Senate Democrats finally released their first budget plan in four years this month: It offers nearly $1 trillion in new taxes, an end to sequester budget savings, and almost no new spending restraint. Despite the failure of the 2009 stimulus package, Democrats also want an extra $100 billion to create jobs on infrastructure projects, few of which would be “shovel-ready” enough to hire workers anytime soon.
President Obama won’t release his own budget till April, but he has a golden opportunity to improve on the Senate budget and create real jobs. All he has to do is end his four-year delay in approving the Keystone XL pipeline, which would bring crude oil produced from Canada’s oil sands to refineries on the Gulf Coast. It is already “shovel-ready” — portions of it are already under construction. And because it’s being built by private sector companies, any new pipeline jobs would come at zero cost to the taxpayers and the economic activity created would provide significant tax revenues.
Keystone has been completely scrubbed environmentally. Four government reports have been issued on its impact, all with essentially the same conclusion. The latest came this month, from the U.S. Department of State. It raised no major objections and concluded, as AP notes, “Other options to get the oil from Canada to U.S. Gulf Coast refineries are worse for climate change.” Nor will all the piped oil be Canadian: Keystone will provide a safe, reliable method of transporting 250,000 barrels of oil a day from the Bakken fields of North Dakota to refineries.
A key finding of State’s report is that the Canadian oil fields are so big — the world’s third-largest reservoir of oil — that they will almost certainly be developed. The question becomes whether the oil will be sent south to the U.S. by our friendly Canadian neighbor or shipped west to China and other Asian powers. Estimates show that for every dollar of oil that North America imports, we receive only 10 percent of the economic benefit — the economic activity the oil is used for. The rest of the money stays with the Venezuelans, Nigerians, and Saudis who pumped the oil. In contrast, when you add up oil-production costs, sales, and downstream jobs created by oil production, the domestic benefit from oil pumped from North American sources is roughly 80 to 90 cents of every dollar of oil revenue.
Every one of the governors along the Keystone pipeline’s route now backs the project. They predict that the $5.3 billion project would create 16,000 direct jobs and an estimated 163,000 jobs in indirect employment.
So why is the Obama administration resisting the pipeline? Before the election, Obama punted for fear of alienating pipeline opponents, including environmental donors and the Sierra Club. Since the election, bureaucrats in his Environmental Protection Agency have proposed withholding approval of Keystone unless Congress agrees to some kind of a carbon tax in exchange.
A carbon tax is clearly on the drawing boards of the Obama administration. A series of Treasury Department e-mails obtained by the Competitive Enterprise Institute under the Freedom of Information Act show that Ian Parry of Treasury’s Fiscal Affairs Department has openly advocated a carbon tax for the purposes of “raising revenue and putting it to good use.” He proposes a carbon tax of $25 per metric ton, which is roughly in the range of the tax proposed in Congress by Representative Henry Waxman, the ranking Democrat on the House Energy and Commerce Committee.
But Obama faces real pushback from labor unions within his coalition, who covet the many union jobs Keystone would create. Many would be in construction, the sector of the economy that was hardest hit by — and has yet to recover from — the collapse of the housing bubble in 2008.
Last year, a total of 69 House Democrats broke with Obama to support the Keystone project, with the overall bill passing by 293 to 127 — more than enough to override a presidential veto. In 2011, fewer House Democrats — 47 — had voted to defy Obama and back Keystone.
In the Senate last year, Majority Leader Harry Reid used a filibuster to block Keystone. But eleven Democrats broke party ranks to back the pipeline, and other pro-pipeline Democrats, such as Virginia’s Mark Warner, backed the filibuster only after personal pleas from President Obama himself.
Red-state Democratic senators who will be up for election in 2014 are strongly pressuring Obama to soften his stance on the pipeline. But there is no doubt that Obama’s environmental allies would explode in fury if he retreated. In January, Sierra Club executive director Michael Brune announced that his group would, for the first time in its history, participate in acts of civil disobedience to block Keystone. Sierra’s view of the best U.S. energy future is very clear: In a recent debate on Minnesota Public Radio, Brune supported keeping two-thirds of all of the world’s oil, coal, and natural-gas reserves “in the ground.”
In theory, liberals are in favor of creating jobs, but in reality, even jobs that pass strict environmental-impact reviews are too “dirty” for their taste. They also turn up their nose at the tax revenue those new jobs would create. In the end, liberals evidently believe that only government can create, or provide incentives to create, the “clean jobs” of the future. In the non-clean-jobs sector of the economy, and for workers unlucky enough to have jobs in politically incorrect industries, the government restrictions that liberals support will lead to a low-growth, lower-wage future.
Conservatives need to highlight that opposition to Keystone is demonstrably anti-worker. You can’t promise to create jobs while doing your utmost to kill them. The way to divide Democratic voters from their Washington leadership is to reveal this internal contradiction at the heart of the budgets Democrats are finally putting on paper.
— John Fund is national-affairs columnist for NRO.