Washington Still Fighting Over How To Turn The Spigots On

Today’s Courier Herald Column:

The House yesterday passed its version of a bill to extend the current payroll tax cut, which has reduced American workers rate of payroll withholding taxes by 2% over the past year. President Obama had proposed increasing the cut for one year and paying for it by increasing taxes on “millionaires and billionaires” over ten years.

It should be noted that both sides seem to keep score these days by counting tax cuts on an annual basis, but counting revenues from tax increases or spending cuts over 10 years. Otherwise, the clear effect of increasing the deficit that both have presumably spent the past year trying to reduce would be obvious. In the spirit of the holidays, it wouldn’t be nice to dwell on double talk coming from Washington, so we’ll just move along. Congress hopes you will too.

In a battle over who gives us more of our tax money back while continuing to borrow more money to finance the government these same folks give us, Republicans have added a litany of “Christmas tree” items from their policy wish list in order to start negotiations with Democrats. We can now expect the argument over how many of these items will be accepted up until Christmas Eve, when passing the tax rates expected to be implemented one week later has become a holiday tradition.

The bill which passed the House on Tuesday contains $180 Billion in spending cuts and closures of tax “loopholes”, including repealing parts of health care reform and freezing the pay of members of Congress.

While many of those provisions will be greeted by Democrats with indifference to irritation, the gauntlet thrown down by Republicans will be focused on two primary areas: forcing a legislative stay on the EPA’s Boiler MCAT regulations and forcing a decision on the Canada to Texas Keystone pipeline. The Boiler MCAT regulations are forcing electric generating companies to decommission many coal powered generating plants over the next couple of years as the cost of upgrading to meet the standards is cost prohibitive. Georgia Power has announced it will idle three plants, with another company abandoning its plans to build a coal powered plant in South Georgia.

Most central to the debate will be the Keystone pipeline. With new exploration efforts from the Dakotas northward well into Canada, oil from the region needs a direct path to the refineries on the gulf coast so that these resources can be used domestically. Given that the payroll tax cut is promoted as a “jobs bill” by Democrats despite the lack of job creation during its first year in effect, Republicans are begging the White House to veto a project that would create 20,000 direct jobs and an estimated 120,000 indirect ones.

The effects of the oil boom are clear when looking at North Dakota’s current economic statistics. The state enjoys a 3.5% unemployment rate and has a one billion dollar budget surplus. Minimum wage laws are irrelevant, as fast food restaurants are advertising for workers at as much as $15 per hour. Housing is in short supply that workers in the oil region have taken to sleeping in their trucks in Wal Mart parking lots. North Dakota needs to become the poster child for job creation. A direct relationship must be drawn to increasing domestic drilling efforts.

The bigger energy debate will not be solved during a two week sprint designed to kick America’s fiscal policy can down the road in order to leave town during Christmas. It can and should become an integral part of the 2012 Presidential and Congressional campaigns.

America currently gets only one third of its oil from domestic resources, with another third coming from neighbors Canada and Mexico. The remaining third is sent to foreign countries, many of which wish us direct harm. Energy Independence has been a stated goal of every President since Nixon, but little direct or successful action has been effectively implemented.

The Keystone pipeline would be a good first move in the direction of shifting oil supplies from OPEC nations to a stable North American supply. Additional drilling in the Gulf of Mexico, Southern Atlantic basin, and even off the coast of California must be considered. In exchange, Republicans should offer up restrictions on the amount of OPEC oil that can be imported as either oil or refined products.

Using our own resources, and employing Americans to extract them, is among the best options open to turning on the spigots of job production. Keystone represents the first move to connect these two in the public’s mind. Republicans must continue to drill this point home over the months ahead.


  1. Calypso says:

    I have yet to hear any explanation, rational or otherwise, from Obama as to why he’s so adamant against the Keystone pipeline project.

    Can anyone help me out and give me a synopsis as to why he’s so vehement in his opposition to what seems a legitimate and beneficial undertaking?

    • The main arguments I’ve seen haven’t been so much against the fact that it’s a pipeline, but have more to do with what’s flowing through it – oil that is extracted from the Canadian tar sands. I’ve seen both sides of the argument and they both seem to be fairly logical, so I don’t really have an opinion on it other than the generic “I’d like to see the country wean itself off oil”. However, I also realize it’s not an overnight kind of thing either and that we do need oil until alternatives are much more plentiful and commonplace than they are now. If we’re going to import oil, I’d rather us import from Canada than the middle east, but I also don’t want it to have an extremely negative impact on the environment or the population that lives around the areas that the oil is being extracted from. So I really have no clue as to what the current solution to the pipeline is.

    • http://www.washingtonpost.com/blogs/fact-checker/post/keystone-pipeline-jobs-claims-a-bipartisan-fumble/2011/12/13/gIQAwxFisO_blog.html

      “And what are some of these jobs? The TransCanada report does not say but Perryman used a similar technique for a report touting the benefits of a wind farm project.

      Among the list of jobs that would be created: 51 dancers and choreographers, 138 dentists, 176 dental hygienists, 100 librarians, 510 bread bakers, 448 clergy, 154 stenographers, 865 hairdressers, 136 manicurists, 110 shampooers, 65 farmers, and (our favorite) 1,714 bartenders.”

      I didn’t realize building a wind farm would create so many jobs for dancers and choreographers… surely building a pipeline would create just as many of those if not more? :-/

  2. gcp says:

    Agree on Keystone but figures a little off. Per Daniel Yergin Dec. 12 opinion article at wsj.com imports currently account for only 46% of domestic supply. Imports peaked at 60% in ’05 and have steadily headed downward since then.

  3. NoTeabagging says:

    Charlie, I know you have environmental concerns from the content of previous articles. There are many new dangers to hydraulic fracking which is used in gas and oil exploration. This dangerous practice is fouling aquifers and air quality around thousands of homes and may contaminate aquifers causing thousands of acres to be uninhabitable. The chemicals in hydraulic fracking are not fully disclosed, but many people living near oil/gas wells have ecperienced health problems from the air and have undrinkable water. You can however turn on your kitchen sink, light it with a bic, and grill steaks. Here’s one of my favorites: http://www.youtube.com/watch?v=d6G6Ap-mF0k&feature=fvwrel
    (see Gasland, the movie for more info).

    What good is jobs boom if the area becomes uninhabitable in a few years?


    Finally oil shale and oil sand extraction is another inefficient means to get a little oil out of the soil. It uses and contaminates millions of gallons of water.

  4. John Konop says:

    This debate is like selfish siblings fighting for an allowance increase while their parents are going BK.

    You have republicans now claiming middle class tax breaks are not simulative. And we have democrats arguing for using a BK revenue source for stimulating the economy ie FICA tax, off-set by a tax on the top 1%. Yet neither party has proposed any real long term viable plan to deal with Social Security and Medicare.

    And this is being driven by tax payers who think we can keep getting more entitlements without paying the full price. The real problem is the mirror.

    As far as the oil pipeline deal, Obama was going to give on this after the election. This will be the compromise deal and Obama will take the hit from his base against the “kick the can” short term job stimulus tax break plan. And 4 to 8 years from now we will run out of room to play this game. I have said it for years the longer we wait to fix the entitlement problem the harder the fall.

  5. saltycracker says:

    Just don’t understand how a temporary reduction in an underfunded “insurance” program is not an economically poor decision. While the wise thing would be to save that money or pay down debt, congress believes most people are dumb and will spend the money, stimulating the economy. So if they are right, they are wrong.

    We need some long term solutions, like rewriting the tax code.

  6. saltycracker says:

    Nancy Pelosi says that extending the unemployment payments will create 600,000 jobs – that should be better news than pot shots at Romney & Newt…..

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