July 3, 2014

Could the Ex-Im Bank save the wind energy tax credit?

More precisely, could the death of the U.S. Export-Import Bank satisfy the blood lust of arch conservatives and allow the wind energy credit to live for another year or two?

It's a bank shot, but such pool hall trickery is probably necessary this year, as emboldened conservatives press House Republicans to permanently kill off both the bank and the wind credit.

To keep that from happening, the new House majority leader would push for termination of the Ex-Im Bank and earn enough good will that renewal of the wind energy credit can slip through sometime in the late fall.

Rep. Kevin McCarthy, R-Calif., who will become majority leader at the end of July, stunned colleagues and onlookers when he announced that he would be perfectly happy to watch the Ex-Im Bank die.

McCarthy also hints that the wind credit has outlived its purpose.

But that isn't the same thing as saying he will block renewal of a credit that still has plenty of support in Congress, including that of the entire Iowa delegation.

McCarthy is seen as a genial, establishment Republican who diligently climbed the ranks to his new position. He's not seen as the type of fellow who's out to tear down the government brick by brick.

The Ex-Im Bank is popular with business interests on both Wall Street and Main Street; it will cease to exist unless Congress approves what's known as a reauthorization before the end of the year.

McCarthy voted in favor of the Ex-Im Bank in 2012, but he is new to his job as majority leader and probably decided this was a safe place to demonstrate to the tea party wing that he is a trustworthy conservative.

Plus, opposition to the bank has been spreading throughout Republican ranks: Iowa's Sen. Chuck Grassley and Rep. Steve King both voted against the last reauthorization in 2012, while GOP Rep. Tom Latham and all of the state's Democrats voted in favor.

Strategically, the fight over the Ex-Im Bank isn't the worst place for McCarthy to throw in his lot with the arch-conservatives.

But what will McCarthy do when the debate turns to the wind energy production tax credit?

The majority leader decides which bills come to the House floor.

The man McCarthy is set to replace as majority leader, Rep. Eric Cantor of Virginia, offered quiet assurances that the wind credit would be nestled into some legislative package later in the year and eventually passed.

McCarthy offers no such assurances and conservative groups, smelling blood, are urging him to put a pitch fork into the wind credit.

"(P)lease stand up to all wasteful tax extenders and let the free market work in the energy industry by allowing the wind (production tax credit) expire for good," the American Energy Alliance wrote in a congratulatory letter to McCarthy and the new House majority whip, Rep. Steve Scalise of Louisiana.

The American Energy Alliance is the self-described advocacy arm of the Institute for Energy Research, which receives funding from oil industry groups as well as Koch Brothers-affiliated outfits. The Koch Brothers, lest we forget, are billionaire industrialists engaged in a high-priced war on government support for wind, ethanol and other renewable resources.

Cantor, the outgoing majority leader, offered his tacit support for extending the wind credit because it was good politics; the credit and other tax extenders were good for Republican incumbents throughout the Midwest and elsewhere.

Eventually, McCarthy may make the same calculation.

McCarthy, in a Wall Street Journal interview, infuriated environmentalists by suggesting that wind power has reached the point where it can stand on its own. And E&E Publishing quoted a source close to McCarthy as saying the new majority leader won't vote for the wind credit again.

Again, that's not the same as saying he will actively seek the demise of the wind credit.

For one thing, McCarthy's own district has a substantial wind industry presence. California's 23rd District is practically the Iowa of the Pacific Coast.

So, if the arch-conservatives can get their pitch forks into the Ex-Im Bank, and if the Senate can get over procedural hurdles and pass an extenders package containing the wind credit, the guess here is that McCarthy will find a way to allow renewal to proceed in the House as well.

That will happen after the November elections.