An “Election Insight 2012” report was issued shortly following the elections on November 7, 2012 by SNR Denton, and provides interesting insights into what political issues will take the forefront in the next four years. The report highlights winners and losers both at the federal and local levels as well as provides a short list of who could take over several key appointed positions. It also gives a top level discussion of what key issues will be addressed during the upcoming lame duck session, as well as over the next four years.
- The 112th Congress returns for a lame duck session beginning next week and the major topic of discussion will be the combination of expiring tax provisions and across-the-board spending cuts (sequestration) including discussion of retroactive extension of expired provisions including research and development tax credit, the production tax credit for wind energy, and other “tax extenders”.
- Several major policy areas that will be on the agenda for the next Congress: debate on the future of American energy; and job creation and economic growth. The issues above are forecast to become part of the broader debate over the economy.
- The energy sector also will draw attention in the context of tax reform, with debate continuing on tax policy affecting both oil and gas companies and renewable generators.
- President Obama’s corporate tax reform plan calls for a lowering of the corporate tax rate from 35%to 28%, and reducing the manufacturing income rate to 25%. To pay for these proposals, the president would eliminate several business tax breaks, most notably subsidies for oil companies.
- Obama’s plan would make the Research and Development (R&D) tax credit permanent and the tax credit for renewable electricity production permanent.
- Obama’s plan would require companies to pay minimum tax on overseas profits and remove tax deductions for moving production overseas, while giving a 20% income tax credit for the expenses of moving back to the U.S.
- The next terms will bring continued debate on the future development of American energy resources, with deep-seated disagreement between those championing fossil fuels and those urging a greater emphasis on renewable development. The Obama Administration will likely continue to champion renewable energy sources like wind, solar, and the safe development of natural gas through conventional and unconventional drilling.
- This “status quo” election result suggests that major energy policy will continue to be made through judicial review, rather than by the Congress. While legislative gridlock is likely to continue on most major energy policy issues, changes in the leadership of the committees with jurisdiction over energy policy will affect the legislative agenda moving forward.
- The new Chairman of the Senate Committee on Energy and Natural Resources will be Senator Ron Wyden (D-OR), the first Chairman in over a decade whose home state is not dominated by fossil fuel production. Senator Lisa Murkowski (R-AK) will continue as Ranking Member. Many observers believe that Wyden will advocate views similar to retiring Chairman Senator Jeff Bingaman (D-NM) regarding renewable energy incentives, while seeking to cut fossil fuel subsidies.