Last week, the U.S. Senate approved the nomination of Senator Max Baucus (D-MT) as the next U.S. Ambassador to China by a 96-0 vote. Although Senator Baucus’ departure will certainly have an effect on foreign policy, it has also set off a chain reaction as Senators move into key leadership positions on tax and energy issues.
Senator Baucus’ departure vacates the Chairmanship of the Senate Finance Committee, which has wide jurisdiction over all issues relating to tax, trade, and entitlement programs. In his place, Senator Ron Wyden (D-OR) will take the helm at the Finance Committee, leaving his current post as Chairman of the Committee on Energy and Natural Resources. Senator Mary Landrieu (D-LA) will replace Wyden as Chairman.
The changes in leadership could have a big impact on the energy sector. Although policy changes on the Energy Committee are likely under Senator Landrieu, Senator Wyden’s move from the Energy Committee to the Finance Committee may be even more significant. In particular, Senator Wyden is expected to bring a renewed focus on tax extenders—a group of over 50 temporary tax provisions that expired at the end of last year or are set to expire at the end of this year. Among the group of tax extenders are numerous tax incentives for renewable energy, including the production tax credit for renewable electricity under section 45 of the Tax Code.
Senator Wyden recently said that one of his top priorities upon assuming the Chairmanship of the Senate Finance Committee will be to pass legislation to deal with tax extenders. If extenders are not addressed, he said, “it could be very damaging to some key parts of our economy.” Wyden went on to say that tax extenders are important as “a bridge to comprehensive tax reform.”
Still, it is unclear how Senator Wyden will approach tax extenders. Although some members support the idea of extending all the expired or expiring provisions, there is momentum among Republicans in particular to streamline the tax code by allowing some provisions to expire permanently. To date, Senator Wyden has not indicated which specific provisions, if any, he would prefer to drop from an extenders package. However, he has historically supported tax incentives for research and development and renewable energy.