Mitt Romney was in Colorado yesterday, where some people aren't too pleased with him. This week he came out in opposition to an extension of the wind-power production tax credit (PTC), which is set to expire at the end of the year. The tax credit helps make wind power competitive and is credited with enabling the creation of thousands of jobs in manufacturing and construction. This is almost certainly not going to be a huge issue in the campaign, but it does reveal some interesting things about where Romney is vis-a-vis the Republican Party. On one side, you have the parochial economic interests of many Republican members of Congress and some very well-heeled Republican economic constituency. On the other, you have the purely knee-jerk reaction of Tea Party types to anything hippies might like. Guess where Mitt comes down?
Yesterday, the Senate Finance Committee passed an extension of the credit with bipartisan support. The PTC has support from members of Congress from both parties who have wind projects in their states, and a number of prominent Republicans like Chuck Grassley have urged Romney to change his position. There are thousands of jobs at stake; as Phyllis Cuttino of the Pew Clean Energey Program writes, "This uncertainty has put off investors and led to boom-and-bust cycles in the industry: Wind installations have declined by 73 to 93 percent in years without a PTC. Because of the long timelines (wind projects can take nine to 16 months from groundbreaking to power generation), investors seeking new wind projects must look two to three years into the future to decide whether the costs and benefits warrant investment. As we've seen in the past, investors are wary of supporting new projects if the availability of the tax credit is uncertain." That brings up a peculiar footnote to this issue: Some of the biggest beneficiaries of this tax break are banks like Goldman Sachs, which is investing heavily in clean energy and so has a substantial stake in the PTC being renewed.
But when the issue came up, Mitt Romney's spidey-sense, with which he tunes into every whim and grunt from Republican-base voters, began to tingle. Let's dispense with the idea that anyone on either side has a principled position on these kind of tax credits that they hold to irrespective of the activity that the tax credit supports. In the case of liberals, there's no hypocrisy involved: We'll freely admit that there are some things government should support, and in a case like renewable energy, some of these industries need a boost in their early stages in order to become competitive. Part of government's job is to create the conditions where the market can operate freely, efficiently, and justly. All of us (well, most of us) would agree that if we got all our energy from renewables and that energy was affordable, that would be better than our current situation, in which most of our energy comes from sources that have substantial environmental costs in both their extraction and their use. The question is what we're willing to do in order to approach that better world, and liberals believe that some tax credits for renewables are a perfectly reasonable part of the price. We also assume that these tax credits are finite and that as the industry matures they can be phased out.
Conservatives, on the other hand, claim that they believe in the free market and that industries should rise or fall on their own merits without any help from government. But in practice, their opinions on particular cases show no adherence to this principle they allegedly hold. Instead, they favor tax credits for industries they like for one reason or another and oppose them for industries they don't like. In the past few years, opinions on energy have become one more culture-war marker for conservatives, with people gleefully chanting "Drill baby drill!" at Republican rallies and leaders like Rush Limbaugh waging holy war against electric cars, for no particular reason other than liberals like renewable energy, and they hate liberals. So Mitt Romney is perfectly happy to maintain subsidies for the oil industry but opposes subsidies for the wind-power industry. There isn't some fundamental principle about the relationship of industry and government at work here. He's just channeling the opinions of his party, as always.
For a long time, it seemed that whenever there was a direct conflict between the preferences of the GOP's economic base and its grassroots ideological base, preference went to the economic base. Those conflicts were rare—part of the great trick the economic base pulled was convincing the grassroots base that if Jesus returned tomorrow, he'd favor cutting the capital gains tax. I doubt Romney feels particularly strongly about this. But his default impulse, at least for the moment, is to do whatever he thinks the most extreme Tea Partier would prefer. As I said yesterday, it's almost as though he doesn't realize the primaries are over.