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Stimulus Bill May Hit Republican Wall in Senate

February 2, 2009
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After easily breezing through the House, the multi-billion economic stimulus package was headed to the Senate floor this week where it could run into a Republican wall and fall shy of the 60 votes needed to overcome a filibuster.

Democrats have a 58-41 majority in the Senate, so they will require the support of every Democrat and at least two Republicans to pass their $888 billion economic recovery package (S.1). Despite the need for GOP backing, Senate Democratic leaders have refused to cave in to Republican demands for greater input in the bill. "It will be close," said a Capitol Hill staffer.

The House's $819 billion stimulus package (HR 1) was unanimously approved by 244-188 last Wednesday, but not one Republican voted in favor of it, despite pleas from President Obama for their support. Eleven Democrats voted against the recovery bill.

House Republicans were united in their opposition, saying that they had been shut out of the negotiations on the recovery bill. Republicans also argued that the stimulus package focused too much on spending rather than tax relief. A substitute House Republican amendment to eliminate all spending in the bill and increase tax cuts was defeated 266-170.

Senate Republicans echoed that sentiment as well. Sens. Tom Coburn of Oklahoma and John McCain of Arizona signaled they may try to block legislation they believe violates a series of government reform proposals that the Obama administration unveiled in January.

"I am opposed to most of the provisions" in the economic stimulus bill, McCain said. "As it stands now, I would not support it." He wants both parties to sit down and rewrite the bill. "The Republicans have not been brought in to the degree that we should be into these negotiations and discussions."

Sen. Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, also complained that Republicans were shut out of negotiations on the economic stimulus package. "Let no one be mistaken that this bill is the result of bipartisan negotiations. While Republicans were courteously consulted at the member and staff level, we were never at the negotiating table."

Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy and Natural Resources Committee, believes the fiscal recovery package plays favorites with energy resources."This bill contains a significant amount of money for renewable energy research, but it does not provide any aid for development of traditional sources of energy. I support renewable energy, but in the near term we still need oil and gas and other conventional sources."

Although the president failed to sway Republicans in the House last week, the vote was the first major legislative victory for Obama, and a big win for the renewable fuels/transmission industries. The House package contains approximately $215 billion in tax cuts and incentives and $604 billion in direct spending. The energy-related portion makes up an estimated $20 billion in tax credits and incentives and approximately $50 billion in investments to spur the development of renewable fuels, boost energy efficiency and construct new electric transmission facilities over a 10-year period.

The Senate stimulus package, which was voted out of the Senate Finance Committee and Appropriations Committee last Tuesday, contains about $342 billion in tax cuts and $545 billion in investments, of which $21 billion is allocated for energy-related tax cuts and $49 billion for direct investments in renewable fuels, energy efficiency and power transmission facilities.

The House and Senate economic recovery bills are similar in several respects, but they do have differences -- particularly in the area of energy -- that will have to be ironed out. Congressional Democrats said they hope to send a bill to Obama by mid-February.

"Most of the economists that I've talked [to] think this is the right mix" of spending and tax cuts to reinvigorate the U.S. economy, said House Majority leader Steny Hoyer (D-MD). The Congressional Budget Office estimates that two-thirds of the recovery funds will be spent in the first 18 months, he noted.

Rep. Jerry Lewis (R-CA) called the economic stimulus bill a "horrendous package," while Rep. John Culberson (R-TX) said it was "one of the worst abuses of power" because it was pushed through the House with virtually no committee hearings.

The House stimulus bill would extend for three years, until the end of 2012, the date that wind facilities must be placed in service to qualify for the federal renewable energy production tax credit. It also would extend for three years, until the end of 2013, the deadline by which other qualifying facilities must be in service to be eligible for the production tax credit.

Renewable project developers also could get an upfront subsidy equal to 30% of the project's capital costs in lieu of the current renewable energy tax credits, which are payable over a 10-year period.

Moreover, businesses and individuals could qualify for the full amount of the investment tax credit even if their property is financed with industrial development bonds or through any other subsidized energy financing. And small wind energy property, solar water heating property and geothermal heat pumps would be eligible for an uncapped 30% tax credit. It would remove the individual dollar caps.

The House stimulus measure authorizes an additional $1.6 billion of renewable energy bonds to finance facilities that generate electricity from alternate fuel sources. It also authorizes an additional $2.4 billion of qualified energy conservation bonds to finance state, municipal and tribal government programs designed to reduce heat-trapping greenhouse gas emissions.

Furthermore, the stimulus package would increase the percentage of matching grants for smart grid demonstration projects to 50%; offer $8 billion in loan guarantees for commercial renewable energy systems and electric power transmission facilities that begin construction by Sept. 30, 2011, as well as upgrades; would increase the threshold for household eligibility for weatherization assistance to 200% of the federal poverty income levels, and hike per-home maximum assistance to $5,000 from $2,500; and require the Department of Energy to include an analysis of the transmission issues facing renewable energy in a study of electric transmission congestion that is due by August.

On the other side of Capitol Hill, the Senate stimulus bill proposes $10 billion of new loan guarantees for standard renewable projects, such as wind or solar, and for electricity transmission projects, as well as $6.5 billion of increased borrowing authority for the Bonneville Power Authority and Western Area Power Administration to pursue the construction of new transmission facilities and upgrades.

The measure also includes $4.5 billion for smart grid-related activities, including work to modernize the electric grid, enhance security and reliability, and conduct energy storage research and development (R&D). An estimated $4.2 billion is earmarked for energy efficiency and conservation grants; $2.9 billion for weatherization assistance; and $2.6 billion for energy efficiency and renewable energy R&D.

Like the House measure, the Senate bill would extend by three years, through Dec. 31, 2012, the date that wind facilities must be placed in service to be eligible for the renewable energy production tax credit. It also would extend the placed-in-service date by three years, through Dec. 31, 2013, for other qualifying facilities to be eligible for the production tax credit.

And facilities that produce electricity from renewable fuels, which are placed in service this year or 2010, will have the option to take a 30% investment tax credit in lieu of the production tax credit.

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