Common sense update: Does Sen. Manchin really think coal doesn’t get ‘a penny of subsidies’?

February 4, 2011 by Ken Ward Jr.

West Virginia Sen. Joe Manchin got some publicity yesterday when he delivered his “maiden speech” on the Senate floor. But Sen. Manchin also was grilling experts during a hearing of the Senate Energy and Natural Resources Committee.

But does Sen. Manchin need to do a little more homework before he starts inserting himself into the national energy debate to defend the coal industry?

Here’s part of what Sen. Manchin asked these energy experts during yesterday’s hearing:

What I don’t understand is all of these energies you’re talking about … the only energy source which is the greatest source that we have so far that we’re so dependent on right now is coal …

It doesn’t get  a penny of subsidies.

But it’s been vilified by this administration and so many people, and it’s the one we depend on the most. It gives back more than it takes. I can’t figure it out.

Not a penny of subsidies?

Not so, according to the group Taxpayers for Common Sense, which put out a news release criticizing Manchin’s comments:

If only that were true – we’d have less work to do. Not to be outdone, Sen. Franken (D-MN) later chimed in:

“Senator Manchin asked why there weren’t subsidies for coal and uh, I’m guessing that I want to answer that. And I don’t know if it was a rhetorical question, but it seems coal is doing pretty well without subsidies.”

That’s Weekend Update material.

The coal industry has been pocketing subsidies since 1932. Taxpayers for Common Sense has identified numerous tax breaks and subsidies over the years to the coal industry. Our Green Scissors report released last July identified over $19 billion in potential taxpayer savings if the following coal subsidies were eliminated:

— Loan Guarantees for Coal Power Generation with CCS and Industrial Gasification with CCS and Advanced Coal Gasification — $8,000,000,000

— Clean Air Coal Program — $2,500,000,000

— Clean Coal Power Initiative — $1,800,000,000

—  FutureGen — $1,073,000,000

— Credit for Investment in Clean Coal Facilities — $1,000,000,000

— Carbon Sequestration Tax Credit – $927,000,000

— Domestic Manufacturing Deduction for Hard Minerals — $856,000,000

— World Bank Capital Increase — $854,000,000

— Expansion of Amortization for Certain Pollution Control Facilities — $835,000,000

— Air Quality Enhancement Program — $500,000,000

— Percentage Depletion Allowance — $409,000,000

— Capital Gains Treatment for Royalties from Coal — $237,000,000

— Expensing of Exploration and Development — $202,000,000

— Certain Income and Gains Relating to Industrial Source Carbon Dioxide Treated as Qualifying Income for Publicly Traded Partnerships — $11,000,000

— Electron Scrubbing Demonstration Project — $5,000,000

— Build America Bonds (BAB) — $9,891,000,000

— Advanced Research Projects Agency-Energy (ARPA-E) — $400,000,000

— TOTAL (excluding ARPA-E or BAB) — $19,209,000,000

Taxpayers for Common Sense President Ryan Alexander said:

We stand ready to work with Sens. Manchin and Franken to make their subsidy free coal a reality. But before we can have an honest discussion about our energy policy and cutting spending, we all need to be using the same facts. Taxpayers spend billions supporting the coal industry every year through holes in the tax code and through loan guarantees for new coal plants. We need to stop giving tax breaks to the well-entrenched coal industry and protect taxpayer dollars.

17 Responses to “Common sense update: Does Sen. Manchin really think coal doesn’t get ‘a penny of subsidies’?”

  1. bo webb says:

    That was an alarming statement coming from a US Senator. To say he doesn’t understand indicates a refusal to accept factual knowledge, an unwillingness to allow himself to grow in his position as a US Senator.

  2. Bill Howley says:

    There are overt subsidies and there are covert subsidies. Economists have a term called “externalities.” These are costs for a company or an industry that are pushed off onto others so that the company or industry won’t have to pay them and can make more money.

    Senators and Congresspeople specialize in pressuring regulators in the executive branch not to enforce laws that protect land, water and people. We see this over and over again in WV and KY. Not enforcing the law creates externalities, because it eliminates costs for the coal industry and makes the people in the coalfields, people who breathe air and people who drink water bear the consequences of failed enforcement.

    Aren’t these subsidies by another name? Aren’t Senators and Congresspeople complicit in this hidden subsidy game? Aren’t these “not subsidy” subsidies much higher than the subsidies that Congress has given the coal industry on paper or in law?

  3. Monty says:

    It is distressing to me that so early into his term in Washington that Manchin is so obviously and deeply in King Coal’s back pocket – or else why would he be saying the things he’s saying and doing the things he’s doing? His very first bill introduced is one that seeks to try and cripple the ability of the agency that is in many cases the enforcer of last resort to protect our air, water and land since state enforcement agencies more often than not fail to do the job (witness our own WV DEP). His first major speech as a senator is, in many respects, nothing more than a long apology for the coal industry, its past excesses, and a vow to continue on as it has because that is the best way.

    Best for whom, Joe?

  4. Mark says:

    Sen. Byrd said this debate needs honest brokers. Clearly, we’re not there yet. Sadly, I’m afraid we have far to go before we get there. Rather like Palin, I doubt Manchin is intentionally fibbing – I think he has great gaps in his understanding and really believes what he says is true.

  5. Darlene Wilson says:

    I agree with Bill re: the hidden subsidies of externalities. The coal industry is a perfect example of the anti-community principle of ‘privatize the profits, commonize the costs.’ There are myriad examples of this throughout Big Coal’s history. But I can think of no better example than the health of industry workers, especially in caring for black lung patients.

  6. armored face conveyor says:

    While I certainly understand the inter-connectedness between the two, most of what is listed are subsidies for the electric power industry. Was the government bailout of GM and Chrysler an oil company subsidy?

    Also for those who are interested, I believe Ms. Alexander is the chairperson and co-founder of Appalachian Citizens for the Economy and the Environment.

  7. Ken Ward Jr. says:


    And of course, this list is federal subsidies only … it doesn’t mention, for example, the Super Tax Credits that cost the state of WV so much in revenue. Most of those went to coal companies.


  8. Darlene Wilson says:

    There are federal subsidies, yes, but also state and local ones. Coal mining cos. pay very low severance taxes; some of that revenue goes into coal haul roads and highways. Coal property values and taxes are, in the interests of ‘supporting the industry’, kept artificially low which, in turn, depresses local land uses and drastically reduces the taxable base for county revenue. (Which, in turn, impacts school budgets.)

    And then we should itemize mine rescue costs and state regulatory expenditures. What’s the budget for WV’s mining-related agencies and who pays?

    Sen. Manchin’s ignorance on this issue is not only appalling behavior for a sitting US senator but proves that, as governor, he kept his head buried in the (coal) dust and ignored the facts.

  9. ted says:

    Coal companies also pay a very low effective tax rate compared to other industries. Aswath Damodaran, a Professor of Finance at the Stern School of Business at New York University, has a great data base on effective corporate rates by industry.

    According to his calculations, coal companies have an effective tax rate of just 13.2 percent compared to the average of 15.3 percent. Among companies that made money, the effective rate of coal companies is 16.5 percent compared to the average 29 percent. Of the 100 industries examined by Damadaren, the coal industry had the 5th smallest effective corporate tax rate. Lots of deductions.

    see here:

  10. David Hill says:

    If you take the bottom line total of $19,209,000,000 and divide it by the latest census population of West Virginia (1,819,777 in 2009) you come up with a total of $10,555.69 for every man, woman and child in Senator Manchin’s state. I know the figures aren’t relevant, but for the sake of trivia, that’s a pretty penny in a state which (according to the latest US census reports), had an average per capita income of $16,477.

  11. Jeff Biggers says:

    The Plains Justice advocacy group in the Power River Basin recently did a three part series on hidden federal subsidies for the coal industry, as it relates to the western coalfields:

    Coal Swarm has this chapter on federal coal subsidies:

    And in the heartland, we hand out state subsidies readily…as this dated article from 2007 notes:

  12. Micajah88 says:

    Manchin’s remarks showed a woeful ignorance of the 19 Billion coal companies get in subsidies per the article. In addition the state of WVa subsidizes them as well. The Gazette printed an article recently about how much the state pays to keep them here – road repairs and who knows what else. It’s way past time for the coal industry to clean up it’s act, and for our politicians to quit pandering to them.

  13. armored face conveyor says:

    Again, lets be clear, most people would not consider these coal industry subsidies. I suspect if you asked the fine folks at AEP if they considered themselves part of the coal industry they would say no. I do not believe energy plant jobs are included when talking about coal jobs, etc, etc.

    Would have to see the numbers, but it is also probably a mis-statement to say these programs cost taxpayers 19 billion dollars. For example 8 billion in loan guarantees I would assume costs the u.s. only if there is a default.

    Personally I don’t know whether the coal company I work for has received subsidies, but I do know the government is subsidizing my house, each of my 3 children and the children of everyone else I know. Unfortunately govt. subsidies appear to be here to stay.

  14. Scott14 says:

    Well said AFC, we all recieve some type of goverment subsidies. How about union subsidies like the Coal give away the helps fund union pensions and retirements. The coal industries taxes are low GOOD. If your serious about ending subsidies to industries then you should support doing away with the current tax system and support a federal sales tax. That way everyone pays the same.

  15. Dave Bassage says:

    Subsidies, like art, are certainly an ‘eye of the beholder’ thing. I’ve done some research in the past on energy subsidies and there is certainly no clear cut definition of what constitutes a subsidy.

    And I’m not one to make a blanket condemnation of subsidies. Much of the good progress we’ve made as a country has happened due to subsidizing things we care about.

    What it really boils down to is deciding what we want our future to look like in order to guide future subsidies. What Senator Manchin seems to be saying is that he wants our future to look like our past, and it’s hard to find precedent where that kind of thinking has given anyone an economic or quality-of-life advantage in an ever-changing world.

    A few responses to points made above:

    Dividing a total of federal subsidies by the population of WV is not a useful tactic. Better to divide by the national population or use a state subsidy number.

    I believe the coal tax Scott14 refers to is the AML tax, which has been tapped into to support retiree pensions and health care (as well as municipal water line development) but is SUPPOSED to be focused on cleaning up coal legacy problems from mines closed prior to passage of SMCRA in 1977. That’s a perfectly legitimate tax in that WV still has a huge backlog of AML sites needing attention, many of which are the primary reason streams in the northern coal fields still run orange, acid, and dead. To expect taxes on everyone to pay for those cleanups or for all of us to just put up with the damage amounts to a tax BY the coal industry ON every one of us.

    I also think it’s disingenuous to dismiss many of the subsidies cited as utility, rather than coal subsidies, when they specifically target coal based utilities. The analogy to the auto industry would only be accurate if the auto industry was being subsidized to emphasize gasoline over electric and other alternate fuel technology.

    To be clear, I don’t advocate cutting the coal industry off at the knees. We do need coal for the immediate future. But we should make every effort to mine, process, transport, and burn that coal as safely and cleanly as possible WHILE we aggressively move towards cleaner, safer, and more sustainable energy strategies.

    I do not accept past practices as desirable or even good enough. I don’t think the WV past dependence on coal as its number one industry and our consistent low ranking on most state quality of life indicators is any coincidence.

    What’s needed here is visionary leadership to move us forward, not foot-dragging and stubborn denial of the need to do so.

    Manchin lost my vote with his rifle ad, and so far has done nothing to earn it back. While I disagree with Rockefeller’s efforts to curtail EPA authority, I am encouraged by his recent speech to the coal association admonishing them to take strong action to improve their standing.

    Ironically, I once heard Manchin give much the same speech to coal leaders, but he appears to have abandoned that stance.

    That’s sad.

  16. Bill Howley says:

    Anarchism may be nice in theory, but it never turns out well in practice. Subsidies, both overt and hidden, are a part of government. It’s what governments do.

    The point of politics is to decide who gets subsidies and why. Some people think subsidizing the coal industry while half of the personal bankruptcies in the US are caused by medical bills is a good thing.

    The point is not to eliminate subsidies. The point is to make sure that subsidies help the most people without hurting even more.

  17. Clem Guttata says:

    I tried to post a comment earlier and it is still pending moderation. I’ll repeat most of it now with just one link and no editorializing…

    A mere 15 months ago then-Gov. Joe Manchin held a press conference praising government subsidies for coal. Quoting from the Bluefield Daily News, $334M in stimulus to clean coal technology, Dec 5, 2009

    “Rockefeller, Department of Energy Secretary Steven Chu, Mike Morris, president and chief executive officer of American Electric Power and Gov. Joe Manchin conducted a telephone press conference with about 25 reporters to announce the funding for the expansion of a carbon capture and sequestration demonstration project at AEP’s Mountaineer Power Plant near New Haven. AEP will match the federal funds granted through the Clean Coal Power Initiative and the American Recovery and Reinvestment Act.”

    “Manchin expressed his thanks for Rockefeller’s leadership in bringing the investment to a West Virginia plant. Morris praised the announcement as being “a great day” for the utility, state and nation, because of the advancement of clean coal technology and the good-paying jobs on the horizon for people of the region.”

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