The President’s ‘Anti-Stimulus’

Mark Green
Posted February 13, 2012

From the president’s remarks during Monday’s rollout of his 2013 budget:

“The last thing we need is for Washington to stand in the way of America's comeback.”

The president is 100 percent right – and he can put his words into action by dropping his politically motivated obstruction of the Keystone XL pipeline.

The Keystone XL is the largest shovel-ready infrastructure project available to help spur the economic revival everyone wants. The $7 billion, privately financed pipeline would create 20,000 U.S. jobs during its construction phase and up to 500,000 U.S. jobs by 2035 as a big part of a comprehensive strategy to fully utilize Canada’s oil sands resources. Energy to run our economy and jobs. But we need Washington to get out of the way.

President Obama:

“We need to … [end] the subsidies for oil companies … The budget that we’re releasing today is a reflection of shared responsibility. … I want everybody here to go out there and do great.  I want you to make loads of money if you can.  That’s wonderful.  And we expect people to earn it -- study hard, work hard for it.  So we don’t envy the wealthy.  But we do expect everybody to do their fair share …”

Unfortunately, the president’s budget would place Washington squarely in the path of America’s economic comeback by increasing taxes on the country’s energy companies by $41 billion over 10 years.

Although the oil and natural gas industry is its own stimulus, contributing $476 billion to the economy in 2010 and projected by Strategic Energy & Economic Research’s Michael Lynch to spend $145 billion this year on drilling and completing new wells in the U.S., the president would saddle the industry with new taxes – hampering its ability to develop new energy sources and create new jobs.

Instead of standing in the way of the economic lift the industry could provide by threatening tax increases, the president should consider policies that could allow the industry to create 1 million new jobs in just seven years and increase revenue to the government by $127 billion by 2020 – three times the amount his tax hike would raise.

API President and CEO Jack Gerard:

“Increasing our taxes would push oil and natural gas investment overseas and diminish job-creation and economic activity here at home.  After a handful of years, we would see less domestic energy production – particularly of natural gas – more imports, fewer new jobs, and, eventually, depressed tax, royalty and other revenues.  Frankly, the administration should be trying to replicate the success America’s oil and natural gas industry has had in creating jobs and growing the economy primarily through development on private and state lands.  The evidence clearly shows that what we’re doing is working. If the industry’s job-creating investments are a stimulus for the nation, then what the administration is proposing is an anti-stimulus.”

One more point on taxes: The president is wrong about subsidies. The oil and natural gas industry doesn’t receive targeted subsidies from Washington. More on that here.

As for shared responsibility, the fact is America’s oil and natural gas companies pay $86 million every day to the U.S. Treasury in rents, royalties and income taxes. They pay their fair share and more than any other sector:

As Gerard noted to reporters Monday during a conference call, Apple is one of the country’s most profitable corporations, but no one is talking about singling it out for a tax hike – nor should they. That would be punishing the success the president says he favors.

“We want to lock arms with the president,” Gerard said. But it will take policies that help increase domestic oil and natural gas production and the American jobs that go with it “instead of penalizing the best job creator in the country.”