Energy and tax measures of huge importance to American manufacturers are on the agenda in Washington. If acted on promptly by Congress, they would work to lower the cost of doing business in the United States and spur innovation and growth.
First up is the Peterson (R-PA) amendment in the FY07 Interior Department appropriations bill, which aims to lift the spending ban three miles and out on the Outer Continental Shelf (OCS) for exploration and production of natural gas. Unfortunately, the amendment does not include oil development, but would permit exploration for oil.
There is expected to be a concerted effort to remove the Peterson amendment from the spending bill when it comes to a House vote soon. It is imperative that the debate on energy matters focus on the basic supply and demand imbalance that is inflating energy prices to all-time highs, and threatening the economic expansion. Peterson must remain.
U.S. environmental policies block access to domestic energy sources in the OCS while at the same time promote increased use of natural gas. This dichotomy cannot sustain itself any longer. For 25 years, we as a nation have avoided the issue of increasing domestic supplies of energy, notably that of natural gas needed to fuel our manufacturing economy. By passing Peterson, the House can move forward on advancing a sensible energy policy.
The chemical industry alone has lost 100,000 jobs and $50 billion in business because of rising natural gas prices.
The plastics, fertilizer and other industries reliant on natural gas for energy and as feedstock are being crippled by the lack of supply. And broader yet, all Americans are suffering from the sustained sticker shock of exorbitant energy prices.
Meanwhile, in unrelated tax matters, there is good news and not so good news.
On the positive side, President Bush is expected this week to sign the Tax Increase Prevention and Reconciliation Act (H.R. 4297) into law. It includes several priority issues for U.S. manufacturers, like extensions of the tax rates on capital gains and dividends through 2010 and international tax reforms.
It does not, however, include an extended and strengthened R&D tax credit that expired at the end of 2005. A second tax bill should be written to fix this problem.
By allowing other nations to garner more of the global slice of R&D expenditures because of the expired credit, policymakers are hurting our nation’s great advantage as the developer of cutting edge technologies and innovations.
We need to end the energy crisis as quickly as possible by bringing more domestic supply to market, and revitalize the R&D credit to bolster U.S. manufacturing in the global economy. There is much work to be done.
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