by Gary Palmer
For the last three years, the federal government has been in mad pursuit of green energy alternatives to redefine our economy and improve job markets. In the process, billions of taxpayer dollars were wasted on green energy companies that didn’t produce reliable alternative energy resources, economic growth or new jobs.
Meanwhile, the Environmental Protection Agency (EPA) has issued thousands of pages of regulations that threaten existing energy producers with catastrophic fines and industry-killing regulations that smother the U.S. economy and force energy prices higher. Among these are regulations that are shutting down on coal-fired power facilities because power companies cannot afford compliance costs.
The resulting loss of 26,000 megawatts of coal-based power could power 20-26 million homes.
As the EPA continues its crusade, the Federal Energy Regulatory Commission estimates that another 55,000 megawatts of coal-generated electricity will be shut down in the next six years. The loss of that much of our power grid combined with billions of dollars in new compliance costs will force American households to pay more for electricity at a time when the net worth of the average American household has declined by 40% since 2007.
Moreover, as a percentage of disposable income, energy costs hit lower-income households the hardest. In 2001, households earning below $50,000 annually were allocating 12 percent of disposable income to pay for energy. In 2011, households in that same income range spent 20 percent. Households with annual incomes between $10,000 and $30,000 spent 23 percent of their disposable income just to pay their energy bills, creating a significant burden for low-income elderly, black, and Hispanic households who are disproportionately in this income bracket.
In 2009, there were 25.3 million senior citizen households with median earnings of $31,354. Expanding access to America’s abundant reserves of oil, natural gas and coal would be of significant help to elderly Americans with fixed incomes. In many respects, it would be equivalent to an increase in Social Security benefits.
The United States has billions of barrels of recoverable oil that could jump start our economy, virtually eliminate our need to buy oil from hostile nations and reduce the cost of energy for all American households and businesses. According to the U.S. Department of the Interior and the Bureau of Land Management, there are 800 billion barrels of recoverable oil in the Green River Formation in Colorado, Utah and Wyoming with the richest deposits located in areas owned by the federal government.
The latest estimates from the federal government indicate proven reserves of over 280 trillion cubic feet of natural gas which is enough to meet the needs of the United States for 90 years. And U.S. coal reserves that are recoverable with current mining technology are sufficient to meet our needs for 249 years. When it comes to energy resources-oil, natural gas, and coal-the U.S. is one of the wealthiest nations in the world. The royalties from the federally-owned energy reserves would be in the trillions of dollars.
In other words, we are not broke, we are stupid.
Accessing federally-owned energy reserves must be a major part of our economic recovery plan. This will provide energy security not seen in decades as well as decrease energy costs for Americans who have seen their energy costs double over the last decade.
By allowing access to these reserves, the United States could become an energy exporter to major energy consumers like China and India. Over time, royalties would be in the trillions, some of which could be used to help ensure the viability of Social Security and Medicare.
New extraction technologies for recoverable energy resources will provide the opportunity to go from dependence on foreign energy to energy independence. Accessing these rich resources will be good for our national security and our economy and for elderly and low-income families whose disposable income is being depleted by high energy costs.
Gary Palmer is president of the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.
The Biden and Ryan Debate: Energy and Taxes
by Raymond J. Keating
The vice presidential debate between Congressman Paul Ryan and Vice President Joe Biden was a lively affair. Though it often was difficult getting by the many interruptions served up by Biden, and Martha Raddatz’s bias as a moderator, in order to get at the substance.
But some clear themes did emerge that warrant the attention of entrepreneurs and small businesses.
First, this was a debate overwhelmingly about foreign policy, in particular about the Middle East and North Africa. Of course, Afghanistan, Iran, Libya and the rest of the general region rank as the immediate hotspots in terms of U.S. national security. And given the role played in oil markets, it’s a huge economic factor.
In the end, given the Obama administration’s mixed messages and general pulling back from the region, Congressman Ryan was justified in hitting the White House hard on their strategy, or lack thereof. There is no doubt that tumult and uncertainty in the region, including the role of the U.S., has been one of the key reasons for oil prices remaining high.
It also should be pointed out that Ryan mentioned greater North American energy independence. To the degree that is achieved will depend on U.S. policymaking, such as the extent of U.S. domestic exploration and production, as well as moving ahead with projects such as the Keystone XL pipeline. Unfortunately, the Obama administration has been hostile to carbon-based energy in general, raised barriers to domestic production, and blocked the Keystone XL pipeline.
Second, a big difference emerged on the tax front.
Vice President Biden was unrelenting in pushing a class warfare agenda. He spoke of a fictional tax cut for the “middle class.” In fact, the Obama agenda offers no tax relief for middle-income earners. Rather, it proposes leaving today’s tax policies in effect for middle and low-income earners, while jacking up taxes on everyone else.
Meanwhile, Congressman Ryan pointed out that the Obama tax plan rests on a major tax hike on “successful small businesses.” He contrasted the Obama plan with the Romney plan by noting that the top income tax rate on small businesses would be nearly 45 percent under Obama, while it would be 28 percent under Romney. That’s a profound and economically substantive difference on tax rates.
Ryan also pointed out that 53 percent of small business income would be hit by the Obama tax increases.
For good measure, Ryan noted that this top Obama tax rate would make U.S. businesses far less competitive internationally. That’s very important. While President Obama, to his credit, has called for reducing the corporate income tax rate, he has pushed and pushed to increase the personal income tax rate, without mentioning that some 93 percent of businesses pay personal, rather than corporate, income taxes.
In the end, it needs to be understood that any kind of tax increase, especially in a tough economy, makes no sense whatsoever. No economists – no matter what school of economic thought they belong to – would advocate tax increases in this environment. Their reasoning surely would differ, but not their bottom line conclusion. And any economist pushing for a tax increase right now is playing politics, and not thinking as an economist.
And make no mistake, economics makes clear that tax increases on upper incomes – as included in ObamaCare and in terms of the additional hikes advocated by Obama – will hurt everyone, not just higher income earners. Biden asserted that the, as he put it, “super wealthy” can afford to pay more in taxes. What Biden misses in his class warfare hysteria is that the Obama-Biden tax increases mean reduced incentives and resources for entrepreneurship and investment. That means bad news throughout the economy – for everyone.
If we want to get economic growth back on track, experience rising incomes, and create more jobs, then taxes cannot be increased on the entrepreneurs and investors that are critical to making this happen.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His article was first published by the SBE Council, 12 October, 2012, http://www.sbecouncil.org/2012/10/12/the-biden-and-ryan-debate-energy-and-taxes.
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Posted in commentary, economy, politics
Tagged Election 2012, energy, Obama-Biden plan, Romney-Ryan plan, taxes