment in terms of what needs to be reauthorized and what doesn’t,” he said. “Because they actually end up costing money.”

House Ways and Means Committee ranking member Kevin Brady (R-Texas) also pointed to Democrats’ demands for the “slow going” pace of extender talks.

“I think some of the demands are just out of this world,” Brady told reporters last week. “The latest offer has been nearly a trillion dollars in new spending in return for a handful of extenders. No one’s interested in that.”

Not ‘going to be easy’

Democrats on the Senate Finance Committee say it’s possible to finish extenders this year but acknowledge the hurdles ahead.

“I think we could come to an agreement,” said Sen. Ben Cardin (D-Md.) last week. “We want to get extenders done. This is of mutual interest to Democrats and Republicans.

“We’re now in a third year. So we’re now talking about three years of extenders, we want to see some of those stand up more than just a short period of time,” Cardin said. “So that seems to be our objective. We’re trying to get to a finish line.”

Sen. Tom Carper (D-Del.) said last month that “some conversations are now underway” between GOP and Democratic staff on Finance “to explore what are important to each of us, both in tax extenders and what Republicans are anxious to extend, renew or restore.”

On the Republican side, those include “technical corrections” to the 2017 GOP tax overhaul to address a number of changes to the tax code that have had unintended consequences.

“You think there might be an opportunity to come up with a compromise that would include tax extenders that the majority and the minority are interested in and some truly technical corrections on the tax law,” Carper said in an interview. “I think there’s a prospect for trying to make that happen, but I wouldn’t say that it’s going to be easy.”

Brady also suggested that technical fixes could be enacted before the end of the year. “The technical corrections have zero cost,” he said last week. “It’s time to move them, and we can find a bipartisan way to do that.”

EV credits

Democrats want concessions from Republicans in exchange for helping to fix problems in a major tax law they had no hand in writing and that passed without any Democratic support.

Republicans in turn are squeamish about some of the Democrats’ top energy tax priorities, including bipartisan legislation, S. 1094, to lift the 200,000-vehicle cap per manufacturer to qualify for the $7,500 federal electric vehicle tax credit.

Brady said there are questions among Democrats, too, about “why they’re giving tax breaks to families with households of $100,000 on average, which is what the EV credits do.”

However, he acknowledged that “there is some discussion there, it’s just one of many issues that are being raised” in year-end tax talks.

For Michigan Democrats like Sen. Debbie Stabenow and Rep. Dan Kildee, who both sit on the respective tax-writing committees in their chambers, it’s the top issue.

Stabenow is angling for the cap to be lifted in the extenders debate, arguing that the fact that several manufacturers have already hit the existing cap.

“I think there’s a lot of support, we just have to find the path forward and see how much people are willing to do,” she told E&E News last month. “But I view that as an extender, because it’s really just extending a credit that’s been in place by up in the cap.”

Stabenow’s comments reflect another hurdle in the extenders debate: There’s bipartisan interest in making revisions to a lot of unexpired tax credits, but adding them to an extenders package opens the doors for lots of unrelated add-ons that add cost and complexity.

‘Green’ package

In the House, Ways and Means Chairman Richard Neal (D-Mass.) in June deflected interest in adding additional provisions to a three-year, largely “clean” extenders package by promising a second “green energy” package before the end of the year (E&E Daily, June 21).

Neal’s plans for a separate energy tax bill are unclear, although lobbyists have said bill text could surface this month.

“I think it’s still a bit of a work in progress,” Kildee said last week. “There’s a commitment — we’re going to move it. How, what form that takes and what it’s comprised of is a bit of a work in progress. My sole focus has been making sure that the electric vehicle credit is included in whatever we move.”

In the Senate, Democrats are hoping for a broader tax bill than can address the EV credit, energy storage and extend the terms of a 2015 tax deal that phased down the investment and production tax credits for renewables. But as the clock ticks closer to Dec. 31, Cardin said an extenders package is likely to shrink, not grow.

“I’ve seen this movie before,” Cardin said. “And normally when you get near the end, it’s a lot easier to change the date.”

Sen. Maria Cantwell (D-Wash.) said last week that she’d settle with just seeing the expired and expiring tax incentives — including a biodiesel blender credit that she and Grassley strongly support — extended by the end of the year to provide certainty to small businesses whose breaks have been expired for years.

“We shouldn’t hold that hostage to some other big, grandiose thing,” she told E&E News.

Reporters George Cahlink and Timothy Cama contributed.