Despite President Obama’s opening up limited coastal areas for oil drilling, new taxes on energy producers will make the nation’s jobs crisis worse, Rep. Kevin Brady (R-Tex.), the top House Republican on the Joint Economic Committee, said in an interview with HUMAN EVENTS.
“The President’s announcement [Wednesday] was ten steps backward and one step forward, but these energy taxes are going to do great damage to our ability to produce and explore here,” Brady said. “The Obama Administration has tens of billions of dollars in punishing taxes on the energy industry. These taxes — which it looks like they will try to use to offset some of this spending spree they’re on — will have a very damaging effect on U.S. energy exploration and on refining as well.”
Brady said that Obama’s announcement will actually delay oil drilling in some areas.
“Looking closely at the President’s proposal, it will delay more than drill by pushing back leases and delegating drilling decisions in the eastern Gulf of Mexico to a Congress more obsessed with global warming than affordable American-made energy,” Brady said. “With high unemployment, we should be creating 1.2 million new energy jobs by opening up the Outer Continental Shelf today.”
New taxes on oil and gas energy production proposed in Obama’s budget are likely to lead to more job losses at a time when the nation is struggling with prolonged high unemployment.
“We’re going to see job losses through a loss of the manufacturing deduction that encourages companies to create jobs and invest in the United States and produce in the United States,” Brady said. “They single out one industry — U.S. energy — and they say essentially we’re going to treat you like you’re making these investments overseas and actually encouraging off-shoring and outsourcing of American jobs.”
America continued to bleed jobs in March losing over 23,000 private sector jobs according to the latest ADP payroll report released this week. The overall unemployment numbers from the Bureau of Labor Statistics out today remains at 9.7 percent, propped up by the inclusion of tens of thousands of temporary, part-time government Census workers hired in March. Overall the government expects to hire approximately 1.2 million temporary Census workers.
Brady said the temporary hiring will continue to skew the unemployment numbers.
“I think it’s important in this economy to understand what’s driving these numbers,” Brady said. “They’ll be significantly distorted by the Census hiring part-time Census workers who are joining the work force in March, April and May. They’ll be later laid off. Each one lasts about eight weeks.”
Brady also offered reminders of the Obama Administration’s own benchmarks set when trying to sell the American people on the urgent need to pass the $1.2 trillion (including debt service) stimulus bill before anyone had a chance to read it.
“In January 2009, Christina Romer, who is now chair of the Council of Economic Advisors, and Jared Bernstein, who is chief economist for Vice President Biden, gave a detailed forecast of how the economy would perform if Congress passed the stimulus bill which was signed into law February 17th ,” Brady said. “First, they forecast an unemployment rate that wouldn’t rise above 8%. That obviously failed in a major way.”
“Secondly, they forecast that 90% of the increases in payroll jobs would occur in the private sector,” Brady continued. “Clearly, it’s actually been the opposite. Almost all of the job loss has been in the private sector. The only job gains have been in the public sector.”
“Finally, Christina Romer and Jared Bernstein forecast the average number of payroll jobs during the fourth quarter of this year would be 137.5 million jobs,” Brady said. “That was the standard, the benchmark they set for themselves as to a successful stimulus package. In February we are far below that. We are at 129.5 million payroll jobs. To reach the Obama Administration’s job forecast for a successful stimulus, the U.S. economy would have to add 802,400 new payroll jobs every month. That’s only been accomplished once in U.S. history and that was in September 1983.” (During the Reagan Recovery, I might add.)
“Clearly, by their own standards, the President is going to miss his own benchmarks for the stimulus in unemployment, in private sector jobs and in total jobs in America,” Brady said.
Brady went on to compare the Obama Recovery to economic recoveries from historically similar recession periods. President Ronald Reagan inherited from his predecessor, Jimmy Carter, an arguably worse economy with double-digit inflation, double-digit interest rates and resulting double-digit unemployment. Reagan slashed marginal supply-side tax rates causing a decades-long economic boom.
The economic performance of the Reagan Recovery after the August 1981-November 1982 recession offers a startling comparison.
“If you compare the Reagan Recovery to the Obama Recovery, the first eight months of the Reagan Recovery, non-farm payroll grew by 1.6 million,” Brady said. “The unemployment rate fell from 10.8 to 9.4 percent. In contrast, the first eight months of the Obama Recovery, non-farm payroll employment fell by 1.02 million and the unemployment rate went up from 9.4 percent to 9.7 percent. Clearly the economic policies of the Obama Administration have failed in meeting their benchmarks for success but also compared to America’s recovery from a similar recession.”