Commentary by James H. Shott
One of the major failures of Barack Obama’s presidency is that he has not kept unemployment at eight percent or below, as he told us the $787 billion stimulus package would do, or even reduced the unemployment rate below 9.5 percent after more than a year-and-a-half in office.
Given the pain the unemployed feel, one might expect the President to be doing everything possible to foster job creation. But his actions, and those of the administration, prove that assumption to be incorrect.
Immediately following the Deep Water Horizon explosion in the Gulf of Mexico that killed 11 workers and unleashed a torrent of oil into the Gulf, Mr. Obama imposed a six-month ban on all drilling. Based upon the performance of the thousands of drilling projects past and present that have gone along without serious problems, this action was completely unwarranted, but the ban’s defenders said it made sense to stop drilling and evaluate the other deep water projects to be sure there would not be a repeat of this disaster, even as predictions of substantial job losses were reported in the news.
Months later, the ban was still in force, and had shut down all deep water projects, and caused rig owners to relocate their platforms to productive areas outside the US, and slowed down or halted shallow water projects, as well. This over-reaction severely damaged the economy of Gulf States, as shown by a study by two Louisiana State University professors that estimates the economic losses from the ban at $2.7 billion.
The ban put thousands of oil and natural gas industry workers in the unemployment line, as well as thousands more workers in related jobs. Curiously, the Interior Department knew this would happen. Among Federal court documents examined by The Wall Street Journal was a July 10 memo sent to Interior Secretary Ken Salazar that said, in part: “a six-month deepwater-drilling halt would result in ‘lost direct employment’ affecting approximately 9,450 workers and ‘lost jobs from indirect and induced effects’ affecting about 13,797 more.”
The administration ignored this dire warning, adding to the high unemployment afflicting the nation. And now the Environmental Protection Agency’s proposal to tighten air quality standards for ground level ozone threatens even more jobs.
The EPA wants to lower ozone from 75 parts per billion to a range of 60 to 70 parts per billion, which may seem a small and manageable reduction. However, Kyle Isakower, vice president of regulatory and economic policy at the American Petroleum Institute, said that the standard “is being set so close to background levels that essentially the only way to reach attainment here is to reduce nitrogen oxides (NOx) down to 60, 70, 80 percent or more of current levels. So you're really talking about virtually shutting down most, if not all, commercial and transportation use in this country.”
And Don Norman of Manufacturer’s Alliance/MAPI has researched the nation-wide ramifications of such an action. “I took a very detailed study conducted by NERA consulting, which was limited to 11 states,” he said, “and tried to expand the results for the entire nation. I found that the annual attainment cost is estimated to be just over $1 trillion per year between 2020 and 2030. This is equivalent to 5.4 percent of projected GDP in 2020. GDP itself would be reduced by approximately $677 billion in 2020 and further, we'd have significant losses of jobs, something like 7.3 million based upon current Bureau of Labor Statistics projections for the labor force.”
Those huge numbers ought to get your attention. The $677 billion in lost GDP is 86 percent of the amount of the Obama stimulus, and the 7.3 million lost jobs is about half of the number of total unemployed persons reported in September. It is small comfort that these severe losses in GDP and jobs won’t occur for a few years.
Clearly, Mr. Obama’s background as a community organizer and as a law school lecturer did not provide him even the most elementary understanding of economics, and everything in his performance as president indicates that economic principles are as foreign to him as speaking Martian. Or perhaps they are just less important than other things.
If President Obama really wanted to create jobs or help the economy recover would he have done what he did in the Gulf and let the EPA do what it intends to do? Reasonable people may conclude that his agenda instead is to do whatever it takes to force the US to adopt alternative energy, and apparently no cost is too great to accomplish this goal, even if it means transforming the most successful nation in history from an economy that is still mostly free and market-based into a centrally-planned, government-dominated economy not unlike China, North Korea and Cuba, or the socialist economies of Europe.
When he said he would fundamentally transform the country, most thought it meant healing racial and political divisions and straightening up the government. Now it appears he meant something completely different.
The world has plenty of government-run economies; it has only one United States of America. Let’s keep it that way.
Cross-posted from Observations