Saving Jobs Is A Poor Reason To Keep Wind-Power Credits
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With the imminent expiration of federal wind production incentives, the wind power industry is in a predictable uproar. One after another, wind manufacturers announce that they will have to lay off hundreds of workers if the wind production tax credit (PTC) isn't extended by year's end.
Congress should ignore these politically charged job claims and ensure the wind PTC expires.
Clearly, wind turbine manufacturers would be able to hire on more workers when the government pays them to do so. Any tax handout will create jobs in the targeted industry. But how many jobs would be created if that money were aimed elsewhere in the economy?
What A Drag
According to the Senate Finance Committee, extending the wind PTC will cost $12 billion dollars next year. This money has to come from somewhere, either through higher taxes or higher debt. That means that the Americans will be either $12 billion poorer, or they will see a $12 billion added to our ballooning national debt. Just like free lunches, there is no such thing as a free tax credit.
Lawmakers need to look beyond the propped-up payrolls. They need to consider the numerous unseen costs of subsidizing wind energy. But these jobs would only exist because of government subsidies, and this money doesn't come out of thin air.
In addition to their explicit cost, there is an oft-overlooked opportunity cost to targeted incentives like the wind PTC. If a wind turbine manufacturer can keep 100 additional workers on the payroll because it receives a tax credit, those 100 workers cannot work in productive sectors of the economy. And by diverting labor and capital away from more efficient uses, wind incentives drag on the economy.
In addition to the PTC at the federal level, the government gives a leg-up to the wind power industry at the state level too. Many states have purchase mandates, meaning that power grids are required to buy certain amounts of electricity from wind power. How much help does the wind industry need to get off the ground?
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