Trump's 'Emergency Powers' Could Initiate a Dirty Energy Bailout

Trump's 'Emergency Powers' Could Initiate a Dirty Energy Bailout
AP Photo/Susan Walsh

President Trump has drawn opposition from many conservatives by using emergency powers to skirt Congress and spend money on a border wall and impose billions in taxes on imported goods. Now his administration is poised to employ similar tactics to funnel billions of dollars to a handful of coal and nuclear companies. After the president’s successful deregulatory agenda has boosted economic growth, this would be a betrayal of the free-market principles that taxpayers have fought for.

Despite a general preference for free markets when it comes to taxation and regulation, the Trump administration appears to be fixated on using the heavy hand of government to tilt the energy playing field in the favor of certain sectors. This was reflected in the Department of Energy’s recent budget request, under which “funds are being diverted toward energy security, with the priorities being nuclear power plants and new, more efficient coal plants.”

Growing the Department of Energy’s budget by $1.1 billion and shifting more and more resources toward coal and nuclear is not an isolated incident. It is part of a broader attempt to revitalize these energy sources with taxpayer dollars and government assistance as they struggle to compete with more efficient and cost-effective alternatives in a free market.

The most egregious example of this is a proposed bailout proposal that could divert as much as $34 billion to a few coal and nuclear companies. While many believed this plan had been scrapped last year, in recent comments at a conference in Texas, Energy Secretary Rick Perry seemed to resuscitate it. According to reports, the Energy Department “has not given up on crafting a financial support package for at-risk coal and nuclear plants.”

This is cause for serious concern. The bailout would cost American businesses, consumers and taxpayers billions of dollars and benefit only a small handful of companies. Under the plan, the Department of Energy would invoke emergency powers under the auspices of a national security threat, as set forth by provisions in the Federal Power Act and the Defense Production Act.

This would allow the federal government to unilaterally intervene -- without any Congressional involvement -- in the marketplace, despite widespread agreement that the struggles of coal and nuclear plants were caused by free-market competition and posed no threat to our nation’s security.  

The proposal would create a “strategic electric generation reserve” by purchasing energy from ‘approved’ power plants. These direct purchases are nothing more than a subsidy to failing coal and nuclear plants. Keeping these plants operational will not help consumers. And, contra the Trump Administration’s possible declaration of an ‘emergency,’ electricity reliability company PJM Interconnection found that there is ‘no immediate threat to system reliability from plant retirements.’

Without a legitimate national security justification, the plan was unanimously rejected by the Federal Energy Regulatory Commission in early 2018. But Secretary Perry’s comments suggest the plan isn’t dead and taxpayers must continue to be vigilant. The Trump administration has already used claims of national security and emergency declarations to circumvent Congress and impose massive taxes on imported goods.

It is using a similar strategy to fund border security projects without the consent of Congress. With billions of dollars on the line in this energy bailout, it important for Congress to provide oversight and work to balance powers between the executive and legislative branches of government. It simply should not allow this level of federal involvement in energy markets. 

New, more efficient technology sometimes replaces old, outdated technology. That’s just how the market works - and it’s how the market should work. A bailout plan is a threat to taxpayers’ wallets with no benefit for consumers. The Trump administration should stick to the free market policies that have worked well with regard to tax reform and deregulation and avoid intervening in a manner that would drive up costs and slow economic growth. 

Brandon Arnold is the Executive Vice President of the National Taxpayers Union, a nonprofit dedicated to advocating for taxpayer interests at all levels of government.

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