In 1992, the Supreme Court ruled in Quill Corp. v North Dakota that companies without a "substantial nexus" in the state where their customer lived didn't have to charge sales tax.
Online retail wasn't much of a thing in 1992. Actually, even e-mail wasn't much of a thing in 1992. But Quill became a seminal case for online retailers: It meant, in essence, that they didn't have to pay state and local sales taxes. That's allowed them to undercut traditional brick-and-mortar stores on price. It's also meant that state and local governments, which rely heavily on sales taxes, have lost enormous amounts of revenue as more and more commerce has moved online. The National Conference of State Legislatures estimates the lost revenue at $23 billion annually.
As you'd expect, online retailers have fought hard to keep hold of this advantage. Amazon.com has waged a particularly long war on behalf of the sweet deal they're getting. But in the last year, Amazon has begun to buckle. The bad press they were getting, and the number of state legislatures they were fighting in, simply ceased to be worth it. Now they're cutting deals with various states -- including behemoths like California and Texas -- to pay sales taxes. And as Amazon goes, so goes the rest of online retailing.
Amrita Jayakumar reports that "a wave of states, including Virginia, have passed laws that will require consumers to pay sales tax on all Internet purchases as soon as next year. Other states and the District are pursuing similar measures. And in Maryland, Gov. Martin O’Malley (D) wants to go further and levy a tax on songs and other digital products bought through popular sources such as iTunes."
Moreover, the Supreme Court made clear in the decision that Congress could overrule them on this issue. The Marketplace Fairness Act, which would make it simpler for online retailers to pay sales tax by standardizing the taxes they pay, would do exactly that. The legislation has bipartisan support in the Senate, and has been endorsed by everyone from Amazon.com to the National Governors Association to the United Auto Workers to Wal-mart.
WIll this solve state and local budget problems on its own? Not even close. But it helps avoid a worrying alternative scenario: A tax spiral where, in order to fund crucial services, state and local government have to jack up sales taxes on the businesses that physically reside within their borders, making them less and less competitive against the online retailers who are out-of-state and don't employ anyone living nearby.
If online retailing wins fair-and-square, that's one thing. In fact, in many industries, it's probably the most likely thing. But online retailing shouldn't win because of Quill Corp. v. North Dakota.
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RCP Obama vs. Romney: Obama +2.7%; 7-day change: Obama -0.9%.
RCP Obama approval: 47.4%; 7-day change: -0.5%.
Top story: The healthcare fallout continues
The House will vote on a bill to repeal Obamacare this week. "House Republicans late Thursday released their proposal to repeal the 2010 healthcare law, arguing that it has increased healthcare costs, puts Americans at risk of losing coverage and is dragging down the economy...The bulk of the seven-page bill consists of a findings section that says the Patient Protection and Affordable Care Act has failed to live up to President Obama's promises for the law. For example, it finds that 'tens of millions of Americans are at risk of losing their healthcare coverage,' even though Obama promised people they could keep their coverage if they liked it. It says the law has not lowered healthcare costs, and that average families paid $1,200 more in the year after passage...The House is expected to vote on the bill Wednesday, July 11. The House Rules Committee has set a Monday evening meeting to approve a rule for the bill." Pete Kasperowicz in The Hill.
The repeal bill leaves a small part of the IPAB in place. "The bill that the House is slated to vote on next week will repeal just about all of the law, except for one small subsection that sets up how the House would vote on the Medicare cuts recommended by the Independent Payment Advisory Board -- a new panel set up by the law to suggest ways to rein in Medicare spending. The subsection prevents the House from changing those rules, including through repeal. If the bill repealed the entire law, Democrats could have raised a procedural point of order against the repeal measure and likely killed it, according to a House GOP leadership aide. Keeping this one subsection -- subsection (d) of section 1899A of the Social Security Act -- would prevent that. The subsection sets up the rules for how future Congresses would vote on IPAB’s spending cuts, including the fast-track procedures lawmakers would use. But the rest of the IPAB would be repealed, so it really wouldn’t matter that these rules would be in place." Jennifer Haberkorn in Politico.
Some are challenging subsidies provided through federal exchanges. "Starting in 2014, the law requires most Americans to have health insurance. It also offers subsidies to help people pay for insurance bought through markets known as insurance exchanges. At issue is whether the subsidies will be available in exchanges set up and run by the federal government in states that fail or refuse to establish their own exchanges. Critics say the law allows subsidies only for people who obtain coverage through state-run exchanges. The White House says the law can be read to allow subsidies for people who get coverage in federal exchanges as well...A rule issued by the Obama administration allows tax credits for insurance bought in either a state or a federal exchange...Mr. Roe and another Tennessee Republican, Scott DesJarlais, have introduced a bill to nullify the rule, issued by the Internal Revenue Service." Robert Pear in The New York Times.
A few states are arguing that the SCOTUS ruling allows them to cut Medicaid now. "Some cash-strapped states have seized on a section of the Supreme Court's health-law decision to pare their existing Medicaid programs, saying the ruling lifts the March 2010 law's ban on such cuts...Within hours of the Supreme Court's ruling on June 28, lawyers in the Maine attorney general's office began preparing a legal argument to allow health officials to strike more than 20,000 Medicaid recipients from the state's rolls--including 19- and 20-year-olds--beginning in October to save $10 million by next July...Other states, including Wisconsin and Alabama, are expected to follow Maine's lead, though there is disagreement over whether the high court gave the states such leeway. That could lead to battles between states and the federal government that could drag the health law back to the courts. New Jersey and Indiana also said they were evaluating the decision and did not rule out challenging the requirements." Christopher Weaver and Louise Radnofsky in The Wall Street Journal.
11.5 million fall into the potential donut hole where, if their state pulls out of Medicaid, they don't get subsidies, either. "States's decisions to opt out of the Medicaid expansion in President Obama's healthcare law will deny millions of people access to affordable coverage, according to an analysis by the Urban Institute...The Affordable Care Act expanded Medicaid eligibility to people whose incomes fall below 138 percent of the federal poverty level. The law also provides subsidies to buy private insurance, but only to people at or above 100 percent of the poverty line. So people whose incomes fall between 100 percent and 138 percent of poverty are caught in the middle -- they're not eligible for subsidies, but they might not be able to get Medicaid, either, if their state opts out of the expansion. Nationwide, about 11.5 million uninsured people fall into that category, the Urban Institute said. Roughly 1.8 million live in the seven states that have said they won't take part in the Medicaid expansion." Sam Baker in The Hill.
The end of DSH payments could get states to sign up for the Medicaid expansion. "That stands for Disproportionate Share Payments, extra money that Medicaid sends to hospitals that provide a higher level of uncompensated care. Those payments, which totaled $11.3 billion in 2011, are meant to offset the bills of the uninsured. The Affordable Care Act phases out these payments...Add on another $11 billion and hospitals would find themselves spending 27 percent more covering unpaid bills. It especially matters in states with more uninsured residents. In Texas, for example, the hospitals received $957 million in DSH payments last year. That money goes away, regardless of whether Texas decides to join the Medicaid expansion or not. Those dollars could be replaced with new Medicaid payments - or, if not, it will be about a $1 billion in new bills for Texas hospitals to foot." Sarah Kliff in The Washington Post.
Romney could repeal much of Obamacare without Congress. "Even conservatives admit Mitt Romney’s promise to repeal President Barack Obama’s health care law with an executive order might not work -- but that doesn’t mean he’s out of luck. Romney could still begin to gut the law immediately by taking some more passive-aggressive steps -- a jumbo-sized version of a strategy Obama has embraced on issues ranging from immigration to education. Even if Romney can’t rely on a Republican-controlled Congress to pass a repeal bill, he could achieve a similar end...Under the law, the federal government is supposed to build health insurance exchanges for states that don’t create their own. But with Romney’s help, those states could defeat that effort, too, even if the law remains unchanged. A quirk in the language of the law -- which the law's supporters call a 'drafting error' -- could allow Romney to make it basically impossible for federally run exchanges to function." J. Lester Feder in Politico.
Insurance market reforms could stay even if the rest of Obamacare is repealed. "GOP Hill aides are still working through the details of what they can rip out of the Affordable Care Act through budget reconciliation -- the same complex process used more than two years ago to usher through final passage of the health law...There’s uncertainty, in particular, on what would happen to the new insurance rules -- such as requiring insurers to cover people with pre-existing conditions. The Senate parliamentarian -- Congress’s rule maker -- will be at the center of any decision. The complicated maneuver of budget reconciliation is pretty clear on a couple of things: Congress could use it only on items that affect the budget, and it has to reduce the deficit. Cigna Vice President Bill Hoagland, a former top Senate Republican budget aide, said it’s not clear whether the case could be made that repealing the private insurance market rules -- known as guaranteed issue and community rating -- would have a budgetary impact." Jason Millman and Matt Dobias in Politico.
Tom Goldstein on the minutes after the Supreme Court's healthcare decision:"The CNN producer says (correctly) that the Court has held that the individual mandate cannot be sustained under the Commerce Clause, and (incorrectly) that it therefore 'looks like' the mandate has been struck down. The control room asks whether they can 'go with' it, and after a pause, he says yes...The Bloomberg team finishes its review, having read the Commerce Clause holding and then turned the page to see that the Court accepted the government’s alternative argument that the individual mandate is constitutional under Congress’s tax power. At 10:07:32 - 52 seconds after the Chief Justice began speaking - Bloomberg issues an alert: 'OBAMA’S HEALTH-CARE OVERHAUL UPHELD BY U.S.SUPREME COURT.' Bloomberg is first, and it is right...I turn to Lyle - who has been focusing on the Commerce Clause section of the syllabus on his copy, but also skimmed the tax power discussion in the syllabus - and say, 'They win under the taxing power.' Lyle responds, 'Yes.'"
@daveweigel: SCOTUSblog tick-tock of networks' Obamacare screw-up is the most exciting narrative journalism ever written about PDF release times.
1) THALER: Behavioral scientists have a lot to add to government. "Imagine that along with the Council of Economic Advisers, a Council of Behavioral Scientist Advisers also provided counsel to the president. What might emerge from such a group? Thanks to an initiative of the British government, we have some evidence about the benefits that might emerge...The most lasting impact will probably be that policy makers will consider randomized trials as a way to discover what works. Such experimentation is rare in government policy, where neither legislators nor bureaucrats are eager to acknowledge that they don’t already know the best way of doing things. Yes, here in the United States we sometimes let states try a variety of approaches to policies for health care and education, for example, but differences among states can make comparisons difficult. And people choose where they live -- rather than being assigned to states at random as in a proper experimental design. Other countries, including our own, should take note." Richard Thaler in The New York Times.
@BCAppelbaum: "As a general rule, the United States government is run by lawyers who occasionally take advice from economists."
2) COULSON: America has too many teachers. "Since 1970, the public school workforce has roughly doubled--to 6.4 million from 3.3 million--and two-thirds of those new hires are teachers or teachers' aides. Over the same period, enrollment rose by a tepid 8.5%. Employment has thus grown 11 times faster than enrollment. If we returned to the student-to-staff ratio of 1970, American taxpayers would save about $210 billion annually in personnel costs...America's public schools have warehoused three million people in jobs that do little to improve student achievement--people who would be working productively in the private sector if that extra $210 billion were not taxed out of the economy each year...While America may have too many teachers, the greater problem is that our state schools have squandered their talents on a mass scale. The good news is that a solution is taking root in many states." Andrew Coulson in The Wall Street Journal.
3) MÜNCHAU: Italy and Spain should quit the eurozone unless Germany changes course. "What we know now is that Germany will not agree to mutualised deposit insurance. It cannot even agree to give the European Stability Mechanism a banking licence so that it can leverage itself. If Germany cannot do the minimum necessary now, why should anybody think it can agree a political union?...With interest rates on 10-year government bonds over 6 per cent, neither Italy nor Spain can sustain their membership in the eurozone. This is what Mario Monti and Mariano Rajoy should have made clear to Angela Merkel at the summit. They should have told her that their governments would make preparations for a withdrawal from the eurozone if there was no change in policy. A resolution requires either a eurozone bond - or some other form of debt mutualisation -in both the public and private sectors, and ECB bond purchases. Germany does not accept the former. The ECB does not accept the latter." Wolfgang Münchau in The Financial Times.
4) DOBRIANSKY AND SAUNDERS: The U.S. should sign a free trade agreement with Europe. "Europe's ongoing economic crisis and the evident discord among its key leaders have profound implications for the United States. Despite a new agreement during the most recent European Union summit last month, the crisis will likely endure for some time, with unpredictable political and economic consequences. Visionary and determined American leadership is essential both to help some of our closest and oldest allies and to protect our national interests, domestically and internationally...Only Europe can ultimately solve its crisis, and the U.S. must concentrate its resources at home. But we have too much at stake to sit on the sidelines. One bold policy option would be to conclude a trans-Atlantic free-trade agreement between the U.S. and Europe, something the EU has already welcomed in principle." Paula Dobriansky and Paul Saunders in The Wall Street Journal.
5) KRUGMAN: Mitt Romney should release details about his finances. "Mitt Romney has largely kept his finances secret. He did, grudgingly, release one year’s tax return plus an estimate for the next year, showing that he paid a startlingly low tax rate. But as the Vanity Fair report points out, we’re still very much in the dark about his investments, some of which seem very mysterious...There’s his Individual Retirement Account. I.R.A.’s are supposed to be a tax-advantaged vehicle for middle-class savers, with annual contributions limited to a few thousand dollars a year. Yet somehow Mr. Romney ended up with an account worth between $20 million and $101 million. There are legitimate ways that could have happened, just as there are potentially legitimate reasons for parking large sums of money in overseas tax havens. But we don’t know which if any of those legitimate reasons apply in Mr. Romney’s case -- because he has refused to release any details about his finances." Paul Krugman in The New York Times.
Top long reads
Sarah Kliff on the shrinking of the public health workforce:"The recession has battered public health; across the country, local and state health departments have shed 52,200 jobs since 2009. Despite resources from the stimulus and the Affordable Care Act aiming to bolster the public health workforce, it has about 20 percent fewer workers than it did four years ago. Forty-one percent of local health departments expect to make even more cuts this year, according to the National Association of County and City Health Officials. Johnson...says these cuts could not come at a worse time. After years of steady declines in teenage tobacco use, new data have shown hints of a backslide. Back in the early 2000s, five full-time staff members worked on smoking cessation in Worcester. Just last year, there was money enough to go around to all 600 tobacco sellers in the area, to make sure they were complying with city regulations and not selling to teens. This year, Johnson had the budget to visit 300 stores. The rest, she says, 'just didn’t get checked.'"
James Surowiecki on the history of currency:"In the 13th century, the Chinese emperor Kublai Khan embarked on a bold experiment. China at the time was divided into different regions, many of which issued their own coins, discouraging trade within the empire. So Kublai Khan decreed that henceforth money would take the form of paper. It was not an entirely original idea. Earlier rulers had sanctioned paper money, but always alongside coins, which had been around for centuries. Kublai’s daring notion was to make paper money (the chao) the dominant form of currency. And when the Italian merchant Marco Polo visited China not long after, he marveled at the spectacle of people exchanging their labor and goods for mere pieces of paper. It was as if value were being created out of thin air. Kublai Khan was ahead of his time: He recognized that what matters about money is not what it looks like, or even what it’s backed by, but whether people believe in it enough to use it."
Janet Adamy and Tom McGinty look at end-of-life care and its costs:"On Valentine's Day 2009, Scott Crawford, 41 years old, received the break that he thought would save his life. A surgeon at Johns Hopkins Hospital in Baltimore removed his ailing heart and put in a healthy one. The transplant was a success. But complications put the former tire-warehouse worker in intensive care for almost a year. Surgeons removed his gall bladder, his left leg and part of a lung. And Mr. Crawford soon became one of the most expensive Americans on Medicare...A few days before Christmas 2009, Mr. Crawford died, leaving behind a young son...A primary goal of the 2010 health-care overhaul that the Supreme Court upheld last week is to slow the growth of costs. Even so, the law does little to address a simple fact: A sliver of the sickest patients account for the majority of U.S. health-care spending. In 2009, the top 10% of Medicare beneficiaries who received hospital care accounted for 64% of the program's hospital spending, the Journal's analysis found."
Ylan Mui on the lasting financial damage of the subprime implosion on black Americans: "The implosion of the subprime lending market has left a scar on the finances of black Americans -- one that not only has wiped out a generation of economic progress but could leave them at a financial disadvantage for decades. At issue are the largely invisible but profoundly influential three-digit credit scores that help determine who can buy a car, finance a college education or own a home. The scores are based on consumers’ financial history and suffer when they fall behind on their bills. For blacks, the picture since the recession has been particularly grim. They disproportionately held subprime mortgages during the housing boom and are facing foreclosure in outsize numbers. That is raising fears among consumer advocates, academics and federal regulators that the credit scores of black Americans have been systematically damaged, haunting their financial futures."
Got tips, additions, or comments? E-mail me.
Still to come: QE3mentum; Medicare tries to reduce costs for complex patients; patent trolls on the rise; division over the farm bill; and a trio of Siberian Tiger cubs are just what you would expect.
Obama will call for a one year extension of tax cuts for people making less than $250,000. "With a torpid job market and a fragile economy threatening his re-election chances, President Obama is changing the subject to tax fairness, calling for a one-year extension of the Bush-era tax cuts for people making less than $250,000. Mr. Obama plans to make his announcement in the Rose Garden on Monday, senior administration officials said...House Republicans plan to vote this month to extend permanently all of the Bush tax cuts, for middle- and upper-income people. The president’s proposal could also put him at odds with Democratic leaders like Representative Nancy Pelosi of California and Senator Charles E. Schumer of New York, who have advocated extending the cuts for everyone who earns up to $1 million. And it will most likely do little to break the deadlock in Washington over how to deal with fiscal deficits, an impasse that has only hardened as Republicans sense a chance to make gains in Congress this fall." Mark Landler in The New York Times.
QE3 is becoming more likely. "Friday's disappointing jobs report increases the likelihood that the Federal Reserve will launch a new bond-buying program to boost economic growth, though it doesn't ensure such a move...Views differ among Fed officials on the conditions that would warrant a new bond-buying program. The central bank's more activist camp believes more action is already justified because the economy isn't making progress toward reducing unemployment and inflation is low. Its hawkish wing, which worries more about inflation and which has been skeptical of the central bank's responses to financial crisis and recession, accepts that more action might be needed but wants to hold it in reserve for serious threats like recession or deflation...Officials could decide to wait through the summer...still, the recent spate of disappointing figures--including feeble job gains and softening factory output, retail spending and consumer confidence--raises the likelihood that a bond-buying program will be discussed when they meet in July." Jon Hilsenrath in The Wall Street Journal.
@ObsoleteDogma: Is there anyone who wouldn't watch a show called The Fed Whisperer, starring Jon Hilsenrath?
@Neil_Irwin: I'm skeptical Fed would ease intermeeting (Bernanke prefers not to), unless as part of global coordinated easing. But in Aug, yeah.
Momentum is growing for e-sales taxes. "A wave of states, including Virginia, have passed laws that will require consumers to pay sales tax on all Internet purchases as soon as next year. Others, including the District, are pursuing similar measures. And in Maryland, Gov. Martin O’Malley wants to go further and levy a tax on songs and other digital products bought through popular sites such as iTunes. For states struggling in the troubled economy, this could mean $23 billion in new revenue each year, according to the National Conference of State Legislatures. Had online retailers collected sales tax this year, Virginia would have added nearly $423 million to its coffers, while Maryland would have seen $376 million and the District $72 million, the group said. The movement in state capitals is driving newfound support for a proposed bill in Congress that could make sales-tax collection a standard practice on the Web, no matter where a consumer logs in to shop." Amrita Jayakumar in The Washington Post.
Eurozone officials are working to create a single bank supervisor. "Senior euro-zone finance officials, moving ahead on a plan to create a single overarching bank supervisor for all the countries in the 17-nation currency bloc, are settling on a framework that would create a new agency reporting to the European Central Bank to police the largest banks in the currency union, people involved in the discussions said...Disclosing the first details of how the discussions on setting up the entity were progressing, officials involved said the talks were coalescing around the idea of creating an agency under the ECB that would be charged with sole supervision of the top 25 or so largest banks. They said smaller euro-zone banks would remain under the purview of their national financial-market regulators. But these national regulators would be brought under the control of the euro-zone supervisor, which could be based in Brussels rather than Frankfurt, the ECB's home." Matina Stevis and Stephen Fidler in The Wall Street Journal.
@economistmeg: I feel a July emergency EU summit coming on.
The IMF will cut its global growth forecasts. "International Monetary Fund head Christine Lagarde said Friday that the IMF will cut its global growth forecasts in the next month, adding that a weaker global economy will bring more trouble for Japan in the form of a stronger yen. The world economic outlook will be 'tilted to the downside,' Ms. Lagarde said at a news conference in Tokyo." Eleanor Warnock in The Wall Street Journal.
Gas prices are expected to stay low. "Consumers have enjoyed falling gasoline prices at the pump, which show few signs of heading higher, analysts and traders said. Benchmark gasoline futures-known as reformulated gasoline blendstock, or RBOB--have plunged 20% from the highs reached in March, settling Friday at $2.7160 a gallon. Prices at the pump topped out this year at $3.936 a gallon in April but have fallen 17%, according to the auto club AAA, with a gallon of regular nonleaded gasoline averaging $3.358. Gasoline stockpiles are growing, and consumer demand remains weak." Dan Strumpf in The Wall Street Journal.
xkcd interlude: The United Shapes.
Medicare is trying to cut its costs for complex patients. "Medicare is trying new tactics to cut costs for complex patients and keep them healthier, although some health-policy observers say they don't go far enough. Under the 2010 health overhaul law, the agency is giving health-care providers incentives to band together and coordinate care for groups of patients. If their costs fall by a great enough percentage, the providers get to pocket some of the savings. Another part of the law will allow Medicare to impose financial penalties on hospitals that readmit high numbers of patients within 30 days of discharge. Readmissions like these often signal a preventable post-hospital complication. Federal officials are working to help hospitals reduce infections and other ailments that patients acquire inside hospitals by 40% over a three-year period under a piece of the law...Past efforts by Medicare to coordinate care have yielded little, if any, savings." Janet Adamy in The Wall Street Journal.
Lab-bound scientists are finding jobs to be scarce. "Michelle Amaral wanted to be a brain scientist to help cure diseases. She planned a traditional academic science career: PhD, university professorship and, eventually, her own lab. But three years after earning a doctorate in neuroscience, she gave up trying to find a permanent job in her field. Dropping her dream, she took an administrative position at her university, experiencing firsthand an economic reality that, at first look, is counterintuitive: There are too many laboratory scientists for too few jobs...Although jobs in some high-tech areas, especially computer and petroleum engineering, seem to be booming, the market is much tighter for lab-bound scientists...One big driver of that trend: Traditional academic jobs are scarcer than ever. Once a primary career path, only 14 percent of those with a PhD in biology and the life sciences now land a coveted academic position within five years, according to a 2009 NSF survey." Brian Vastag in The Washington Post.
Patent 'trolling' is on the rise. "Technology companies used to condemn what critics call 'patent trolls,' ventures that profit from innovations they themselves often had no hand in creating. Now, some of those companies are taking pages from the trolls' playbooks.To bring in extra cash, some big names in the tech industry are spinning off their patents into separate entities, with the aim of pressuring other companies to license the technology and suing when they can't reach deals. Others are selling their patents to so-called nonpracticing entities, a less derisive term for trolls. Broadly speaking, NPEs buy up troves of patents not to develop products with them, but to make money through licensing and litigation...Last year, five companies--Apple, Microsoft, Research In Motion, Ericsson, and Sony--spent a combined $4.5 billion to buy up more than 6,000 patents from the bankruptcy estate of Nortel Networks Corp. Rather than divvy up all the patents, the companies tucked about 4,000 of them into a venture called Rockstar Consortium." Ashby Jones in The Wall Street Journal.
@mattyglesias: We have too many patents, not too few.
Adorable animals in Hungary interlude: Here's a trio of Siberian Tiger cubs. You know what to do next.
House Democrats are divided over the farm bill. "Liberal Democrats are fuming over $16 billion in cuts to food stamp programs included in the House farm bill set for a markup on Wednesday. Rep. Collin Peterson (Minn.), the top Democrat on the House Agriculture Committee, agreed to the cuts as a pragmatic way of moving forward with legislation important to rural lawmakers. In an interview with The Hill, he said much of the cuts would be restored in a conference with the Senate. Yet the move has led to anger on the left, while raising questions over whether the farm bill can pass the House given opposition among Republican and Democratic lawmakers. Rep. Rosa DeLauro (Conn.) issued a scathing statement after the bill’s release that called it immoral and inhumane...A group of liberal congressmen plan a Tuesday press conference to protest the farm bill. Agriculture Committee members Reps. Jim McGovern (Mass.) and Joe Baca (Calif.) are slated to attend along with DeLauro." Erik Wasson and Mike Lillis in The Hill.
A tax credit for wind power is nearing expiration. "Acciona Windpower's generator-assembly plant here in the heart of the corn belt is down to its last domestic order as the U.S. wind energy industry faces a sharp slowdown. Demand for the school bus-size pods it assembles to house the guts of a wind turbine is drying up as a key federal tax credit nears expiration. Acciona is now banking on foreign orders to keep the plant going next year, while hoping the credit will be extended...The tax policy, initiated two decades ago, currently gives operators of wind farms a credit of about two cents per kilowatt-hour of electricity they generate. Without the credits, wind power generally can't compete on price with electricity produced by coal- or natural gas-fired plants. Analysts predict that if the tax credit expires on Dec. 31, as it is scheduled to, installations of new equipment could fall by as much as 90% next year, after what is expected to be a record increase in capacity in 2012." Mark Peters and Keith Johnson in The Wall Street Journal.
Keystone XL would boost U.S.-Canada trade relations. "At the remote border crossing north of here, two stern U.S. border guards emerged from their spanking new post to check passports. There wasn’t another person or car in sight. An uninterrupted sea of prairie stretched in every direction. On the Canadian side, the nearest town is Val Marie, the entrance to Grasslands National Park and home to 137 people. On the U.S. side, it’s Loring, population nine -- not counting the dog called mayor. 'The border is 16 miles away, and in between, there are 4,000 Angus cattle and 3,000 acres of farmland and that’s about it,' said Kenny Clark, a mechanic and oil worker who lives in Loring with his wife, two children and parents. Soon, there might be one more thing: TransCanada’s Keystone XL pipeline. The company wants to run its controversial new pipeline not far from this outpost...If the U.S. government gives TransCanada the go ahead, the Keystone XL pipeline will give another boost to U.S.-Canada trade relations." Steven Mufson in The Washington Post.
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.