Last week, President Obama gave an important economic speech about his goal for the US to double our exports over the next five years. Get this right, and we’re talking about two million good jobs making stuff here and selling it to other countries.
The President announced a set of initiatives that will help our firms sell into foreign markets, but I’d like to talk briefly about another policy the President and Vice-President have been touting of late: the (somewhat inauspiciously named) 48C Advanced Energy Manufacturing Tax Credit.
This is a 30 percent tax credit that can be used to offset the costs of investment in building clean energy equipment right here in the good old USA. You heard me: we build it here to expand our own domestic capacity in clean energy manufacturing. This helps on the import side by meeting more domestic demand with domestic capacity. But we also start selling more of these goods abroad, complementing the goal the President set out in yesterday’s speech to boost exports.
The Recovery Act provided $2.3 billion for the tax credit, but the credit was so popular that we received many more qualified applications than we were able to accept. As part of our jobs agenda to build off of Recovery Act successes, the President has called for a $5 billion expansion of 48C. And note that because the tax credit offsets less than a third of the costs of an investment, it brings private-sector capital in from the sidelines – $5 billion in tax credits means $15 billion of total investment.
With 48C, we don’t merely create good jobs today. We lay the foundation for a vibrant, clean energy industry tomorrow. The credit can support investments in advanced energy technology throughout the economy, from technologies like wind turbines and solar panels that create energy from renewable resources, to technologies like batteries and smart grid systems that store and transmit that energy, to technologies like advanced lighting that help conserve energy. Not to mention investments in plug-in electric vehicles and their components, or investments in equipment to capture and sequester carbon dioxide or otherwise reduce greenhouse gas emissions.
Now, think about all of the above in the context of the President’s agenda, including job growth, clean energy, and exports. We’ve got the world’s most productive manufacturers right here in America, and while we’ve historically used incentives to encourage the generation and the use of clean energy, we’ve never before taken that extra step to incentivize the actual manufacturing of the equipment used to generate clean energy here.
And there’s every reason to believe that this new output would be competitive both here and around the globe.
That’s what 48C does, and that’s why it’s so important that Congress enacts our proposed expansion of this program to help create the lasting opportunities working Americans need and deserve.
Jared Bernstein is Chief Economic Advisor to the Vice President