Energy, environmental interests watching deficit-reduction committee

October 5, 2011 By    

With over 9 percent national unemployment, a weak U.S. economy perhaps on the verge of another recession and the backdrop of the 2012 presidential election, Congress’ energy agenda has been overtaken by the issues of government spending and job creation.

Despite this backdrop, however, some energy issues are percolating in Congress. This fall, Senate Democrats may try to push legislation involving electric vehicles, a residential energy efficiency program, a renewal of an advanced manufacturing tax credit and grants for renewable energy projects. To pay for their clean energy measures, Democrats and President Barack Obama are calling for the repeal of oil and gas tax incentives.

House Republicans are expected to continue to hammer the Environmental Protection Agency (EPA), even in light of the president’s recent decision to withdraw the EPA’s ozone rule. Their anti-EPA focus also includes legislation focused on rules for industrial boilers and cement plants, and to prohibit the agency from regulating coal ash as a hazardous waste or promulgating other rules on greenhouse gas standards for power plants and oil and gas refineries.

However, the real action in Washington will center on Congress’ “Super Committee,” formally called the Joint Select Committee on Deficit Reduction. The committee, with a makeup of six Democrats and six Republicans, is being watched closely by energy and environmental interests.

The 12 House and Senate members who make up the deficit-reduction panel are tasked with reducing the federal deficit by $1.5 trillion over the next 10 years. The committee was formed as a result of the debt-ceiling agreement reached in August.

Most importantly, the panel’s outcome is far from certain. Its deadline is Nov. 23 to report out a plan and Dec. 23 to hold a congressional vote on its proposal. And, against this tight deadline, Republicans and Democrats are calling for panel members to expand their mandate. A blueprint for a bolder approach was outlined by the Simpson-Bowles Commission, which called for $4 trillion in cuts over 10 years. This proposal is being referenced in regards to the work of the Super Committee and the possibility of a “grand-bargain” agreement on the deficit.

In addition, leading voices in both parties are calling for the panel to be bolder and cut more from the deficit, address entitlement programs and/or reform the tax code, among other ideas.

House Speaker John Boehner, R-Ohio, has called for the panel to come up with a revenue-neutral overhaul of the tax code. He also said tax increases to pay for the deficit reductions are not acceptable. However, recognizing a tax overhaul may not be possible given the panel’s time frame, Boehner called for the panel to at least lay out the framework for broad tax reform that lowers individual and corporate tax rates, closes deductions and eliminates credits and other breaks. In contrast, House Minority Whip Steny Hoyer, D-Md., has said the panel must go beyond its $1.5 trillion mandate and will need to raise taxes to get there.

The president added his own pressure by calling upon the panel to come up with deficit cuts to pay for his $447 billion jobs program. Republicans reject raising taxes to pay for a bill that spends money on new unemployment and jobs programs, even as Democrats argue creating jobs reduces the deficit.

With the memory of Congress’ nearly catastrophic debate to raise the debt ceiling, it is fair to ask if Congress will be able to reach a compromise. If that is a barometer of things to come on the new panel, it is hard to envision how a serious compromise, or a “grand agreement” a la the Simpson-Bowles recommendation, will be reached.

And what if the “Super Committee” fails to come up with a plan or Congress fails to pass the committee’s proposal? The law calls for a 2 percent across-the-board reduction in nearly all federal spending.

Leaving spending cuts up to an automatic trigger will be hard to sell constituents. Such a plan will surely cut popular programs. It is this pressure that many hope will force the Super Committee and Congress to pass the “grand bargain.”

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